AUD/USD: 0.9245EUR/USD: 1.3750Currencies were mostly pretty much unchanged on Friday, with the exception of a weaker Yen ahead of today’s end of FY in Japan. A big week of data lies ahead with the German Retail Sales and EU CPI today, possibly providing a hint as to what the ECB will do on Thursday. The monthly PMI’s, starting with Australia and China, will kick things off in Asia tomorrow, ahead of the RBA I/R decision. The market will eventually begin to focus on Friday’s US Jobs/NFP, but here will be plenty of action before then.
EUR/USD: 1.3750
The Euro finished Friday pretty much unchanged, after soft German and Spanish CPI had earlier sent the Euro lower, with the dollar then underpinned by some reasonable US data (Personal Spending, Consumption) before some light position squaring, heading into the w/e.
It will be a busy week ahead, with plenty of data due, the main events being the ECB I/R decision (Thursday) and the NFP on Friday (Exp +196K), but starting today with German Retail Sales and the EU CPI. – (Although the general market expectation is for 196K for the NFP, one big US bank expects +230K as weather related issues recede).
Technically, although the Euro forged out a series of lower lows last week, reaching 1.3704 on Friday, it finished pretty much unchanged at 1.3750, and with the indicators being a bit mixed more choppy trade between 1.37/1.38 looks likely, at least early in the week. The risk for the Euro is probably to the downside as we approach Thursday’s ECB meeting, given the recent remarks from various bank officials with regards to the potential for easing rates. The flash EU CPI today could provide a hint and a reading of lower than 0.6% will see the Euro heading south.
While the dailies point lower it could be that we eventually break to the downside, where below 1.3700, the points to watch will be at the top of the daily cloud at 1.3680, the 100 DMA (1.3675) and then the 61.8% Fibo support at 1.3660, which is also where the rising trend support now lies. A break of this looks unlikely in the near term, but if wrong, then the 27 Feb low at 1.3643 will come into view ahead of the 76.4% Fibo support at 1.3595.
On the topside, 1.3765 is the first minor Fibo resistance, above which the 100 HMA is at 1.3785. Above 1.3800 (1.3803: Daily Kijun, 38.2% of 1.3966/1.3704), the 200 HMA now lies at 1.3807, a break of which will see sellers at 1.3825 (Daily Tenkan) ahead of 1.3833 (50% pivot of 1.3966/1.3704). A break of this would see a move on towards 1.3865 (61.8%) and the recent spike high at 1.3875. I cannot really see this being tested again for a while, but beyond there would head towards the minor trend resistance at 1.3900, above which would suggest a retest of 1.3966 and eventually 1.4000. If we ever get there, this area won’t be easy to overcome as there well be plenty of option related sellers protecting it, but if/when the Euro finds the legs to head above it, there is not 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.
For today, look for some more choppy trade, using 1.3720/1.3790 as a guide, but keep an eye on the EU data as a soft reading will have the markets focusing on the chance of an ECB rate cut.
Economic data highlights will include:
M: German Retail Sales, EU CPI, US Chicago PMI,
T: German/EU Unemployment, EU Mfg PMI, US ISM Mfg PMI, Construction Spending
W: EU GDP, US Factory Orders, ADP Jobs Data
T: EU Services PMI, Retail Sales, ECB I/R Decision/Press Conference, US Trade Balance, ISM Non Mfg PMI, Services PMI
F: German Factory Orders, US Employment, NFP.
Jim LanglandsFX Charts www.fxcharts.com.au
