AUD/USD: 0.7000EUR/USD: 1.1185The dollar is mixed and under a little pressure against the firmer Euro after Mario Draghi’s less dovish than expected outlook, but generally remains strong elsewhere, with Sterling and the commodity bloc under some pressure. Stocks and oil also remain under pressure following the generally weak global manufacturing data. It will be another busy one today, with plenty of data due but with the focus likely to be on a speech from Janet Yellen. Elsewhere, the main interest will come from the German IFO, Targeted LTRO, US Durable Goods Orders, Chicago and Kansas Fed Activity, Jobless Claims and New Home Sales. Japan back from holiday will trigger additional Yen activity.
The Aud squeezed a bit higher in early Europe, following the post-China PMI losses, to sit at 0.7050 as NY walked in, but after taking it up to 0.7665, there has since been a change of heart and the Aud was sold sharply lower (helped by heavy flows in EurAud and AudJpy), to a session low of 0.6988, where the Fibo support (76.4% of 0.6900/0.7279) has so far prevented further losses.
The hourly charts are now rather oversold, although the 4 hour momentum indicators still point lower, so a break of today’s low would open the way towards 0.6945 (10 Sept low) and then to 0.6900. As we said before, once back below 0.6900, there is little support until the April 2009 low at 0.6855, below which would then suggest a run towards 0.6773 (June 2004 low). A break of this would then open a black hole, in terms of support, until we reach the major Fibo support at around 0.6250 (76.4% of 0.4773/1.1082), which ties in with the lows seen in Feb 2009.
If the oversold condition of the hourlies does manage to prop the Aud up, then back up above 0.7000 could see a return to 0.7015 and 0.7035 (both minor), ahead of Fibo resistance at 0.7055 (23.6% of 0.7279/0.6988) and then, above the session high of 0.7089, seen before the release of yesterday's China data, to the next Fibo level at 0.7100 (38.2%).
Selling rallies still seems the way to go, although if Yellen is overly dovish, the Aud may pick up some positive momentum as the yield seekers enter the market.
Jim LanglandsFX Charts
