AUD/USD: 0.9550EUR/USD: 1.3530The news that the Senate has reached a deal, - although it is yet to be rubber stamped by Congress and signed off by Obama -, to reopen the government and avert a U.S. default has seen the US$ spike higher, only to immediately lose all its gains and come back to be virtually unchanged, as the market now looks forwards to all the backed up data that is due to be released and which is hardly likely to be a major positive for the US.
While we wait for any outcome, the technical points to watch once again, remain pretty much unchanged.
The spike lower has seen a new trend low at 1.3472 but in reality the strong support at 1.3480 is still holding and in the short term looks as though it will continue to do so, with the momentum indicators not giving much of a hint in either direction. Below 1.3480 though would see a decline towards 1.3437 (38.2% of 1.3144/ 1.3645 under which it would head to 1.3400 and on 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.
On the topside, the Euro traded up to a session high of 1.3567, and 1.3570 is building as a bit of an obstacle, beyond which, 1.3600 has proved too strong so far this week, but if taken out, the Euro would head on towards 1.3645 and then 1.3660 (4 Feb high) and will provide offers ahead of the major 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.
For the time being, it looks as though a neutral stance is again required and thus I suspect we again need to use 1.3480/1.3600 as a guide and that we should wait for a little more clarity, which hopefully will provide a little more direction to the markets. One does wonder what has to happen to bring about any real directional move? Maybe we are doomed for more 1.35/1.36, but eventually I am still eyeing the chance of the Euro building a right hand shoulder before a swift drop towards 1.3370. We shall see....
Economic data highlights will include:
EU Curr/Acc, Construction Output, Philly Fed Mfg Survey, US Jobless Claims
