AUD/USD: 0.7402EUR/USD: 1.1000It did not take long – about 2 minutes – for sellers of the Euro to arrive following the announcement of a deal to provide Greece with another bailout. Whether the Greek Government can actually proceed with the austere requirements that the EU has imposed remains to be seen, but the market seems doubtful, leaving the Euro under pressure throughout the Europe/US sessions. Equity markets seem to have taken a more positive outlook and have rallied strongly. The rescue deal is contingent on Greece meeting a tight timetable to enact reforms of value added tax, pensions and budget cuts, and whether this can be enacted is going to be the only story in town for the rest of the week. Elsewhere though, today sees the German HICP, CPI, German/EU ZEW Economic Sentiment Survey, UK CPI and US Retail Sales. Australia leads off with the NAB Business Conditions/Confidence (Jun), while China delivers the Foreign Direct Investment data for June.
The Aud was pretty much sidelined through Asia/Europe in holding above 0.7400 although this level was taken out in NY trade, with a quick dip to 0.7383, before a late return to sit back at the 0.7400 pivot.
The charts are a little mixed and the coming session could be another one of consolidation, at close to current levels, with the NAB Business Conditions/Confidence and the China Foreign Direct Investment likely to be the main drivers.
The dailies still point lower though and if today’s low and then last week’s 0.7372 base are taken out, then there is a bit of a hole of support until the very strong support at around 0.7200, where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082). The conditions to see such a move are not yet in place and I think that 0.7370 will probably hold for the coming session. If, (when) Greece does fall over, then 0.7200 could appear on the horizon very quickly. Before 0.7200, there is some Fibo extension support at 0.7288 (100% of 0.8162/0.7598) from 0.7848(Blue Fibo structure on chart.)
A reversal higher will see sellers at 0.7435 (100 HMA), the session high at 0.7468 and then at 0.7490 (200 HMA). Above here looks unlikely, but a break of 0.7500, would see a run towards 0.7532 (6 July high), 0.7555 (23.5% of 0.7848/0.7372) and then on towards 0.7600.
Selling rallies still seems to be the theme, with a SL sitting tight above 0.7500.
Economic data highlights will include:
NAB Business Conditions/Confidence (Jun), China Foreign Direct Investment.
Jim LanglandsFX Charts www.fxchartsdaily.com
