AUD/USD: 0.9375EUR/USD: 1.3505Improving risk appetite is once again the main theme in the markets today, with China's widespread reform plans keeping the currencies generally underpinned, while the dollar is still a little soft.
China is expected to make sweeping modifications in tax reform, interest rate liberalization and the one-child policy in the course of the next 12 months. The markets liked the idea and saw less need for safe haven currencies such as the dollar and the yen, keeping them mildly under pressure.
The Euro is a little higher today, having been up to 1.3542, although with one eye on the possibility of the ECB adding further liquidity to the system, following weekend comments form an ECB board member, it has been unable to make too much progress and is back near 1.3500 in what has generally been a pretty steady day's trade.
In the absence of any major data, apart from the German/EU ZEW Economic Survey, it looks likely to be another rangebound session again today, but the underlying tone remains bid and for the time being the push to slightly higher levels looks set to continue.
Having broken above 1.3500/10 resistance, it really needs to hold for the Euro to make further gain, above the session high, towards the daily Kijun at 1.3565.
The dailies also now look as though they may try to turn a bit higher still, and thus, if we do push through the near term resistance, look for a run up towards 1.3600, 1.3624 (61.8% of 1.3832/1.3294) and possibly to 1.3700. That is for another day and I would be a little surprised to see the Euro much above 1.3600, and if it does get there, it may be unlikely to maintain those levels.
On the downside, if we go back below 1.3500, bids will arrive the session low at 1.3575 and then at the rising trend line, now at 1.3465, and then at the previous rising lows at 1.3432, 1.3418 and 13390. If we go under there we are likely to find bids at the 100 DMA 1.3365. Below that would see an acceleration towards the previous low at 1.3290 and the Weekly Kijun at 1.3287, and should therefore be strong, ahead of 1.3274 (76.4% of 1.3105/1.3832). Further out, would see a fall back towards the 200 DMA at 1.3220 beneath which, it would begin to look as though are going to retrace the whole of the move higher that began at 1.3105. This could be the eventual outcome, but not today.
For the coming session, use 1.3485/1.3560 as a guide.
Economic data highlights will include:
EU Construction Output, EU/German ZEW Economic Sentiment Survey
