EUR/USD
The better than expected Chinese GDP data gave the Euro a bit of a lift in Asia
yesterday and this was followed up later in the day by the strong ZEW survey of
German investor confidence and the successful bill auctions in Spain and Greece
and also by the EFSF.
The theme then has therefore been one of increased confidence returning to the
markets and the equity markets in Europe had a good day with the DAX and the
CAC up 1.8% and 1.4% respectively. The S&P continued its gains and is sitting
around 1293 having tested the long awaited 1300 level.
The Euro had a good run higher, reaching 1.2808, just above the Fibo resistance at
1.2795, before retreating back into the middle of the day’s range as the day wore
on.
For the time being the indicators are a bit mixed, suggesting that we will stay within
the current range for the Asian session at least, before the potential for another
attempt to higher ground. The hourly charts, as can be seen, are showing some
downward pressure, while the 4 hourlies continue to have upward momentum, so
it would appear that in the short term, dips will attract good buying interest.
For now, sellers will re emerge at 1.2800/10 and above here at 1.2865 and 1.2900.
Buyers should be seen at 1.2715 and at 1.2665. For the Asian session I suspect
1.2715/1.2810 should cover it.
Further out the downside is fairly clear. A move below 1.2665 would test
1.2590/1.2625. Beneath here there is not a lot to stop it moving quickly towards
1.2465.
The topside has good resistance at the top of the channel 1.2865 and then the pivot
point is at 1.2945. Above here would lead to an interim low and a probably move
back above 1.3000. This is some way off.
There is a whole raft of data out later today to provide direction, including US
PPI/IP/Housing Starts/CU (see calendar).
AUD/USD
The Chinese GDP put the Aud back on a firm base yesterday, and this continued
into Europe as it rose to a high of 1.0449, touching the trendline resistance
before failing and retreating to current levels.
Eur/Aud has continued its path lower, so far to 1.2228. This trend is heading
towards 1.2000, but the divergence is giving warning signals. I’d be very wary of
jumping on board down here, although there is probably more room to the
downside.
The Aud is trading very nicely from a technical perspective at present. Further
tests may be seen at the 1.0450 level, although I have my doubts that we are
likely to see it today. If this were to be the case though, resistance will be
strong, but if broken would potentially see a move on towards 1.0490 (76.4% of
1.0750/0.9660). Beyond here 1.0580 would come into view. The 200 DMA at
1.0410, although it has been breached, has failed and will continue to provide a
hurdle that needs to be overcome.
The downside has support right here at 1.0380 - previously good resistance. A
break below this level would target 1.0335/40 and beneath here 1.0300 and
1.0270.
I suspect the consolidative conditions are going to continue at around current
levels so the 1.0270/1.0450 range should continue to prevail, although with
improved confidence in the last couple of days may mean that dips will see
good support.
Today sees the WBC Leading Indicators Index.
