AUD/USD: 0.9125EUR/USD: 1.3705The Eur/Usd had a rocky ride after the strong US jobs data, Friday, which showed an increase of 203K in the NFP, while the headline unemployment rate fell sharply to 7.0%, a 5 year low. The dollar initially made good gains, spiking to 1.3617 as US yields soared, but it was unable to build any momentum and quickly reversed back towards 1.3700 where it pretty much finished the week.
The charts are looking positive for further gains in the coming week although they may be hard to sustain, and early in the week 13700/10 may prove a tough nut to conquer, with strong Fibo resistance lying immediately ahead at 1.3708. Once above there though, we should see a bit of an acceleration towards 1.3738 (31 Oct high) and then on towards 1.3785 (30 Oct high) and 1.3800. Above that, 1.3831 (25 Oct high) will prove a major challenge and I don't see that being easily taken out, certainly not early in the week .
On the downside, should 1.3700/10 hold its ground, 1.3675 will provide the initial minor support, below which would head back towards 1.3650 and to Fridays spike low at 1.3617. The first Fibo support arrives at 1.3609 (23.6% of 1.3294/1.3705) and although it looks unlikely that the Euro is going to head below this today, the next support, below 1.3600, would arrive at the 100 hour MA at 1.3680, followed by the 200 HMA at 1.3550. Various Fed heads will be talking today, probably putting their own slant on when we might expect tapering to begin, which could make the dollar a bit choppy all round, and before that the EU Sentix Investor Confidence data will be the focus.
While the sentiment does currently point higher and buying dips in the Euro appears to be the plan, it would not surprise if the market takes a second look at Fridays strong US data and decides to buy some dollars in expectation that tapering may actually be on its way. Be flexible and use 1.3675/1.3725 as an initial guide, with a preference on the day, of trading from the long side, for an eventual push towards 1.3800.
Economic data highlights will include:
M: Eurogroup Meeting, German Current Account, Trade Balance, Industrial Production, EU Sentix Investor Confidence Survey, US Fed's Locker, Bullard, Fisher Speeches
T: EcoFin Meeting US Wholesale Inventories
W: German CPI,
T: EU Industrial Production, US Jobless Claims, Retail sales, Business Inventories
F: EU Employment Change, US PPI
