EUR/USD
The Euro made a turnaround today from its recent decline as the ECB left rates
unchanged with ECB Chairman, Draghi suggesting that the 3 year LTRO has
supported confidence in the banking sector and that he expects substantial
demand in next tender. The ECB though remains ready to act if conditions
deteriorate. Both Spain and Italy completed successful bond auctions that saw
borrowing costs fall across Europe, boosting the Euro. The US data then
disappointed the market with retail sales rising just 0.1%, further pressuring the
US$.
European equities ended mixed, unable to hold on to early gains and the US
markets are pretty much unchanged with the S+P -0.2%
Technically, the bounce has taken a while to come, but the Euro managed to hold
on to the base of the (blue) channel and has broken minor trendline resistance to
squeeze higher to 1.2844. The momentum suggests that we may have further gains
to come, but in the short term the Euro has become overbought and may require
some sideways price action before it is able to make further gains. 1.2820 & 1.2760
will now act as buying levels for the Euro, and 1.2660/65 has become a major
support level, having now been down there twice before. I’d be very surprised if we
were to revisit these levels in the next couple of sessions.
In the short term, through Asia at least, I would be surprised to see the Euro above
1.2860, while 1.2790 should provide a base. As the short term indicators unwind,
dips are now likely to provide medium term buying opportunities for tests further
out at the 1.2860 level, before a possible assault on 1.2900/20 congestion. Above
here may see moves towards 1.2975, but that is a little way off at present.
We get the EU and US Trade Balance figures today as well as the Rts/Michigan
Consumer sentiment index.
It is Friday 13th so tread carefully! Good w/e.
AUD/USD
The Aud recovered in line with a weaker USD, but lost ground against the Euro
during the session. A high of 1.0377 has seen the top of the range tested again,
which has so far held and seen a partial retreat. This came as confidence and
risk appetite improved after the successful European bond auctions. A recommendation from a US investment house to buy Aud helped the cause as well, sending it higher before the enthusiasm dissipated somewhat following the US retail sales data.
Some buying in EUR/AUD capped the Aud as well, with the cross turning
around from its lows at 1.2298, the channel support that we mentioned
yesterday, and it currently trades at 1.2420, just below its day’s high of 1.2440.
This makes it an outside day with further gains looking very possible. Worth
watching. Trendline resistance is at 1.2490 and the first Fibo retracement level
is not until 1.2647
The Aud/Usd therefore remains in its range, and I don’t think it is going very far
from here in the near future.
1.0380 remains formidable resistance and above here we have the 200 DMA at
1.0410 and then congestion resistance at around 1.0440/50. The downside has
1.0260 now acting as good support and should we break below here, Fibo
support is at 1.0200.
For today look for 1.0300/75 to cover it. The 4 hour charts are pointing very
mildly higher but I would not get carried away and suspect we are in for a quiet
session.
