EUR/USD
The Euro has had a reasonably quiet session as it recovers from Mondays lows,
in line with equities, as a mild risk appetite returns to the markets. We are
pretty much unchanged from yesterday, having been as high as 1.2817 where
good sellers were seen. The rally was largely bought about after Fitch stated
that they have no plan to downgrade France's AAA credit rating this year in the
absence of any unforseen shock to the EU system.
European stocks had a good day as well with the CAC up 2.66% and the DAX
higher by 2.4%.
Given the relative absence of news from the EU, the Euro has traded within an
80point range today. Technically it looks to have made a short term base and
within the (red) channel we could be looking to push on towards the resistance
line, currently at 1.2970, but moving lower. In order to reach this though the
overnight highs and decent sell orders will need to be overcome at around the
1.2830 level and then again at 1.2860 and 1.2915, all Fibo levels of the move
down from 1.3070.
The downside is well supported for the time being at 1.2665, Monday’s low.
Below here, the (blue) channel support is at around 1.2625 and then the major
Fibo support is at 1.2590. Momentum to the downside is not going to be easy
to sustain given the mildly oversold nature of the daily charts.
In the near term, judging from the upside momentum of the 4 hour charts, it
would appear that we have further choppy conditions to come. In Asia it may
well be quiet ahead of the EU GDP figures later today. It looks as though
1.2740/1.2820 might cover it and we shall have to wait for the data, which will
include the US Beige Book later on today, for direction.
In the more medium term it would appear that we are in for some 1.26/1.300
sideways but choppy action.
AUD/USD
The commodity currencies were the highlight of the day, led by the Aud, on the
back of the building permits and Chinese data. Mining stocks also moved
higher, partly due to the Alcoa report yesterday, which has also underpinned
the currency. So, risk appetite is back in fashion today with the S+P currently up
1% as the next data from the reporting season is due, with JPM reporting on
Friday.
The strength has been greater than I expected, but ultimately we still remain
within the 1.0385/1.0040 range of the last couple of weeks. There are likely to
be S/L building now above the top of the range and a short term test to see
what is up there would not surprise but the hourlies have become overbought
and are now turning lower which may hinder further upside action today.
Having said that, both the 4 hour and daily charts are hinting at potential upside
pressure in sessions to come. If there is no disaster out of the EU (a big IF!),
then the Aud will continue to benefit.
Technically today, we will see resistance at the session high of 1.0350 and
above here at 1.0385, where a double top formation can be seen on the chart.
Beyond here would target the red downtrend/Fibo resistance at around 1.0490,
but that is some way off at present. The 200 DMA lies ahead of this at 1.0410.
The downside now has short term support at 1.0300 ahead of Fibo levels at
1.0270 and 1.0245. Right now it doesn't appear that there is going to be too
much pressure to the downside and a range of 1.0285/1.0350 may cover it for
the early part of the session. In the longer term, continue to look at the
1.0200/1.0385 range to provide a guideline
Eur/Aud made another low at 1.2357. The downtrend is strong but becoming
oversold, so keep S/L tight.
Today sees WBC Leading Indicators. .
