AUD/USD: 0.9200EUR/USD: 1.3220The U.S. dollar has built on yesterday's gains after the FOMC indicated that, while it remains on hold for now, it could begin withdrawing its stimulus programme later this year, as the U.S. economy improves.
Better than expected data home sales and factory orders in the U.S. further assisted the dollar and saw bond yields soar once again, with the 10 year jumping to 2.42%
The Euro fell quite sharply to as low as 1.3160 before a mid bounce back to 1.32 into the NY close.
The recovery from the lows looks somewhat temporary, given that the 4 hour charts still point sharply lower, and the dailies suggest that it will be a while until we see 1.3400 again. The hourly charts are in the process of unwinding their short term oversold condition and we may pause for a breather, but if/when 1.3180 (31.8% of 1.2796/1.3415) is broken on the downside, then we can expect further declines towards the session low of 1.3160 and then to 1.3105 (50%). 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).
If the dollar loses some of its strength today and the Euro squeezes higher, which I don't really expect to any great degree, then look for sellers of the Euro at 1.3255 (38.2% of 38.2% of 1.3415/1.3160), 1.3285 (50%) and 1.3315 (61.8%).
There is little data out, so it may be a quiet end to the week but it looks as though the dollar has legs for further gains next week and the DXY (81.90) looks as though it is about to head back towards 82.50.
Economic data highlights will include:
EU C/Acc
