AUD/USD: 0.9120EUR/USD: 1.3335The Bundesbank released its monthly report today, indicating that it sees the German economy returning to steadier ground in the months to come and showing steady growth in H2. It added that "forward guidance" on interest rates from the ECB was not an "unconditional commitment", and the Euro spiked higher when the Buba suggested that ECB monetary policy will be dependent on the inflation outlook, with a rate hike being possible should inflation pressures emerge. Given that this all seems a very long way off, the reaction seemed to have been a bit over the top, but nevertheless the Euro spiked up to 1.3374, since when it has spent the session drifting back to where it started in an otherwise uneventful session.
Today could be another choppy but pretty directionless one, with the highlight being the German PPI, in an otherwise data free session, as we head towards tomorrows FOMC minutes and then Jackson Hole on Thursday/Friday.
So once again, despite today's spike, the near term resistances at 1.3380 and 1.3400 remain intact. As before, if 1.3380 can be overcome, then look for further gains into the expected heavy offers between 1.3400/30. The points to watch are at 1.3400 (200 WMA), above which would see a run into resistance at 1.3415 (19 June high) and then at 1.3435(100 Month MA). Above here would trigger plenty of stops towards 1.3477 (76.4% of 1.3710/1.2753) and then there is not a whole lot to stop it heading back to 1.3710 (1 Feb. high).
On the downside, there will again be bids at today's 1.3315 low and below here at 1.3300. Further minor support will be seen at 1.3270, 1.3230 and then at around last week’s lows at 1.3205, where the top of the weekly cloud lies, providing strong support.
Look for another day trapped between 1.33/1.34 and do the same as everybody else...wait for the FOMC before getting involved.
Economic data highlights will include:
German PPI
