AUD/USD: 0.8090
EUR/USD: 1.1600
The Euro has had a choppy session ahead of today’s ECB meeting, with various leaks causing a squeeze higher and then a reverse, to finish the session not too far from where it started. The Aud and the Kiwi both saw some decent damage done, on the back of a surprise easing from the BOC, sending $Cad sharply lower and taking both the Aud and Kiwi along with it. The ECB will be the only game in town today, so until then it is likely to be quiet. After that bedlam will reign, Go with the flow, but look to sell any decent short squeeze in the Euro
Having spent another session gyrating either side of 0.8200, reaching a session high of 0.8233, the Aud dived in the US session in sympathy with $Cad after the surprise BoC rate cut. Traders are now eyeing the chance that the RBA will be under increased pressure to cut on Feb 3, a move which is already being called for by a couple of the big local banks.
Having been to a low of 0.8077, the Aud is currently hovering just below 0.8100 but has broken several important support levels and does look as though it could ratchet lower. It may be a sideways session given that all the attention is going to lie elsewhere, but the shorter term indicators do point lower, and if 0.8075 were to give way, then we are looking for a run towards the previous lows at 0.8067 (14 Jan) and then to the recent trend low of 0.8032 (7 Jan). Below here, albeit possibly not today, the downside momentum would look to carry the Aud below 0.8000 and on towards the important Fibo level at 0.7944 (61.8% of 0.6006/1.1080), below which we then are headed to the July 2009 low at 0.7700 and beyond, possibly to the RBA’s stated target at 0.7500, albeit not for a while.
The topside will now find sellers at 0.8100, and above here at 0.8130, 8.8150 and at the 200 HMA now at 0.8175. Beyond here, 0.8200 currently looks out of reach, unless we see a decent sell-off in the US$, but were that to be the case, then further sellers would arrive at 0.8230 and at Friday’s high of 0.8255, ahead of the recent minor highs at 0.8273 and 0.8298, with the next Fibo resistance not seen until 0.8321 (38.2% of 0.8795/0.8033). Beyond this, the breakout level from below the base of the long term channel is seen at 0.8350 and should be strong resistance – and a decent sell opportunity – if seen.
For now, with the 4 hourlies looking negative and selling any rally today toward s0.8120/30 looks to be the plan as the Aud heads for a more sustained test of 0.8000. Caution will be warranted around the ECB announcement, but any decent short squeeze would only offer an improved sell opportunity in my opinion.
Economic data highlights will include:
Consumer Inflation Expectation, New Home Sales, China CB Leading Index
Jim Langlands
FX Charts
www.fxchartsdaily.com
