AUD/USD: 0.7020EUR/USD: 1.1120After the ECB had left rates unchanged, a dovish Mario Draghi put the Euro under pressure on all fronts as the longer term downtrend again built momentum. In his rather bleak outlook, he suggested that the ECB's asset purchase programme could be adjusted in size, composition and duration if necessary, sending the Euro lower. Looking ahead, a strong reading from today's US Jobs data will underpin the dollar and could well see the Euro - and all the other counterparts - accelerate lower. Until then it could be a rather quiet session with little economic data to provide any excitement, with China, which has recently been the driver of much of the price action in Asia in recent weeks being on holiday. A good day for the admin duties before it all kicks off later in the session. US Labor Day holiday on Monday.
The soft Retail Sales data yesterday reduced any chance of a prolonged rally in the Aud and it currently sits precariously above 0.7000, where it could well remain until the US jobs data.
The technical outlook remains unchanged from yesterday; although it is worth noting that the 4 hour charts appear to increasingly suggest that there is going to be a nasty short squeeze at some stage soon. Note the bullish divergence in the charts.
A sustained break 0.7000 may retest the weeks 0.6980 lows, although ahead of the NFP there seems to be little chance of it heading under here. If wrong, we may see stronger test of the downside, where the April 2009 low at 0.6855 is the next realistic support although this is some way off at this stage.
A rally will again run into offers at 0.0.7060 /0.7070 and then at 0.7100, beyond which, could eventually see the Aud back at the 15 year trend line that was broken at the end of the month at 0.7130. Above here looks unlikely but it is possible that we could yet see a squeeze back to the top of the descending wedge formation, currently at around 0.7200
Jim LanglandsFX Charts
