AUD/USD: 0.9030EUR/USD: 1.3705 The dollar remained relatively steady against the Euro in thin trade today, being a US holiday and has stuck close to 1.3700. We could be in for more of the same today, with not too much data due for release, although the ZEW could provide some volatility in Europe.
Technically, despite making a new recent high at 1.3723 today little has changed in the bigger picture. The immediate resistance remains intact at 1.3730 (61.8% of 3892/1.3476) and then at the 24 Jan high at 1.3738, a break of which would open the way to 1.3775 (2 Jan high). Above 1.3800, which I am doubtful of seeing today, would allow a test of the major descending trend resistance, currently at around 1.3840 and then possibly the Dec 27 1.3892 high. As I have previously said, we are sitting right up against the base of the monthly cloud (although we have today broken above the top of the daily cloud, which could bring in fresh buyers), which could continue to act as a major hurdle to further topside progress, and if this continues over the next couple of sessions the Euro could eventually roll over to the downside once more.
The growing divergence on the 4 hour charts suggest that the Euro could be contained on the topside again today, and if we do head a little lower bids will arrive, firstly at Friday’s low of 1.3673 and then at 1.3650. Under there, 1.3625 should provide further minor support ahead of the 100 DMA at 1.3605 and the base of the daily cloud at 1.3590.
I suspect we are in for another fairly tight day but with the short term indicators beginning to roll over to the downside, suspect we could be in for a move towards 1.3650, and would therefore use 1.3650/1.3720 as a guide.
The Fed's Lockhart, Bullard and Williams will all be speaking.
Economic data highlights will include:
EU Current Account, EU/German ZEW Economic Sentiment Survey, NY Empire State Mfg Index
