AUD/USD: 0.7465EUR/USD: 1.1015The US$ has traded a bit lower on Monday , with the Aud in particular enjoying a strong session after good rises in both oil and iron ore. US equities have traded sideways and despite finishing on a firm note they have largely failed to follow the lead from oil today which could be hinting of a near term top. Tuesday will focus on the China Trade Balance, while later on it will be the Q4 EU GDP that traders will look to for any hint of what to expect from Thursday’s ECB Meeting. Ahead of that Australia gets the NAB Business Conditions/Confidence, but that aside there is little else to move the markets, with nothing major to come from the US in what could be a choppy session while waiting on the ECB.
AUDUSD performed strongly by jumping on the coat tails of oil, gold and iron ore in heading higher. It is finishing the Monday session at just below levels last seen 8 months ago, where the Fibo resistance at 0.7493 (50% pivot of 0.8162/0.6826) has so far capped it.
The initial focus today will be on the NAB Business Conditions/Confidence and then on the China Trade Balance, where expectations are for a $50.75 bio surplus (vs $63.29 bio last month) while exports are expected to fall by -15% and imports are expected to fall by -10.2%.Watch out for the speech today from the RBA’s Lowe, who may use the occasion to try and talk the Aud lower.
From a chart perspective, a break of the Fibo level at 0.7495, would test 0.7500, a break of which would target 0.7532 (2 April 2015 low) and then the May/June 2015 double bottom lows at 0.7597. Beyond there lies the next Fibo resistance at 0.7648 (61.8% of 0.8162/0.6826) but is currently a long way off at this stage. In the longer term, the next major Fibo level - as per the weekly chart below, - is at 0.7845: 38.2% of 0.9504/0.6826)
A failure here would head back to 0.7455 (previous Fibo resistance: 23.6% of 0.9504/0.6826) and 0.7420 (both minor), below which could then had back towards 0.7400. While the charts do currently suggest that under here is unlikely, note that the 4 hour charts are increasingly overbought and that at some stage soon a dip is inevitable – after the China Trade Balance perhaps? – Right now though 0.7400/0.7395 (23.6% of 0.7108/0.7470) looks unlikely to be tested. If wrong, look for further weakness towards 0.7375 (minor) and then to 0.0.7340 (38.2%), to 0.7325 (23.6% of 0.6826/0.7470) and to 0.7300.
Economic data highlights will include:
NAB Business Conditions/Confidence, China Trade Balance, RBA's Lowe speech.
Jim LanglandsFX Charts
