AUD/USD: 0.7705EUR/USD: 1.0850Equity markets staged a recovery following Friday's sharp selloff while the currencies were generally rangebound, although Cable had a solid session, underpinned by sales in the cross as the ECB began its QE programme. Another directionless session is possible today given that there is little data to come from the EU or the US (Wholesale Inventories), although Asia might have a busy day, with the China CPI and PPI both due. Australia gets the Consumer Confidence numbers and the NZ House Price Index is also coming up shortly.
The Aud chopped around today either side of 0.7700 and currently sits not too far away after recovering from a season low of 0.7683 to reach a high of 0.7740. The upcoming session will be a busy one with the NAB Business Conditions/Confidence, and the China CPI, PPI all due.
As with yesterday, , I suspect that 0.7740 will continue to provide quite a strong cap, although if the Aud does head above 0.7740/50, then we are most likely heading back into last week’s choppy consolidation area which has recently been using the 100 Month MA at 0.7760 as a pivot. Back above 0.7800, which I am doubtful that we will see today unless the data surprises strongly to the upside, further resistance would be seen again at 0.7840 and 0.7860.
On the downside, a break of 0.7700 would head towards the channel support at 0.7685 and then on to the 12 Feb low of 0.7643, and possibly to the trend low at 0.7625. Eventually I suspect that we will reach the RBA’s stated target of 0.7500, and from a technical point of view we could head a lot lower, although that would be a long term move.
Wait for the data, but overall looking to sell into strength again appears to be the plan.
Economic data highlights will include:
NAB Business Conditions/Confidence, China CPI, PPI.
Jim LanglandsFX Charts www.fxchartsdaily.com
