EUR/USD
Having virtually reached the 1.2970 support level (low 1.2973), the Euro has bounced strongly following word that the EU finance ministers are “on track” to approve the bailout package for Greece on Monday. A Greek bond swap deal by the ECB, with a longer maturity to give Greece a bit of breathing space is being cited as one reason for the rally. It is all becoming far too complicated for a simpleton like me to comprehend, but the result has had the desired effect and sent the Euro scurrying to higher ground! Whether progress is actually being made, or whether the inevitable default is merely being delayed is a different matter. Elsewhere, almost unnoticed, US Jobless Claims dropped to a 4 Year low.
The rally has been strong, as we anticipated yesterday, given the heavily oversold nature of the charts. We are actually near the top of the channel (chart), and may well continue higher in the short term as the hourly indicators continue to point north. This is being backed up by the 4 hour charts and a continuation to 1.3155, support-turned-resistance, looks to be not very far off. If this were to be seen, the squeeze could well continue on to 1.3190 or 1.3215, both previous rally highs. A more likely target is at 1.3240, which is 38.2% of 1.4245/1.2623 and also currently acts as trendline resistance. This is a little way off right now, and unlikely t be seen in Asia.
To the downside, short term support is at 1.31 and then at 1.3060. However 1.2970 continues to act as the more important base ahead of the base of the channel, currently at 1.2955. This is backed up by the 25 Jan low at 1.2927 and then the Fibo support at 1.2890.
It looks like another day of hanging on for whatever statement appears out of Europe. We also have the German PPI, EU PMI (Services) and US CPI as we wind up for the weekend. I think Asia is likely to have its usual non committal affair but a bit of a short squeeze as we go into the w/e would not surprise.
G20 this weekend. Likely to be the usual non event.
Meta Trader – AxiTrader
EUR/USD: 4 hour
AUD/USD
The Aud remains very choppy and unable to make up its mind as it gyrates between 1.0630 and 1.0800. Right now, at 1.0765 it looks pretty bid, and indeed the 4 hour charts are pointing a little higher. A failure here though would put in place a triple top and the likelihood of a return to the lower end of the range. Should we breakthrough on the topside though, expect to see a test of 1.0825, ahead of the 1.0844 (8 Feb) top of this rally.
The downside has plenty of support all the way down to 1.0630.
For today look at 1.0730/1.0800 to cover it. I don’t see anything too directional, although being a Friday it may be that we see a little lightening of risk positions.
With the way the indicators are pointing though, any dips should meet with good demand.
Meta Trader – AxiTrader
AUD/USD: 4 hour
