AUD/USD: 0.9370EUR/USD: 1.3840The ECB left rates unchanged, as expected, but Mario Draghi’s assertion that the central bank is ready to ease in June, if necessary, had the market on the run, sending the Euro sharply lower after an initial spike to 2 1/2 year highs. The BOE also left rates unchanged although Cable was left largely on the sidelines. Coming up today, the focus in Asia will be on the China CPI and the RBA Statement on Monetary Policy, while later in the session will see German Trade, UK Trade, Industrial Production and GDP Estimate and from the US, Wholesale Inventories. Have a good w/e
The Euro initially jumped to 1.3993, a 2 ½ year high against the dollar, after ECB left interest rates unchanged, but quickly reversed once ECB President Draghi hinted at the possibility of easing rates in June and is currently sitting near session lows at 1.3850.
Technically, it looks as though the wedge formation that we have previously mentioned may be in the process of playing out after having failed at the resistance just ahead of 1.4000 and having seen a key-reversal, outside day, the 4 hour charts are now hinting that we may have lower levels ahead of us. The dailies may also be on the point of turning to the downside and thus trading from the short side over the next few days would appear to be the strategy..
The initial support is now at 1.3830 (daily Kijun) and then at 1.3800, where the rising trend support meets the 38.2% Fibo reversal of the rise from 1.3475/1.3993. Below there would find some minor bids at 1.3775 (30 Apr low) and then again at 1.3735 (50% pivot) and below 1.3800 at 1.3675 (61.8%/4 April low).
The topside, which looks less likely over the next couple of days, would find sellers at the 200 HMA at 1.3875 (daily Tenkan: 1.3880) and then 100 HMA at 1.3900. I am not sure that we are going much above here, but if wrong further offers will arrive at around 1.3920/30.
The preference is to sell into strength, and while the hourly charts unwind their oversold condition it may be worth waiting to see if we can get a squeeze towards 1.3875/1.3900 before doing so.
There is not much data out today, so it could be a quiet end to the week, but there may be some volatility in Europe as traders continue to digest the wording of Mario Draghi’s press conference.
Use 1.3880/1.3810 as a guide, with a preference to selling into strength.
Economic data highlights will include:
German Current Account, US Wholesale Inventories
Jim LanglandsFX Charts www.fxcharts.com.au
