EUR/USD
There is not a great deal to add today as the market awaits the LTRO later on in the session, where a similar outcome to the previous offering, in December, is expected. On that occasion 523 Banks took up Eur 489 bio at 1% for 3 years. The Euro has remained pretty much rangebound today despite German CPI rising slightly more than expected at 2.3% y/y and soft US Durable Goods orders and House Price Data. On the other side of the coin, US Consumer Confidence was stronger than expected.
Otherwise, the only point of interest was when the Euro had a brief spike to 1.3388 on the announcement that Ireland will hold a referendum on the European Fiscal rules that it is due to abide by and whether it will accept them. The dip didn’t last long and it was soon back within the day’s range.
Technically, the Euro continues to trade above the neckline of the head/shoulder formation that we have been talking about for the last week. For this to play out, 1.3365 needs to hold if we are to see further advances and the way ahead needs to overcome 1.3480, allowing a move on towards the top of the channel at 1.3620. If seen, this should be tough to break, but the head shoulder objective is not until 1.3990.
If the 1.3350/1.3365 support level does give way, we may see a sharp move to the downside and a return to the previous resistance turned support at 1.3245 would look to be the first obvious target.
The indicators are mixed at this point. In the short term they have become overbought and are currently in the process of unwinding. The dailies though, are suggesting further upside ahead. Until we see what the LTRO has in store, the Euro looks as though it will gyrate around current levels.
Sit on your hands and take your guide from the outcome of the offering. This is likely to dominate for the next few sessions
Elsewhere German Unemployment, EU CPI, US GDP and Personal Expenditure will all be added into the mix.
Although quiet right now, it will become pretty volatile later in the session. Tread carefully!.
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EUR/USD: 4 hour
AUD/USD
Again, there is very little to add from yesterday. The Aud, having looked bid in early Europe reached a 1.0786 high and has spent the rest of the session drifting a little lower. It looks, pretty much as though we may see a replay of yesterday prior to the LTRO in Europe, which will affect Risk Sentiment across all markets.
So, we remain within the channel of recent weeks, but still think we may be building momentum for a break of the topside although we may be running out of steam. Keep an eye on the S+P. It attempted a new high in the latest rally during the session, but has drifted off from 1373, to be largely unchanged on the day. As with the Aud, it looks like it wants to go higher, but may be running out of steam, in which case we will revert to 1300/40, which would see the Aud back towards 1.0600.
If we do go higher, 1.0815 and 1.0845 looks to provide the first targets for the Aud, ahead of 1.0900. Today it looks as though 1.0720 should act as support, while the channel top at 1.0793 may come under pressure, with stops undoubtedly placed above here.
We get various bits of data today, headed by Retail Sales, Private Sector Credit and Capital Expenditure. Until then expect it to be quiet.
Overall 1.06/1.08 remains intact. Short term, 1.07/1.08. Today, 1.0720/90.
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AUD/USD: 4 hour