AUD/USD: 0.8150EUR/USD: 1.2225The dollar ended Friday on a firm note, which could well continue in short week ahead, with a fair bit of US data due ahead of Christmas but with little to come from the EZ, aside from the UK Q3 GDP. A generally strong performance from the US will have all the other majors under pressure heading into the holiday period, with the Euro in particular about to break some critical support levels. Watch out for some action in the Yen on Christmas Day, with a lot of data due from Tokyo, when liquidity will be pretty much non-existent.
This will be the last outlook before the New Year, unless there are any major moves, in which case I will provide the major support/resistance levels.
The Aud had a choppy session on Friday, capped by the 100 HMA, currently at 0.8180, - which in turn lies ahead of the descending trend resistance at 0.8200, - and supported above the trend lows of 0.8106.
More of the same could be in store this week in the absence of any local market moving data with any direction likely to come via the US$ following the release of the week's US data. Liquidity will be increasingly thin though, so look for the possibility of some exaggerated moves.
While I doubt that we are headed above 0.8200 this week, a break of the trend resistance would trigger some stops and take the Aud up towards the 200 HMA at 0.8230 and possibly beyond to 0.8270 (23.6% of 0.8795/0.8106). If seen I think it would be a reasonable sell opportunity. Note that the 4 hour charts are showing some minor bullish divergence, so a mild bounce is possible early in the week.
On the downside, a break of 0.8100 would open up the May 2010 lows at 0.8066, below which there is not too much to hold it above 0.8000. Under that would surely bring a Christmas smile to the faces at the RBA who would begin to expect to get their wish for the Aud to head towards 0.7500 in early 2015!
Don't forget, the long term view is for a run towards 0.6000 (!), as per the head/shoulder objective in the monthly chart below.
Economic data highlights will include:
T: China Leading Economic Index
W: CB Leading Indicator
T: Christmas Day
F: Boxing Day
Jim LanglandsFX Charts www.fxchartsdaily.com
