AUD/USD: 0.9570EUR/USD: 1.3340The Euro had a relatively quiet finish to the week although the price action was choppy with the dollar ending mildly firmer after the US PPI climbed to 0.5% in May, beating expectations of a 0.1% rise after a 0.7% decline in April. Disappointing consumer sentiment numbers somewhat dampened the dollar's advance though after the Rts/ Michigan's index fell to 82.7 in June from 84.5 in May.
Early in the coming week some consolidation looks probable before the main event on Wednesday; this being the Feds IR decision and Bernanke's press conference. The market is hoping that he will provide some clarity on the outlook for tapering the QE programme, in an attempt to calm the nervousness over the potential impact of Fed's unwinding of the stimulus programme.
Little has changed from a technical perspective and early in the week it looks as though 1.33/1.34 will continue to cover it. In the short term the rising trend support, now at 1.3285 - where the major rising trend resistance currently sits - remains intact, and as long as that remains the case we may yet take a look at 1.3400/50 (100 Month MA:1.3435, 200 Week MA: 1.3450), . If this area is broken at anytime, there will be plenty of stops being triggered and we could see a move towards the 13 Feb high at 1.3520, and beyond there would suggest the chance of a run towards the 1 Feb high at 1.3710. I don't think we are ready for this yet although the DXY does suggest that we have further dollar weakness ahead. As with last week I am looking to sell the Euro somewhere above 1.3400, with a tight stop and reverse placed above 1.3480 (50% pivot of 1.4940/1.2042). Note the bearish divergence building in the 4 hour charts.
If we head immediately lower from here, and the 4 hour charts suggest that this may be a possibility, below 1.3285 would find bids at 1.3250 (23.6% of 1.2796/1.3389) and then at 1.3160 (38.2%). Under here there is now very strong support in the 1.3075/95 area where the 55,100 and 200 DMA's are all converging and is also 38.2% of the move from 1.2042/1.3710 (1.3075).
Looking to sell into strength above 1.3400, with a SL placed with everyone else at around 1.3475!
Economic data highlights will include:
M: EU Trade Balance, NY Empire State Mfg Index.
T: EU, German ZEW, US Building Permits, CPI
W: FOMC, Fed IR Decision
T: Eurogroup Meeting, German PPI, EU Markit Flash Mfg PMI, US Jobless Claims, US Markit Flash Mfg PMI, Existing Home Sales, Philadelphia Fed Mfg Survey
F: EU C/Acc
