AUD/USD: 0.9265EUR/USD: 1.3810Softer than expected German Inflation data stymied any potential strength in the Euro ahead of today's important EU CPI figure, German Unemployment and then later in the day, the FOMC meeting. Before then it is a busy day in Japan, headed by the BOJ interest rate decision and press conference. Australia gets private sector credit while from NZ, we see the Business Confidence data. It could be a busy day for a change!
--------------------------------------------------------------------------------------------------------------------------------------------------------------------
The Euro bounced around near its highs in early Europe after the mixed regional German CPI figures, squeezing up to 1.3878 but ran in to month-end sellers at the trend resistance. This was as good as it got, because once the main German CPI number came in below expectations at 1.3%, the Euro fell sharply back to 1.3800 with little bounce seen since.
Today we have the overall EU Inflation number and another below par reading (exp 0.8% yy) would see further downside pressure on the Euro. Later in the day we get the US GDP (exp 1.2% Q1), the ADP Jobs number and the Feds interest rate decision, with no change in rates expected and the focus being on the wording of the Policy Statement, so it could be a busy day – hopefully! Another $10bio taper is expected
Technically there is little to add, although the 4 hour charts have changed to point lower but the dailies remain flat, so again, a neutral stance is required for now, albeit with a slightly bearish bias.
The low so far has been 1.3805, and back below 1.3800 will see further good demand ahead of 1.3780 (daily Kijun 1.3787). There will be plenty of stops placed below here which could drive the Euro towards the rising trend support at 1.3760 (also 61.8% of 1.3672/1.3905). Below here 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.
On the topside, the 200 HMA at 1.3820 and the 100 HMA at 1.3835 will see initial minor sellers ahead of 1.3850. 1.3870/80 will be fairly formidable but looks unlikely to be seen unless the EU CPI surprises to the upside or the US GDP is particularly weak. If wrong, a break would head to the recent high at 1.3905, a break of which 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 a move towards 1.4000 in the near term. I cannot see a move of this sort before the US Jobs data on Friday, and it would take a very weak NFP (exp 210K) reading to send the dollar markedly lower (higher Euro) towards 1.4000.
Wait for the data, but the preference is to trade from the short side, for a test below 1.3780, possibly down to 1.3750 or even the cloud base at 1.3720. The hourly charts are rather oversold though, so I prefer to allow them to correct higher and to sell into any near term strength towards 1.3830/40, with stops placed above 1.3785.
Economic data highlights will include:
German Retail Sales, Unemployment, EU CPI, US GDP, FED IR Decision/Statement, ADP Unemployment, Personal Expenditure, Chicago PMI
Jim LanglandsFX Charts www.fxcharts.com.au
