AUD/USD: 0.9200EUR/USD: 1.3000NB Bernanke has now spoken and continued the theme of the FOMC Minutes, sending the dollar back to the days lows, with the Euro trading higher to currently sit just below 1.3000. Good resistance lies at 1.3000, but the 4 hour charts suggest that we could give it a good run for its money.
The Euro had already recovered from its session lows of 1.2764 to be trading at around 1.2850 by the time that the FOMC minutes were released. With no sign of any imminent tapering from the Fed, which has apparently surprised the market, a wave of dollar selling, helped along by stops being triggered, saw the Euro spike up to 1.2948 before a partial reversal and the market now awaits to see what Bernanke has to say, who will be speaking shortly, which should ensure a fairly hectic session. We need to remember that the minutes are from the previous meeting that took place 3 weeks ago, and since then the improved NFP may have put a slightly different light on things as far as whatever Bernanke has to say today.
Technically, in the short term, the Euro has found itself on slightly more solid ground after its recent sell-off and it is doing its best to break out above the top of the channel, currently at 1.2920. Although it is below here at the time of writing, the 4 hour charts look as though they are winding up for another near term test of the topside and back above 1.2900 and more importantly today's 1.2948 highs would see a run towards 1.3000 (1.3004: 38.2% of 1.3415/1.2764). There are plenty of sellers up here, so this would not be easy to attain, unless Bernanke is extremely dovish, but above 1.3000 would see a run towards 1.3025 (100 DMA), 1.3075 (200 DMA and) 1.3085 (50%).
If this spike lower in the dollar is reversed on what Bernanke has to say, then a return to the downside for the Euro would see bids now at minor support at around 1.2850 (minor), 1.2800 and then at previous session low at 1.2753 low. Below that lies the 4 April low at 1.2744 below which there is little to hold it ahead of 1.2680 (61.8% of 1.2042/1.3710), which should be strong, and there would be further bids at 1.2660 (13 Nov low). If/when we get under here, the real acceleration could begin as we head to 1.2586 (Aug 2010 low) and then 1.2435 (76.4% of 1.2042/1.3710).
Wait to see what Bernanke has to say and take the lead from his direction. While the 4 hour charts look positive, the dailies still point lower, although they may be flattening out and so once all the noise has died down it may be that we are entering a new trading range within the broad 1.2750/1.3000 parameters. I still think the US$ will be the eventual winner in all this, but it could take a while to come to fruition and in the short term a run towards 1.3000 looks possible.
There is not too much other data out today so it will largely be a session of making sense of Bernanke's words. Expect a choppy ride.
Economic data highlights will include:
ECB Monthly Report, US Jobless Claims
