AUD/USD: 0.9275EUR/USD: 1.3865It was a fairly quiet session in the absence of Europe, with the focus solely on the US employment/NFP data due later in the coming session. The exception was Cable, which made another new 5 year high and is now looking at 1.7000. All will depend on today's US data though and until then the market is going to sit on its hands. Have a good w/e.
Despite the European holiday, the Euro tried the upside early in the session but merely succeeded in filling in the small Monday opening gap to 1.3886 from a couple of weeks ago where it topped out and drifted back towards more comfortable territory as the market sits on its hands ahead of today’s NFP/US Jobs data. A report, released today indicating that the ECB is likely to cut rates in June and may also downgrade the EU inflation outlook helped to cap the Euro, although the dollar was unable to take too much advantage as US bond yields were under pressure, today closing at the lowest level in 3 months (10-yr yield 2.593%). Assisting the dollar though was the generally solid US data, in which personal spending rose 0.9% (exp 0.6%) in March from an upwardly revised 0.5% in Feb, while the manufacturing ISM rose to 54.9 (exp 54.3) from 53.7.On the other hand, the initial jobless claims disappointed rising by 14K to 344K as opposed to an expected fall of 11K.
Today’s NFP is expected to be 210K, while the headline employment figure is expected to improve from 6.7% to 6.6%. Before then, the EU manufacturing PMI and unemployment data is due.
Technically there is no change and until the NFP it might pay to find something else to do.
As with yesterdays outlook, if/when the nearby resistance at around 1.3885 is overcome, expect a quick run towards the recent high at 1.3905, above which, would lead us back towards the 13 March 1.3966 high and possibly onto 1.4000. It would take a weak NFP today to head up this high and the ECB will be unhappy if this were to be the case and would potentially increase the possibility of an easing in May.
On the downside, bids will now be found at near-term minor support at 1.3825/35 (200 HMA). Back below 1.3800 would see another attempt on 1.3780 (daily Kijun 1.3787). Once again, 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 this 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.
In the longer term as I said yesterday - and outlined in last Sundays outlook, I am still eyeing the possibility of a large wedge formation building, in which case any attempt on 1.4000 would eventually fail, for a return to the downside. Should this turn out to be incorrect, above 1.4000 could see a very quick run on towards 1.4240, but this is some way, if at all, off yet I suspect.
Keep an eye out for where the US bond yields finish the week. 10 Years, sub 2.6% would not be a healthy outlook for the dollar in the days ahead.
Economic data highlights will include:
EU/German Mfg PMI, EU Unemployment, US Unemployment/NFP, Factory Orders
Jim LanglandsFX Charts www.fxcharts.com.au
