AUD/USD: 0.9285EUR/USD: 1.3815Solid German/EU Manufacturing data helped the Euro today but it was unable to build on its gains, despite US housing figures, ahead of a speech later in the coming session from Mario Draghi who may well use the opportunity to talk the Euro lower once again. Aside from Draghi, the focus will be on the German IFO and the US Durable Goods orders. In the meantime, the RBNZ have just hiked rates - as expected.
Despite the mixed outlook of the manufacturing PMI’s (France 50.9 v expected 51.9), the solid figures from Germany and the Eurozone (respectively 54.2 vs 54.0 exp. and 53.3 vs 53.0 exp) took the Euro up to a high of 1.3854, where speculative sellers capped it ahead of Mario Draghi’s speech later on today. The dollar though has been unable to regain any substantial ground though, due to the soft US data, with New Home Sales down sharply, by 14.5% mm for March.
Overall there is little change from a technical point of view and 1.3800 remains the pivot. On the topside, 1.3850 looks set to remain reasonably firm resistance and we have yet to close the Monday opening gap of 14 April to 1.3885. I cannot see it up there today but if wrong, above there, the recent high at 1.3905 will be strong resistance. A break would lead us back towards the 13 March 1.3966 high but that seems some way off and the indicators do not suggest any chance of such a move in the near term.
On the downside, back below 1.3800, there will be strong bids at 1.3780, with stops placed below here which could drive the Euro towards support at 1.3760 (61.8% of 1.3672/1.3905) and 1.3730 (76.4%). Rising trend support also lies near here and should provide reasonable support, below which the 100 DMA/daily cloud base both lie at 1.3720. A break of 1.3700 could bring a deeper decline, and apart from some minor Fibo levels, there is not too much to hold the Euro up ahead of the 200 DMA at 1.3568.
Mario Draghi could provide much of the action today if he repeats his recent remarks about the exchange rate, although the market is reacting less and less to these and wants to see some action from the ECB to back up the rhetoric. The German IFO will also be in focus as will the US Durable Goods orders later in the day, for what hopefully will be a busy session. I still prefer selling the Euro into strength for an eventual break to the downside, but if the US data is weak again, the dollar is going to find it hard to make too much headway.
Economic data highlights will include:
German IFO Business Climate, Mario Draghi Speech, US Durable Goods Orders, Jobless Claims, Kansas Fed Mfg Activity
Jim LanglandsFX Charts www.fxcharts.com.au
