AUD/USD: 0.9470EUR/USD: 1.3335The dollar is generally a bit weaker today as the market begins to focus on next week's FOMC interest rate decision and the growing uncertainties over when the Fed will begin to scale back its USD85 billion monthly bond-buying program.
Earlier in the day the data highlights had little market effect, after the German CPI for May came in at +0.4%mm v +0.4% (exp) although the EU April Industrial Output was slightly improved at 0.4%mm (-0.2% exp) and did the Euro no harm.
It has been a choppy session again but the Euro has ended up at higher ground and currently sits up against the resistance at 1.3338 (61.8% of 1.3710/1.2742) having had a brief spike to 1.3358. If we are to head higher, the points to watch are at 1.3400, 1.3450 (major downtrend resistance) and 1.3480 (76.4% of 1.3710/1.2742). As with yesterday, the dailies do suggest that this will continue to be the direction for now, although the 4 hourlies are hinting at some bearish divergence and further gains will be hard won by, with the price action looking likely to remain choppy. I am still of the view that until we break the trend resistance, we need to be using this rally to look for levels to sell into, in preparation for another leg lower. Above 1.3450 would probably prove me wrong and therefore SL should be left just above 1.3500.
On the downside, which still looks a bit limited in the short term, the initial support is at today's low at 1.3265 which is backed up by the rising trend support at 1.3225. It does not look as though we are going too much below here today, but if wrong look for bids at 1.3175 and then at 1.3115 (382% of 1.2796/ 1.3315).
We have the ECB monthly report later on, after which today's focus will be on the US Retail Sales and the Jobless Claims and until then I suspect that we are in for another day of choppy trade with a mild upside bias. The market will also continue to watch the Yen crosses and the Nikkei, given the poor performance by the US equities markets today., so keep an eye on Eur/Jpy.
Economic data highlights will include:
ECB Monthly Report, US Jobless Claims, Retail Sales, Business Inventories
