EUR/USD
The Euro somehow continues to hold up well on optimism that Greece is going to conjure up a deal that will eventually allow them to receive the EUR130 bio bailout package and therefore have the ability to pay the March loan repayments and avoid default. The meeting of Greek leaders is happening right now, so it maybe that there is some kind of announcement in Asian trade. Be careful! Elsewhere, almost unnoticed, in a quiet day’s trade, German exports fell 4.3% in December, (against expectations of -1%) and their fastest decline in 3 years, which cannot be healthy for the Euro as Europe looks towards the possibility of recession. It amazes me that the Euro is up here, but here it is!.
Technically there is not a lot of change from yesterday, having traded within a 70 point range over the last 24 hours. The 4 hour indicators are still showing the possibility of further strength ahead, although they are approaching overbought territory. A sustained break above 1.3280 is required, with the next target being around 1.3350, and with interim hurdles at 1.3300 and 1.3335. On the dailies (below), the momentum adds to the view that we still have further upside potential with the major target here being Fibo resistance is not to be seen until 1.3438 (50% of 1.4243/1.2623).
The downside has seen the market hold onto the gains above 1.3220, so this is likely to act as a bit of a base in Asia unless (until?!) it all goes wrong in Greece. Should we go below it though, the previous channel top at 1.3190 and then Fibo support at 1.3115(23.6% of 1.2623/1.3167) will provide support above important 1.3005 Fibo support. The market is ominously comfortable with the Euro up here and has the potential to have a nasty cleanout.
Ahead of us today, of course we have the ECB Interest rate announcement, where no change is expected – but watch for Mr Draghi’s Press Conference. We also have the EU Finance Ministers meeting in Brussels.
All in all it looks like being increasingly quiet until some resolution is reached in Greece, at which point it could get exceedingly hairy so tread carefully!
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EUR/USD: Daily
AUD/USD
The Aud continues to test the topside of the channel in Europe sessions before failing to overcome resistance and then settling back into the range, but above solid support at 1.0750. Last night’s European high was 1.0844 and we slowly squeeze higher, with the top of the channel now being 1.0855. While going against the trend is not a wise move, the dailies are becoming seriously overbought and a correction lower looks inevitable to me, if only to unwind the charts as we prepare for the next leg higher.
As already mentioned 1.0750 is good support and below here 1.0730 is currently the level of the (white) uptrend line on the chart. 1.0665/85 acts as pivotal support ahead of the channel base, currently at around 1.0550.
For Asia I suspect 1.0750/1.0800 will cover it and much depends on the Greek outcome. Equities have had a very quiet session (S+P 1347 +0.1%) in the US, which follows on from similar dead markets in Europe, all awaiting the same thing. It could be the quiet before the storm though, so tread lightly!
On the topside a break above the top of the channel (unlikely – for now) at 1.0855, we should expect the next target to be 1.0890 and then 1.0910, ahead of congestion in the 1.0950/1.10 area.
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AUD/USD: 4 hour
