AUD/USD: 0.9440EUR/USD: 1.3520The dollar clawed some ground back against the Euro today despite the fact that there is still no sign of any headway being made in Washington to resolve the government gridlock. Not even the fact that Janet Yellen got the Fed nomination undermined it, given that she is a perceived dove, and is therefore likely to prolong the current economic stimulus programme. The mere fact that there is some kind of clarity as to who will lead the Fed seems to have been good enough to help the dollar and despite a quick blip in Asia when the announcement was announced, when the Euro reached 1.3604, it has been downhill for it for much of the session. The Euro finally broke down through 1.3500 , reaching 1.3485 after the FOMC minutes, which indicated that the decision to continue with the current stimulus programme was fairly finely balanced. Most board members seem to have felt that tapering would be likely be appropriate to start taper this year, ending the stimulus programme altogether by mid-2014.
Technically the bids at 1.3500/20 have now been filled in and if the dollar can pick up some more momentum, below 1.3485, the Euro should see 1.3460 (minor) and then 1.3437 (38.2% of 1.3144/ 1.3645). Below that would head towards 1.3370 where it sat before the surprise FOMC decision from the Fed to sit on their hands and to delay tapering.
On the topside, we will now head back into the consolidation area below 1.3600. Above there, 1.3610 and .3645 will provide offers ahead of the topside target of 1.3710 (1 Feb. high) although ahead of this, resistance at 1.3660 remains intact (4 Feb high). Beyond that, would see further sellers at 1.3760, after which we should look for a run towards 1.3810 (61.8% of 1.4939/1.2041).
Today will see the ECB Monthly Report and the US Jobless Claims, which are apparently going t be released despite the government shutdown.
Use 1.3540/1.3460 as a guide.
Economic data highlights will include:
ECB Monthly Report, US Jobless Claims
