AUD/USD: 0.9420EUR/USD: 1.3820Solid US retail sales helped the dollar and equity markets today, while the Euro was under pressure from comments on monetary policy from various ECB board members. Improved risk sentiment assisted the commodity bloc currencies and also commodities, which were generally firm. Today's focus will be on the EU/German ZEW Economic Sentiment Survey and the UK and US CPI. Before then RBA minutes will provide the interest in Asia.
The Euro remained under pressure today following Mario Draghi’s weekend remarks in tying the exchange rate to monetary policy and which were followed up today by another ECB board member, Noyer, who said that the ECB are prepared to ease rates if inflation remains low for an extended period.
The dollar was also assisted by the solid U.S. retail sales, which grew by 1.1% in March, exceeding expectations of 0.8%. February figures were revised up to 0.7% from a previously estimated 0.3% rise.
Today’s focus will be on the EU/German ZEW Economic Sentiment Survey and followed later by the US CPI.
Technically the Euro looks set to remain under some pressure, although while it holds above 1.3800 it may find the legs to squeeze up to fill the gap to Friday's close at 1.3885. I don’t really see it, but if wrong, beyond there would potentially take a look at the Fibo resistance at 1.3895 (76.4% of 1.3966/1.3675) and the rally high at 1.3905, beyond which would target the 13 March high at 1.3966. Above that would suggest a run towards 1.4000 which won’t be easy to overcome as there well be plenty of option related sellers protecting it – and the ECB would not like it either -, but if/when the Euro finds the legs to head above here, 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.
On the downside, below 1.3800 would see bids at 1.3790 (200 HMA/ 50% pivot of 1.3672/1.3905), which lies ahead of 1.3761 (61.8%) and 1.3727 (76.4%). The rising trend support/ 100 DMA is currently at 1.3710 but which for now, looks out of reach.
The 1 and 4 hour indicators are conflicting and thus I suspect we are in for another tight day and would use 1.3790/1.3860 as a guide although the data could provide a bit of interest.
Economic data highlights will include:
EU/German ZEW Economic Sentiment Survey, EU Trade Balance, US CPI, NY State Mfg Index
Jim LanglandsFX Charts www.fxcharts.com.au
