EUR/USD
The Euro has continued its recovery from recent lows in choppy trade with the main
news headline of the day involving the IMF, who are reportedly attempting to boost
their lending capacity by $500billion to $1 trillion to avoid further instability to the
global economy, beyond the current crisis in Europe. One of these, Greece, is
reportedly progressing toward a deal with private creditors to take a big haircut on
their debt and the mere fact that there is some advancement in the situation has
helped to underpin the Euro today.
European equities finished mixed – around par – but US stocks have had a good
session, with the S+P at 1304, holding gains above 1300 following better than
expected results from Goldman’s.
The currency market has had a pretty choppy session but the Euro is currently
about 100 pips higher than this time yesterday. It is currently up against some
decent resistance, pushing against the top of the down channel (red line), which
also happens to be 50% of the fall from 1.3070/1.2623. The hourlies are getting
over bought, so further upside in the next few hours may be hard to come by and a
retreat towards 1.2800 would not surprise. The 4 hour charts though, are showing
some upside momentum, so should we be lucky enough to see a dip, it ought to
provide a buying opportunity for an attempt to head towards 1.2930 and possibly
1.3000.
If we are going to head higher, we really should not go under 1.2780 now, but if we
do, there is support at 1.2730. S/L will be in the 1.2780 area if we do head lower.
Below 1.2730, it looks as though we may revisit 1.2665 ahead of the recent 1.2623
low. This is not the favoured view at this time.
Overall it looks as though we will continue in a choppy fashion until we get the ECB
monthly report and the US CPI later in the day. Building Permits and Initial jobless
claims will also be released. Ahead of this, use 1.2810/85 as a guide.
AUD/USD
The Aud has been pretty choppy today, in line with the majors, but has
ultimately ended up on higher ground and is looking to make an attempt on
major trendline resistance at 1.0453, ahead of the Fibo level at 1.0490. Right
now though the 200DMA at 1.0410 is acting as a bit of a magnet and it may be
that we have a session trading at around current levels until the Unemployment
figures later this morning AEST, where estimates are for an unchanged rate of
5.3% and +10k. Economists are beginning to become increasingly of the view
that rates will have to be cut in the next few months as the economy slows, and
it is hard to become too bullish on the Aud at current levels. Indeed the World
Bank today warned of a potential slump in global economic growth and urged
developing countries to prepare for a slowdown that may well be more severe
than that of 2008. Australian unemployment is tipped to head towards 6% later
in the year.
Yesterday’s lows at 1.0360, ahead of 1.0300, provide immediate support, but
we will have to wait and see the data for direction.
In Eur/Aud it is worth noting that the Euro has recovered to 1.2335. A break
above 1.2375 would break the recent downtrend line that began at 1.3800. This
would see stop loss buying and could see a move back towards Fibo resistance
at 1.2590.
Gbp/Aud looks much the same. Currently at 1.4810, it needs to break 1.4930 to
see renewed buying that would take it towards 1.5080.
Until the unemployment it looks to be very quiet with the indicators all being
pretty flat, so stand aside and take direction from the data.
