EUR/USD
There is not an awful lot to say on the Euro today. Having opened lower in Asia on Monday, it stayed heavy through Europe as investors responded to a lack of progress on the Greek debt swap negotiations, which currently looks likely to see a failure to secure the next tranche of the bailout package. Both Sarkozy and Merkel have said today that there are no alternatives to further Greek reforms and the Greek PM has ordered his Finance Minister to prepare a report on the consequences of an exit from the EU. Despite all this, the Euro has rebounded from its days low at 1.3027 and actually sits not too far from the days high which goes to show how short the market must be. If any genuine progress is made, the Euro is going to take off, although this remains a pretty doubtful outcome.
Technically then, there is little change from yesterday. The recent channel, as can be seen on the chart, remains intact. The parameters here are currently at 1.3005/1.3195. The lower of these two levels also acts as a Fibo level (23.6% of 1.4245/1.2623), while the topside 38.2% Fibo resistance is at 1.3240. The daily oscillators still point higher but appear to be losing some momentum, while the 4 hours are pretty flat but may have some mild upside bias.
Purely from a technical point of view, I would prefer to buy dips -, as per yesterday. This could go horribly wrong of course if Greece does fall over, so stops would need to be pretty tight. The first sign of a break below the 1.3000 level would see me out of any long position. For those who bought the dip in today's session, I would be raising stops now to at least break even. The topside at 1.3240 would be the first target and beyond here 1.3335/50 should attract.
Today we have German Industrial Production and later Bernanke will be giving a Press Conference to testify on the Feds outlook for the economy, which my provide added volatility. I would be keeping it all pretty tight for now, keeping a very close eye on Greece as it appears we are reaching the end game here, one way or another, and the Euro is beginning to look due for a breakout from the current consolidation.
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Meta Trader - AxiTrader
EUR/USD: 4 hour
AUD/USD
The Aud is mildly lower than yesterdays levels, having recovered from the weaker Retail Sales numbers yesterday. With an RBA rate cut more or less inevitable later today, the Aud is incredibly resilient, but as I have said before, with Australia being one of a diminishing number of AAA rated sovereign debt nations, any dips are keenly sought after by international investors who are constantly looking to pick up cheap Aud. If the RBA do not cut, the Aud is likely to take off, which wont help the Australian export community at all. Even if they do cut, I am not sure how much the Aud will retreat, as it is about 80% written into the market price.
Technically the Aud remains nicely within the channel, the parameters of which are currently 1.0530/1.0820. While the daily indicators are still pointing higher, they are in overbought territory and look liable to roll over. The 1 and 4 hour oscillators are mixed, but out of choice, on the day, I would prefer to sell into strength – if we see it – and then looking for a break of 1.0685 area, for a move back towards 1.0585. On the topside, SL should be place above 1.0820.
All will be on hold until the RBA, so continue to sit on hands till 2.30pm AEST.
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Meta Trader – AxiTrader
AUD/USD: 4 hour
