AUD/USD: 0.9285EUR/USD: 1.3700It was a mixed session Friday, with a slight miss in the NFP, but followed up by an upward revision in February's reading as well as an improved participation rate. The dollar looks as though it is trying to build a head of steam although yet more patience will be required but if Wednesday's FOMC minutes are suggestive of an H1 2015 rate hike, while the ECB appear to be about to start easing, this could be the catalyst for further dollar gains. German Industrial Production, Sentix investor Confidence today.
The dollar finished the week generally slightly lower after the lukewarm NFP (192K) came in below the expected 200K, while the jobless rate deteriorated to 6.7% from 6.6%. On the bright side, February's figure was revised upwards and the participation rate also increased. The mixed picture had the market wondering what the outcome might mean for the tapering programme (and looking for clues as to any possible timing for a hike in interest rates), but result meant that the dollar gained some strength on the news of the previous month's upward revision, with the Euro having a brief blip down to 1.3675, before finishing back at 1.3700, pretty close to where it spent much of Friday's session.
The market will now be looking to this week's FOMC minutes (Wednesday) for inspiration and hoping for a hint of what the Fed are thinking with regards to tapering. I suspect there will be little change and that we should expect them to continue on a straight course, with the minutes reiterating the policy of "steady as she goes" until the end of the year. Any mention of a rate hike in H1 2015 would give the dollar a further boost, particularly against the Euro, where it looks increasingly as though the ECB are heading in the opposite direction.
Before then the main data focus will be from the EU, beginning today with the Sentix Investor Confidence Survey and the German Industrial Production numbers.
Technically, the Euro is holding on above the strong support at around 1.3680. This is not going to give up its ground easily, being where several indicators converge, including the top of the daily cloud, the 100 DMA, the 23.6% retracement of 1.2753/1.3966 and the rising trend support from the 1.2753 low. A break of this though, would head back towards the Fibo support at 1.3660 (61.8% of 1.3475/1.3966) below which, the 27 Feb low at 1.3643 will come into view ahead of the 76.4% Fibo support at 1.3595. Below there would head towards the 200 DMA at 1.3525 and while this is a long way off, I suspect that eventually it is going to be tested.
On the topside, minor resistance will arrive at 1.3730 and then 1.3750/60, where the 100/200 HMA’s now lie. It looks unlikely that we will head much above here today, and I don’t think we are going to see 1.3800 again for a while. The resistance above 1.3800 remains strong, with 1.3808 (1.3803: Daily Kijun, 38.2% of 1.3966/1.3704) and 1.3820 (Daily Tenkan) providing the initial hurdles 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 in the near term, but if wrong, 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
Looking to sell rallies appears to be the game plan, although today I don't think there will be an awful lot in it either way, nor possibly for the next couple of sessions as the calendar is light, and would therefore tend to use 1.3675/1.3725 as a range guide, preferring to trade it from the short side.
Economic data highlights will include:
M: German Industrial Production, Sentix investor Confidence
T:
W: German Current Account, US Wholesale Inventories, FOMC Minutes
T: ECB Monthly Report, US Jobless Claims
F: IMF Meeting, German CPI, US PPI, Provisional Rts/Michigan Consumer Sentiment
Jim LanglandsFX Charts www.fxcharts.com.au
