EUR/USD
The Euro enjoyed another positive session following successful bond auctions in
Spain and France and following better than expected US data where Initial
Jobless Claims fell by a greater than expected 50K to 352K. This has all added up
to improved appetite for risk, as evidenced by the equity markets, which have
had another good day. The CAC40 in particular, was up 1.86%, the DAX 0.97%
and the S&P is currently up 0.5%.
Technically the Euro has now broken above the downchannel, taking out the
resistance level at 1.2930 that we mentioned yesterday, and seeing a high so far
of 1.2944. It looks as though the Euro wants to head on to the next Fibo level of
resistance at 1.2965 and possibly to 1.3005 (23.6% of 1.4245/1.2623). Caution
should be used at these levels though. As can be seen that hourlies are quite
overbought and the RSIs are showing a degree of divergence. We are also at a
pivot point right here, with this being the low of 14 December. I would therefore be keeping my stops reasonably tight on long positions as corrections back towards 1.2880, possibly 1.2850 are possible from here.
The dailies though continue, to suggest that we have further upside momentum
and the 1.300 handle is likely to be tested sooner or later. Should we do so, the
next target would be 1.3045, but we have some work to do before we get
there.
Asia looks unlikely to take it much higher than this so use 1.2965/1.2900 as a
guide to the range and wait for Europe. The hourlies need to unwind a little
before we can make further progress.
We get German PPI and little else in data today, so EU disasters aside, it may be
a reasonably quiet end to the week.
AUD/USD
The Aud has done very little really since the unemployment numbers yesterday
trading in a range of 1.0370/1.0435, currently sitting pretty much in the middle
of it. 1.0450 and 1.0490 remain the immediate resistance levels to watch, while
the downside remains protected at 1.0370 and then 1.0300 ahead of 1.0270.
The indicators are looking fairly flat and suggest further sideways trade, with
direction to be dictated by risk sentiment, so keep an eye on the S&P as the
correlation remains strong. As long as equities retain a bid tone, the Aud is not
going to go too much lower. The S&P though looks to be heading to important
resistance and a correction is possible, which would take the Aud lower with it.
More interesting than the Aud, is Eur/Aud, which has done as we thought,
yesterday, taking out the 1.2375 trendline resistance, moving along to 1.2440 at
present. Although the hourly indicators are overbought, suggesting a session of
sideways trade, the longer term indicators look to have more upside potential
towards 1.2600 Fibo resistance.
Likewise Gbp/Aud is breaking resistance at current levels. It is lagging Eur/Aud
somewhat due to the buying in Eur/Gbp, but nevertheless, the outcome looks
to be the same and progress towards 1.4935 would not surprise. Back under
1.4760 would delay any immediate upside potential for further consolidation
