AUD/USD: 0.9280EUR/USD: 1.3878The stronger NFP on Friday bought a swift rally in the US$, which was equally quickly given up on closer inspection of the diminishing participation rate, with most currencies finishing back where they started the session. This week will be a busy one, particularly for the Aud, which will see important data on most days of the coming week, starting today with the Job Ads, Building Permits and HSBC China manufacturing data. We get the RBA meeting tomorrow, as well as interest rate decisions, Thursday, from both the BOE, ECB. Janet Yellen will testify to Congress on Wednesday. Today's other highlights will be the Sentix Investor Confidence Survey and US ISM Non-Mfg Index. It is Golden Week in Japan, May Day holiday in the UK.
Friday's strong US jobs report and NFP reading ( 6.3%, +288K) allowed the dollar to briefly rally against all-comers, but was quickly undone once traders looked at the drop in the participation rate (62.8% v 63.2% exp), sending the Eur/Usd back to square one, pretty much unchanged to where it had spent much of the week.
The shorter term indicators now look somewhat bullish and it could be that the Euro will now head higher to test the stops above 1.3905 (11 April high) ahead of the ECB IR meeting coming up on Thursday. No change is expected from the ECB in May, with June seen as a more likely time horizon for any potential easing, and should this turn out to be the case, it could well be that 1.4000 is going to come under some pressure in the days ahead, which is not going to please Mario Draghi and his colleagues, so they could yet spring a surprise by easing this week, which would bring the Euro back to more comfortable levels..
Elsewhere on Friday, EU unemployment was unchanged at 11.8%, while the manufacturing PMI was revised up slightly to 53.4 in April.
Technically though there is again little change in the Euro.
The nearby resistance at around 1.3885 remains intact but if/when taken out, 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.
As I have previously said, 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, then once above 1.4000, could see a very quick run on towards 1.4240 but this is some way off yet I suspect - if we see it at all..
On the downside, the initial bids will now be found at minor support at 1.3840/50 (100/200 HMA) ahead of Friday’s 1.3812 low. 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.
The hourlies point higher and a decent Sentix survey today could see a test of the 1.3900 level. Stops lie above here, ahead of some selling interest at 1.3930. More likely though, given the recent lack of volatility, it appears that we may be doomed to hang around here until the ECB meeting on Thursday. Let’s hope not!
As ever, keep a close eye on events in the Ukraine where things have not improved over the w/e.
For Monday, use 1.3850/1.3920 as a guide.
Economic data highlights will include:
M: Eurogroup meeting, Sentix Investor Confidence Survey, EU PPI, EU Economic Growth Forecast, ISM Non-mfg PMI
T: EU Services/Composite PMI, EU Retail Sales, US Trade Balance,
W: German Factory orders, Consumer Credit, Yellen testimony to Congress
T: German Industrial Production, ECB I/R Decision, Press Conference
F: German Current Account, US Wholesale Inventories
Jim LanglandsFX Charts www.fxcharts.com.au
