AUD/USD: 0.9255EUR/USD: 1.3280The dollar finished on a relatively steady note on Friday, having traded a tight 40 point range against the Euro, with one eye on a very heavy schedule of data in the coming week. Improved Consumer Sentiment data continued the recent theme of mixed economic readings which is clouding expectations as to when the Fed might wind down its stimulus program. No one expects any imminent QE tapering to be announced this week after expectations were watered down by the relatively dovish statement after the WSJ article last Thursday.
We may get some clarification after Wednesdays FOMC meeting, which will be the main focus of the week, and the market will be paying very close attention to the wording of Bernanke's Press Conference for any hint into when winding back of the stimulus programme is likely to commence.
Aside from the FOMC there will also be interest rate decisions from the ECB and BOE, and then on Friday, the US Unemployment/NFP data. On top of all this, EU unemployment, the US GDP, and a host of other data are due, so it is going to be a busy few days.
Technically, nothing has changed since Friday.
The way still looks open for further gains to 1.3300 and possibly higher, towards the downtrend resistance now at around 1.3350, which, in turn, comes ahead of the 200 WMA at 1.3405 and the 19th June high at 1.3415. While the daily indicators still show positive momentum, the 4 hour charts do not appear to be quite so positive, which suggests that we could be in for a choppy session today, possibly with a mild upside bias. Above 1.3415 would be a different matter and would suggest that there is plenty of upside potential. We will deal with that nearer the time.
On the downside, 1.3250 remains the initial support, having traded down to 1.3252 on Friday, a break of which would head back to rising trend support, currently at 1.3225. Below this would see a decline, back below 1.3200 to 1.3165 - formerly 61.8% resistance of the move from 1.3415/1.2753 - and also 23.6% of 1.2752/1.3296.
Overall, a fairly neutral stance is required to start the week, but with the US$ Index (DXY) still pointing to further dollar weakness, I suspect that at some stage are going to see the Euro take a look at the 1.3300/50 range and possibly a bit higher towards the 1.3415 resistance. Stay flexible.
Economic data highlights will include:
M: US Pending Home sales
T: German CPI, Consumer Confidence, EU Business Climate, Business Confidence, Case Schiller Home Price Index, US Consumer Confidence
W: German, EU Unemployment, EU CPI, US ADP Unemployment, Personal Consumption, GDP, Chicago PMI, FOMC I/R Decision/Press Conference
T: EU Mfg PMIs, ECB IR Decision/ Press conference, Jobless Claims, US Mfg PMI, Construction PMI, ISM Mfg PMI
F: EU PPI, US CPI, NFP/Unemployment, Personal Spending, Factory Orders
