EUR/USD
If there was any enthusiasm for the treaty changes within the EU, they quickly
disappeared as markets, including the Euro, declined on Monday, despite Italy
managing to sell 7 bio Euros at 5.952%, down from 6.087% in November. Moody’s
and Fitch joined S+P, assisting the daylong move lower when they issued a warning
on the EU outlook for 2012 and a possible downgrade of some EU countries in the
coming month, . Equity markets had a tough session with the DAX down 3.36%, and
the CAC40 down 2.61%. S+P is closing down 1.5%
As the uncertainty continues it is difficult to find any enthusiasm for the Euro and as
we head towards crucial support it may be that the move wants to accelerate.
1.3145 still holds though, and for the time being the shorter term indicators are at
oversold extremes. Any good news items are likely to bring about a sharp rally,
although it would appear that this is only likely to offer renewed selling
opportunities.
Should the support at 1.3145 give way, it is possible a sharp move lower may ensue
as SL are triggered. The next support would be seen at 1.3052 (61.8% of
1.1875/1.4940). Below here 1.2960 and 1.2870 will provide a supportive base.
On the topside minor resistance is now at 1.3235, 1.3275 and at 1.3300. More
medium term levels are at 1.3400 and 1.3460.
As long as 1.3145 holds and we are not too far away from it, I would be wary of a
bounce given the oversold short term indicators. The 4 hourly charts though do
point lower, while the dailies are undetermined. It is probable that Asia will see a
sideways session before another push by Europe, and given where we are test of
1.3145 and the Stop Losses would not surprise.
Directionally, much will depend on the data later today when German ZEW survey
and then US Retail sales and the I/R decision from the FOMC are delivered.
AUD/USD
The AUD had a tough session as metals fell sharply and the China Shanghai
Composite Index broke through vital support yesterday, closing below 2300 and
looking as though it will have another tough day today with the European
Indices closing lower and the S+P down 1.5%.The general move to reduce risk
has done nothing to help and the AUD has not seen any kind of bounce
throughout the session.
I did not expect the low of last Friday, at 1.0046 to be tested so early in the
week, but here we are and the 4 hour charts are looking as though they want to
give parity a nudge in the near future. The hourlies are pretty oversold but look
as though they want to correct themselves by trading sideways. Be wary of
bounces but there should be plenty of sellers into strength and for now 1.0125
looks to offer good resistance.
The downside, sees immediate support at 1.0020 (50% of 0.9660/1.0380), and
should we break parity again, sees the next level of support at the Fibo level of
0.9940 (61.8%) and at 0.9917. It maybe that this gets a workout over the next
24 hours, although given the overbought status of the US$ against most
currencies on the short term charts I would be surprised to see it in Asia. Keep
an eye on the Chinese stocks today though. The important support at 2300 has
broken, opening the way for a move to 2100, which would weigh heavily on the
AUD.
Today sees NAB Business Confidence
