AUD/USD: 0.9330EUR/USD: 1.3460The Euro initially headed lower today, to 1.3390, after comments from an ECB board member that negative interest rates or asset purchases were options the bank could use to reach its inflation target. It later turned around sharply, once the dollar took a bit of a dive, when the market began to speculate on the possible comments, including the chances of delaying tapering, from the dovish Janet Yellen, the incoming president of the Fed, at her Senate testimony later today.
The effect of all this has meant that the Euro is really not too far from where it was trading at this time yesterday and that we could be in for another session stuck mostly between 1.34/1.35
The shorter term indicators point a little bit higher and it would not be a surprise to see a bit of a squeeze above the session high of 1.3470. There is some resistance here, in the form of the 100 HMA as well as the top of the daily cloud, but a break would see some acceleration towards 1.3500 (1.3497: 38.2% of 1.3832/1.3294). Above here is the daily Tenkan at 1.3516, which lies ahead of the daily Kijun at 1.3565 although that may be a stretch too far today.
If the indicators are incorrect, and we head lower, look for a run down towards the session lows at 1.3390. If we go under there we are likely to find bids at yesterdays low at 1.3358 and below that at the 100 DMA at 1.3342 but which appears unlikely to be seen today. If wrong, a break would head towards Thursday’s low of 1.3294 (Weekly Kijun: 1.3287), below which 1.3274 is 76.4% of 1.3105/1.3832. Beneath there would see a run back towards the 2000 DMA at 1.3216 and under that, it would begin to look as though are going to retrace the whole of the move higher that began at 1.3105.
The EU GDP will be the first driver, after which Yellen's testimony will give the dollar its direction. Stay nimble, but the bias for the day is to trade it mildly from the short side (ie. long Euro).
Economic data highlights will include:
EU Meeting, ECB Monthly Report, German/EU GDP, US Trade Balance, Jobless Claims, Bernanke Speech, Yellen Speech
