AUD/USD: 0.9100EUR/USD: 1.3735The Euro remains firm today, taking a ‘risk-on’ view of Friday’s US jobs numbers, despite some softer EU data, and currently trades close to session highs, in what has generally been a reasonably quiet affair ahead of the various Fed heads who are currently speaking. Bullard is on the wires as I write, suggesting that there is room for some minor tapering to commence following the improvement in the jobs outlook and we shall find out more on Dec 18 at the next FOMC. Until then, the general uncertainty about the outlook for U.S. monetary policy looks set to continue with mixed messages to be heard from the various Fed members.
The earlier data today included the EU Sentix investor confidence figure, which unexpectedly fell, while German industrial production contracted -1.2% MM in October and the German trade surplus came in narrower than expected at EUR 16.8b in October – none of which are overly positive for the Euro.
Looking ahead, there is little out of either the EU or US today, although Mario Draghi will be speaking, and there is a bit out of China (Retail Sales, Industrial Production, Urban Investment) so the market may well use this as a guide to trade by today.
Technically, not too much has changed and the Euro is currently 20 points higher than this time yesterday against the dollar, but looks reasonably well underpinned. Having said that, the 1 hour charts are showing some bearish divergence, so I don’t think we are going to run away to the upside, and on top of this, the 4 hour charts are beginning to look a little overbought and potentially showing signs of rolling over. At this stage it is too early to treat that with any confidence but caution is warranted.
The dailies though still point quite aggressively higher, and so while I am dubious of any major move up in the next few hours, buying dips still look to be the way of it, with appropriate stops left in place.
Minor resistance still lies at 1.3738 (31 Oct high) beyond which we should see a bit of an acceleration 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 today. Before then, there is talk of Asian offers at 1.3740/50, protecting a 1.3750 barrier.
On the downside, should 1.3700/10 again hold its ground (session low 1.3694), 1.3675 will provide the initial minor support, below which would head back towards 1.3650 and potentially to Fridays spike low at 1.3617. The first Fibo support arrives at 1.3625(23.6% of 1.3294/1.3705) , while the 200 Hour MA is now at 1.3610 and the rising trend support is at 1.3575 but looks pretty safe at present.
Use 1.3680/1.3760 as a guide today.
Economic data highlights will include:
EcoFin Meeting US Wholesale Inventories, Draghi Speech
