AUD/USD: 0.9155EUR/USD: 1.3765The Euro continued to climb against the broadly weaker dollar today, with traders beginning to focus on next week’s Federal Reserve meeting , as the uncertainty continues over the direction of US monetary policy.
Today has little data, with German CPI being the highlight, and another session capped by 1.3800 would not really surprise unless the market decides that any tapering is not going to occur until the end of Q1, in which case the dollar weakness is set to continue.
Elsewhere, ECB president Draghi urged governments to deliver economic reforms and complete banking union within the EU.
It looks as though we could be in a rising channel, with a top, currently close to 1.3800. If we do head above this, then 1.3831 (25 Oct high) will prove a major challenge and I don’t see that being easily taken out. If wrong, then look for advances on towards 1.3858 (Nov 2011 high) and beyond that, the way appears open towards 1.4000 with not too much standing in between. Before then though, 1.3830 will not be easy to overcome, this being major Fibo resistance (61.8% of 1.4940/1.2042)
On the downside, I am doubtful at present of heading much below 1.3700. Should this fail to hold its ground, then 1.3675 will provide the initial minor support, below which we would head back towards 1.3650 and potentially to Fridays spike low at 1.3617. The first Fibo support arrives at 1.3675(23.6% of 1.3294/1.3794), where thee 200 Hour MA now also lies. The rising trend support is at 1.3600, but looks pretty safe at present.
I do not see too much different today and it may be that we continue to grind slightly higher. The short term charts though are becoming very overbought and I am a little doubtful, in the short term of any gains above 1.3800 and would therefore use today’s 1.3730/1.3795 range as a guide.
Economic data highlights will include:
German CPI.
