AUD/USD: 0.8840EUR/USD: 1.3540Trade in the Euro has more or less ground to a halt this week, today confined to a 40 point range against the dollar as all the action takes place elsewhere, today being the turn of Cable and the Aud on the back of improved data for both.
We may not have to wait long for some volatility though, with the global PMI data due for release today, and then next week we get the Fed meeting at which we could see another cut in tapering - if the WSJ turns out to be correct, - which would be likely to see the dollar resume its recent uptrend. Later in the day will see some US housing data.
Technically there is little to add today though, and the points to watch remain unchanged.
We have been up to 1.3582, briefly breaking above the base of the daily cloud at 1.3560 before drifting back off to sit just below this resistance, and also below the 100 DMA which is now at 1.3575, and since having broken below it last week, has proved a stubborn topside barrier. This is where the descending trend also now lies and should therefore be quite strong resistance, but if we can make a sustained move above 1.3580, look for a run towards 1.3600 (23.6% of 1.3892/1.3507/descending trend resistance) and 1.3615 (Daily Cloud Top), 1.3630 and 1.3650 (38.2% of 1.3892/1.3507). I don’t think we are likely to head too much above here today, but if wrong, we could move on towards 1.3700 (50% pivot of 3892/1.3507).
On the downside, as before, back below 1.3525 (61.8% of 1.3294/1.3892) would see another swing to 1.3505/15 where good bids are lined up ahead of 1.3500. Beyond 1.3500 heads down towards 1.3485 (minor) and then 1.3455 (23.6% of 1.2042/1.3892 & 38.2% of 1.2755/1.3892) beyond which, 1.3435 (76.4% of 1.3294/1.3892) will attract.
I think we are heading lower in the medium term, as indicated by the daily charts, but we do need to leave room for a possible near term short squeeze, so I think leave room to sell into rallies for an eventual look below 1.3500.
Economic data highlights will include:
World Economic Forum – Davos, EU Flash Mfg, Services, Composite PMI’s, EU Curr/Acc, US Jobless Claims, Personal Consumption Expenditure, Flash Mfg PMI, Existing Home Sales, Chicago/Kansas Fed National Activity indices
