AUD/USD: 0.7870EUR/USD: 1.1095The FOMC Minutes saw the dollar weaken, albeit briefly, but it has since recovered its ground against all the major counterparts as the focus now turns towards speeches due from the Fed board members Fischer (Thursday) and Janet Yellen (Friday). Before then, today will be very busy, starting with the flash global PMI’s, the EU Current Account, ECB Monetary Policy Meeting Accounts and then followed, from the US, by the Kansas, Philadelphia and Chicago Fed Manufacturing Activity, Existing Home Sales, Jobless Claims. Mario Draghi will also be speaking late in the day (at the same time as the Fed’s Fischer), so it could get quite volatile.
The Aud was heavy, sitting at 0.7880 ahead of the FOMC Minutes, the release of which caused some volatility with a quick spike down to 0.7860 followed by an equally quick move back to 0.7915, some choppy two-way trade, and then a slow drift back towards the bottom end of the range, currently trading at 0.7870.
Today’s action will come via the Consumer Inflation Expectation and the HSBC China Flash Manufacturing PMI, with a weak reading looking likely to retest the session lows, below which, the 100 DMA at 0.7840 will provide the initial support. Below here would head towards 0.7800 and then to the spike low seen after the RBA rate cut, at 0.7785, where the 55 DMA currently also sits. Further support will be seen at 0.7770 (61.8% of 0.7532/0.8162), below which, unlikely today I suspect, would head towards 0.7710 (minor) and then to 0.7682 (76.4%).
The topside will find sellers at 0.7900 and at the descending trend resistance at 0.7930. A break of this would head towards 0.7950 and then to 0.7985, where the 100/200 HMAs are crossing, but looks unlikely today.
The hourlies are mildly positive and show a degree of bullish divergence, so while I prefer to be structurally short, there might be better levels to sell into today. While running a core short position, leave room to resell above 0.7900 with a SL placed above 0.7950
Economic data highlights will include:
Consumer Inflation Expectation, HSBC China Flash Manufacturing PMI.
Jim LanglandsFX Charts www.fxchartsdaily.com
