AUD/USD: 0.9040EUR/USD: 1.3870The better than expected US jobs data helped the dollar recover from its lows on Friday, although it still looks to be under pressure in the days ahead, as does the Yen. From a technical perspective, the Euro looks as though it is about to make some fairly strong gains, although the Crimea situation is impeding its progress and could yet come to the dollar's rescue if the situation deteriorates. There is plenty of data out this week for what could be another busy one. Today sees the EU Sentix Investor Confidence release, while in Asia, the Chine New Loans may provide some volatility. Softer weekend China data could drive the Aud & Kiwi a bit lower early on Monday.
Although Friday's release of the US unemployment rate edged up to 6.7%, the NFP grew more than the expected 150K, by 175K in February, at the same time as the prior month's figure was revised up from 113k to 129k, allowing the dollar maintain its balance and ending up pretty much unchanged on the day against the Euro.
Despite making a new 3 year high at 1.3915, before the data, the Euro eventually gave up its gains due to squaring of risk positions because of the ongoing tensions in the Ukraine.
The weekly close was however above the long term trend resistance at 1.3830, which augurs well for further gains in the days ahead, albeit that the price action is going to be rather nervous with one eye on the latest headlines from Russia/Ukraine. On the other side of the coin, if the Jobs data is a sign of ongoing improvement in the US economy, the dollar is going to remain in favour, as could be seen on Friday in US yields, where the 10 years moved back up to 2.79%, well above their recent low of 2.58%.
On the topside, back above 1.3900 and then above Friday’s high would lead on towards 1.3950 (50% of 1.6037/1.1876 & Monthly cloud top). If we get above 1.4000, then don’t sand in the way, as I do not see a lot to stop it heading on to the next major Fibo resistance at 1.4240 (76.4% of 1.4940/1.2041) which was also the Oct 2011 high.
On the downside, minor support lies at 1.3845, ahead of the previous resistance, now support at 1.3830. . Back below 1.3800 would hint at a false topside break and would suggest a run back down towards 1.3770, below which 1.3745 is 38.2% of 1.3475/1.3915, beyond which lies 1.3700, which provided a solid base last week. It looks doubtful that we see this level again for a while but if wrong then the recent low at 1.3643 should provide ample support.
There is plenty of data out this week to provide volatility and the dollar does look to be under a fair bit of trouble having closed below the important support in the DXY (see outlook below). If the Euro is to head higher though, it looks as though it could be a volatile ride as long as the Russian/Ukraine issue remains unresolved.
The 4 hour charts are overbought and thus I suspect that today the upside is somewhat limited and would therefore tend to use 1.3825/1.3900 as a guide, with only the EU Sentix Investor Confidence Survey to provide any real direction
For today, use 1.3825/1.3900 as a guide
Economic data highlights will include:
M: Eurogroup Meeting, Spain CPI, EU Sentix Investor Confidence.
T: German Current Account, US Wholesale Inventories
W: EU Industrial Production, US Monthly Budget Statement
T: US Retail sales, Jobless Claims
F: German CPI, EU Employment Change, US PPI, Rts Michigan Consumer Sentiment Index
Jim LanglandsFX Charts www.fxcharts.com.au
