AUD/USD: 0.8985EUR/USD: 1.3675Having previously made some good gains in reaching 1.3560, the dollar came under pressure today in turning sharply lower, with the Euro staying bid through the whole session, assisted by good demand for Eur/Aud, and not helped later in the day by the soft US data, with both the Retail Sales (-0.4%) and the jobless claims (339K) coming in below expectations.
Elsewhere, the ECB monthly meeting, committed to its forward guidance programme, while at the same time stating that it "it continues to expect interest rates to remain at present or lower levels for an extended period of time.”
Today’s highlights will be in the form of the German/EU GDP (exp +0.3%/+0.4% QQ), later to be followed by some secondary U data, and with the China CPI (+0.7%QQ/2.3%YY) also in focus in the Asian session.
Technically, having briefly dipped to 1.3560, the Euro steadily recovered through Asia, with stops being triggered in Europe on the break of 1.3650, before reaching its 1.3692 high following the US data.
Further gains now look possible, although the short term charts are becoming over bought and the momentum looks to be running out of some steam so some flexibility is required.
There is plenty of resistance right ahead, initially at 1.3685, the weekly Tenkan and also the 50% pivot (red line-chart) of the move from 1.3892/1.3476, which has been tested but yet to be successfully overcome, Beyond this , the top of the daily cloud and the base of the monthly cloud both lie at around 1.3695 and should prove strong. Above 1.3700 would see the shorts scrambling once more, as we head towards 1.3730 (61.8% of 3892/1.3476) and possibly to the 24 Jan high at 1.3738. Above that, – which I don’t expect to see yet given the strong resistance that lies ahead of it -, the way would once again be open to 1.3800, and above, towards the Dec 27 1.3892 high.
On the downside, minor Fib support lies at 1.3640 and again at 1.3610, which is where the 100 DMA also sits and should prove solid support today. Below 1.3600 would see a return to 1.3560, but which looks unlikely .
Another day of 1.36/1.37 appears to be the most likely outcome, but the dailies are beginning to look a bit more positive for a more concerted test of the topside, and today’s EU GDP numbers will most likely decide the direction for early next week.
suspect 1.3630/1.3700 may cover it, with a chance of a look at 1.3720.
Economic data highlights will include:
German/EU GDP, Trade Balance, US I/P, Capacity Utilization, Rts/Michigan Consumer Sentiment Index
