AUD/USD: 0.9650EUR/USD: 1.2930The Euro finished the week in reasonably steady fashion ahead of the long weekend in the US, after the German GDP showed no real sign of life in the economy, growing, as expected by 0.1% qq, although the IFO did pick up markedly to 105.7 in May, up from 104.4 and beat expectation of 104.4, indicating that there may be signs of life and helped to underpin the Euro through the Friday session.
Later in the session the Dollar received some support of its own after the better than expected Durable Goods orders rose by 3.3% in April against expectation of 1.7%.
Thus the pair went nowhere really, although it did get up to the 1.2990 resistance, allowing us to get short, as discussed on Friday, and which was able to book a few pips profit before squaring up prior to the weekend, and I don't think we should expect too much different, at least early in the coming week, given the Monday US holiday and the pretty light data schedule in the week ahead.
Technically, there is not too much change, and as I said this time last week, while I suspect that we are carving out the right hand shoulder of a large head/shoulder formation, I think it is too early yet to expect a move lower to take out the neckline at 1.2770.
We have been up to the 1.2990/00 resistance a couple of times last week, but have yet to breach 1.3000, while on the downside 1.2800/20 continues to provide good support. I think we are in for more of the same, with the immediate risk looking as though we could take out the 55 DMA (1.2983) and then the 200 DMA (1.3005) for a move towards downtrend resistance at 1.3075. Above this would see acceleration towards 1.3175 and potentially 1.3242 (1 May high) although these levels look pretty safe, at least early in the week.
On the downside, back below 1.2900 would see further choppy trade above 1.2820. A break would tend towards 1.2800 (17 May low@ 1.2796). Under here 1.2740/70 will continue to see plenty of buyers and I don’t think we are ready for this yet. If/when we do get there, look for further bids at the 50% projection of the decline from 1.3710/1.2744 from 1.3242 at 1.2758 and then the 1.2744 4th April low. Below this there are minor supports at 1.2685 and at 1.2660 but not too much to hold it ahead of the 61.8% projection at 1.2645.
For Monday, look for more trade near 1.2900 with, I suspect a good chance to take out eventually 1.3000 at some stage to try for a run at 1.31/1.32, (albeit probably not today given the London/NY holidays), where good sellers should be seen, as we carve out the time required in order to build the right hand shoulder for the bigger move to the downside and eventual run towards the measured target near 1.1700.
Economic data highlights will include:
M: U Memorial Day Holiday.
T: US Consumer Confidence, Case Schiller Home Price Index, Richmond, Dallas Fed Mfg Index
W: German Unemployment, CPI
T: EU Business Climate, Economic Sentiment, US Jobless Claims, Personal Consumption, US GDP, Pending Home sales,
F: EU CPI, Chicago PMI, Rts/Michigan Consumer Sentiment, US Personal Income/Spending
