AUD/USD: 0.9040EUR/USD: 1.3755Today the focus turns to the FOMC minutes, with the market looking for any sign of wavering (or not) from the current tapering programme. Aside from the Fed, the focus will again be on Sterling, with the BOE minutes to be released, which follow on from yesterday’s soft CPI data release. UK Unemployment is also on the cards, and from the US, we get some housing data. WTI continues to run higher.
The Euro is firmer again today after a much weaker than expected reading from the Empire state manufacturing index, which dropped sharply to 4.5 in February, (expected; 9.5),undermining the dollar in the process ahead of today’s FOMC Minutes.
Earlier in the session, the Euro ignored the weaker than expected ZEW German economic sentiment index that came in at 55.7, down from 61.7 in January and below expectations of an unchanged reading.
The Euro has been up to a high of 1.3770, having triggered stops above 1.3740 and appears to be gaining the momentum for a run towards 1.3800 (1.3792: 76.4% of 1.3892/1.3476) and then to the important descending trend resistance at 1.3825. It would probably already be there had it not been for the weakness in both Sterling and Yen which has seen the dollar make gains against both. The momentum indicators are all pointing to the topside and if 1.3825 is taken out then we are heading for the Dec 27 1.3892 high, above which would see a run higher towards 1.4000. The data coming from the US has not been positive recently, pointing to a loss of momentum in the economic recovery and has raised doubts about the trajectory of Fed tapering so today’s focus will be on the FOMC minutes for any hint as to whether this may be the case. Any sign from the Fed of pulling back on the rate of tapering would ensure the dollar heads quickly lower.
If however it looks as though the Fed are going to maintain their course, the dollar could regain some lost ground and send the Euro back to 1.3700 and possibly lower. This currently looks less likely from a momentum perspective, but the points to watch are at 1.3640 (minor), 1.3700 (23.6% of 1.3476/1.3770) and then at 1.3680 (100 HMA). I don’t think we are likely to see it down here today, but if wrong, then further bids would arrive at 1.3660(38.2%).
In Ichimoku terms, it should be noted that the Euro is now well above the top of the daily cloud (1.3692) and also above the weekly Tenkan (1.3680), both of which suggest further gains, as does the fact that it has broken back above the base of the monthly cloud (1.3700), the top of which lies at 1.3950.
Aside from the FOMC minutes, the US Housing data and PPI will also be in focus, but there is little out from Europe so it looks like being fairly rangebound near current levels for the next few hours.
Economic data highlights will include:
US Building Permits, Housing Starts, PPI, FOMC Minutes
Jim LanglandsFX Charts PL
