AUD/USD: 0.9275EUR/USD: 1.3840It was a generally quiet end to Easter week for the currencies, although both Equities and Commodities saw some volatility. This week should liven up, with plenty of data due, headed by I/R decisions from Japan and the US, CPI readings from the EU, global manufacturing PMI's, the UK GDP and on Friday, the US Unemployment/NFP numbers. Elsewhere, the market will have one eye on the Ukraine situation. Hopefully we are in for some decent volatility!
It was a quiet end the week, with the Euro trading a tight 20 point range on Friday but should liven up in the coming days, with a heavy data load due through the week. Wednesday will be busy, with both the US GDP and the Fed interest rate Decision/ Statement due (exp another $10 bio taper), as will Friday when we get the US Jobs/NFP data (exp 6.6%/+210K). There is plenty of other economic Interest before then although Monday looks as though it will be quiet, with nothing major from Europe and just the Pending Home Sales, Dallas Fed Mfg Index from the US. The German CPI (Tues - exp 1.3% yy) and EU provisional CPI (0.8% - Wed) will both be closely watched, and if the numbers are weak, the Euro may come under increasing pressure as the market begins to look for some action from the ECB to ease policy .
Technically the Euro has travelled sideways over the last few sessions and this appears set to continue today, but looks as though it may be building for a break out from the minor converging trend support/resistance levels, currently at 1.3750/1.3870. All the indicators are fairly flat, so a neutral stance is currently required, and the strategy would appear to be to go with a break of either level.
On the topside, 1.3850 will see sellers, and if 1.3870 does give way, then we may close the Monday opening gap of 14 April to 1.3885. I cannot see it up there today but if wrong, the recent high at 1.3905 will be strong resistance. A break would lead us back towards the 13 March 1.3966 high, but which seems some way off and the indicators do not suggest any chance of such a move towards 1.4000 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). Below the 1.3750 rising trend support, which appears unlikely to be tested today, would head towards 1.3730 (76.4%/100 DMA) and the daily cloud base 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.
It looks as though the market will keeps its powder dry until Wednesdays FOMC meeting and for today it could be that 1.3800/60 covers it. Ukraine will remain in focus.
In the bigger picture, as per the chart below, it looks to me as though the Euro may be forming a rising wedge (blue support/resistance lines), the parameters of which are currently at 1.3390/1.4000, which more or less makes up the trading range of the last 12 months so nothing to become too excited about. If the Euro does break above 1.4000, then as we have previously said, there is not too much to stop it heading on to around 1.4250, but until then I suspect that selling into strength may be the play for an eventual test of the bottom side. A break of the white rising trend support at around 1.3750 would be a good start.
Economic data highlights will include:
M: US Pending Home Sales, Dallas Fed Mfg Index
T: German Consumer Confidence, CPI, EU Business Climate, Consumer Confidence, US Consumer Confidence, Case/Schiller House Price index
W: German Retail Sales, Unemployment, EU CPI, US GDP, FED IR Decision/Statement, ADP Unemployment, Personal Expenditure, Chicago PMI
T: Labour Day Holiday, US Personal Expenditure/Consumption, ISM Mfg PMI, Yellen Speech
F: EU/German Mfg PMI, EU Unemployment, US Unemployment/NFP, Factory Orders
Jim LanglandsFX Charts www.fxcharts.com.au
