AUD/USD: 0.9070EUR/USD: 1.3415The dollar fell in today's session, to a six-month low against the Euro, as U.S. Treasury yields retreated amidst the uncertainty of the timing of the Fed's reduction in its stimulus programme. Having reached 2.89% on Monday, 10 year yields dipped to 2.81% today, undermining the dollar and sending the Euro above 1.3400, and looking as though it has the steam now to make further gains in the days to come.
Much depends on the outcome of the event risk from the US, with the FOMC minutes coming up today, ahead of the Jackson Hole symposium on Thursday/Friday, but daily momentum is picking up and if 1.3450 can be overcome, then the way is beginning to look open to higher levels.
If the Euro does head north, it is going to have to overcome some pretty decent resistance that lies ahead. The 100 Month MA lies immediately above here, at 1.3438, and the top of the wedge formation that appears to be building, lies just above the 1.3451 session high, at 1.3475. This is also 76.4% of 1.3710/1.2753 and so should prove strong, but beyond there sees a run towards 1.3520 (13 Feb high) and eventually, towards 1.3710 (1 Feb high).
The 4 hour indicators are also positive, and thus dips, for the time being look likely to be well supported. The 200 WMA at 1.3390 has now been overcome, and a close above this on Friday, would be supportive of further gains. Back below, would suggest a run down to minor support at 1.3340 and 1.3300, below which the base of the rising wedge is currently at 1.3260, but looks pretty safe.
Until the FOMC minutes, I suspect that 1.3450 should cap the advance of the Euro and I would be very surprised to see it take out 1.3475. On the downside, there will now be plenty of bids in the 1.3385/00 area. Overall though it appears that buying dips, looking for an eventual run higher appears to be the way to go, but direction is fully dependent on the outcome of what the Fed come up with, beginning later on today, when hopefully the Minutes will provide some clues as to whether they will begin to pare back its asset purchases in September or not.
Economic data highlights will include:
FOMC Minutes, Existing Home Sales
