AUD/USD: 0.9425EUR/USD: 1.3560The Euro/Usd had a choppy session on Friday but ended up going nowhere too far from its opening levels and the action early in the coming week will be dependent on any progress to be seen coming out of Washington. The current signs are not looking particularly positive and comments over the weekend from the Republicans that talks with President Obama have stalled is unlikely to do too much to assist the dollar early in the week.
There is a range of data out this week, although much of it of a secondary nature with very little to be expected from the US as long as the shutdown continues, with the Columbus Day holiday on Monday likely to make for a pretty quiet session. The EU ZEW Survey on Tuesday will be the early week highlight, but even that will be overshadowed by events in Washington.
Technically, the points to watch remain pretty much unchanged and above Fridays high of 1.3582, - which came when stops were triggered after some comments from the ECB's Nowotny that he didn’t see any need for action on liquidity or any reason to lower interest rates, - further offers would be seen at 1.3600/10, where the Euro topped out last week. Beyond that, 1.3645 will see sellers and 1.3660 resistance remains intact (4 Feb high), providing offers ahead of the topside target of 1.3710 (1 Feb. high). Beyond there would see further sellers at 1.3760 and 1.3810 (61.8% of 1.4939/1.2041) which currently remains some way off.
On the downside, 1.3500/20 will see bids ahead of last week's lows at 1.3485, and under there, bids will emerge at 1.3437 (38.2% of 1.3144/ 1.3645). Below that would head towards 1.3370, where it sat before last month’s surprise FOMC decision by the Fed to sit on their hands and to delay tapering.
In the medium term, although the 4 hour charts are mildly positive, the dailies are beginning to increase their downside momentum, and given the look of the DXY (see outlook) I suspect that some dollar strength against the Euro could begin to emerge later in the week, placing pressure on the downside. For the coming session, 1.35/1.36 could well cover it, particularly given the US holiday which will put a dent in the market interest, but I prefer the idea of selling rallies near 1.3600, should we see them, for an eventual look below 1.3500, for a possible run towards 1.3400.
EURJPY: 133.50. The cross broke strongly higher once it headed above 132.40 resistance, which now becomes support, and looks headed for a retest of the 19 Sept 134.94 trend high. As elsewhere, much depends on the talks in Washington and the Yen will jump around all over the place, in line with whatever the latest headlines dictate. The indicators are not all that helpful and thus I suspect that a few days of playing the range between 132.50/134.50 may be the way to go.
Economic data highlights will include:
M: Europgroup Meeting, EU Industrial Production
T: EcoFin Meeting, EU/German ZEW Survey, NY State Mfg Index
W: EU CPI, Trade Balance, US Beige Book
T: EU Curr/Acc, Construction Output, US Building Permits, Philly Fed Mfg Survey
