AUD/USD: 0.8950EUR/USD: 1.3590Having spiked up to a 2 year high of 1.3892 (27 Dec) in very thin Christmas trade, the Euro has been under some pressure ever since and looks as though this could continue in coming sessions.
The generally positive US data has assisted the dollar and this week could see more of the same with the Non Mfg PMI’s due to be released today, - along with the German inflation figure, - ahead of plenty of data from both the EU and the US over the course of the week, culminating with the US Employment/NFP numbers due on Friday (exp 7%/194K).
Before then, the FOMC minutes will be released late on Wednesday and will be a key focus, with the market hoping for further guidance on how far the Fed may further reduce its bond-buying programme in the months ahead. Ben Bernanke, speaking on Friday, probably for the last time as Fed Chair, was reasonably upbeat on the US growth outlook in coming quarters with the rider that there is still a long way to go in reaching the Fed's required targets, so monetary policy will remain “highly accommodative” for as long as necessary. All up, a fairly neutral appraisal, unsurprisingly, ahead of today’s US Senate nomination of Janet Yellen as Federal Reserve Chair until February 2018.
On Thursday, the ECB rate decision/press conference will be the focus. No change is expected, although as usual, the market will play close attention to Mario Draghi’s press conference.
Technically as long as we stay under the 1.3892 high, I prefer to sell into strength, this is an important level on the weekly charts, being a strong resistance level of the long term downtrend that began in July 2008 at 1.5947, joining up with the top seen at 1.4940 (Apr 2011). Above there would see a different scenario, but 1.3900+ does not currently look in imminent danger.
The topside in the short term looks to be limited to 1.3650/1.3700 and if seen it would appear to be a sell opportunity, with a SL placed somewhere above 1.3770.
The downside looks more vulnerable, with the next support likely to be at 1.3545/1.3525 (Rising trend support, 61.8% of 1.3294/1.3892, 100 DMA) ahead of 1.3500 and then 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) and 1.3435 (76.4% of 1.3294/1.3892) If this area is seen it should prove very strong support and where any profits on shorts should be taken..
In Ichimoku terms, it should be noted that the Euro has finished right on support at the weekly Tenkan which is unlikely to yield immediately and thus it may be that we need to chop around here, at least early in the week, which at least would allow the short term charts the time to unwind their oversold condition, before the downside is allowed to potentially resume.
For today, look for 1.3625/1.3540 to cover it with a preference to selling into strength for an eventual resumption of US$ strength.
Economic data highlights will include:
M: EU Epiphany Bank Holiday, German Retail Sales, EU Services, Composite PMI’s, German CPI, Sentix Investor Confidence Survey, US Factory orders, Non Mfg PMI
T: German Unemployment, EU CPI, PPI, US Trade Balance
W: German Current Acc, Factory Orders, EU Retail Sales, Unemployment, US ADP Employment, FOMC Minutes, Consumer Credit.
T: German Industrial Production, ECB I/R Decision, ECB Press Conference, US Jobless Claims,
F: EU GDP, US Unemployment, NFP.
