AUD/USD: 0.9380EUR/USD: 1.3715The UK Jobs/BOE Quarterly Inflation Report provided most of the excitement today, which combined to send Cable sharply lower while the Euro remained largely sidelined. US Equities & Bond Yields are lower, Commodities generally higher. There is plenty of data due today with German/French GDP and EU/US CPI being the highlights, but with plenty of secondary data, particularly from the US, due for release. Asia gets the Japan GDP and a speech from the BOJ's Kuroda. Janet Yellen is speaking later in the day.
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The Euro is unchanged today, having consolidated in a tight range above 1.3700 after the German and French CPI came in more or less in line with expectations. The fact that an ECB June rate cut is increasingly being seen as a done deal had little immediate effect, with the Euro being supported, in part, by some heavy short covering in Eur/Gbp following the benign BOE Inflation outlook. We could be in for some more volatile action today as it will be a heavy data load, headed by the German/French GDP and EU/US CPI, and with plenty of secondary data from the US. Janet Yellen will also be speaking late in the session.
Technically there is really no change.
On the topside, back above near term resistance at 1.3720 (daily cloud base ) and 1.3730 (session high) would find further sellers at 1.3740 (100 DMA) before heading towards 1.3775, which has capped the topside over the last couple of sessions. Above 1.3780 (daily cloud top) would suggest a run back to 1.3800 (38.2% of 1.3995/1.3688) - which currently looks unlikely, but if wrong, we could head up to the 200 HMA at around 1.3830.
The 4 hour charts are still unwinding their O/S condition, so while the dailies do point lower, I would give the Euro a bit of time for another run towards 1.3740/60 I think, before selling into it.
If we fail to get any sort of rally, then below 1.3700 and then yesterday’s low of 1.3688, would head towards the strong support in the area between 1.3670/75 ( 4th April low at 1.3675, the Fibo support at 1.3672 (61.8% of 1.3475/1.3995) and the weekly Kijun, at 1.3670). Below here though, would see a drop towards further good bids at around 1.3620 (200 DMA) and then to 1.3595 (76.4% of 1.3475/1.3995). In the bigger picture, as I pointed out previously, I suspect that we are in a large wedge formation, the downside objective of which is at 1.3375.
While looking for somewhere to get short, I would be tempted to wait for a bit more of a squeeze to the topside and would therefore use 1.3680/1.3750 as a guide today, but with plenty of data due, it could get quite volatile - for a change!
Economic data highlights will include:
EU Council Meeting, ECB Monthly Report, German GDP, EU CPI, GDP, US CPI, NY Empire State Mfg Index, Industrial Production, Capacity Utilisation, NAHB Housing Index, Philly Fed Mfg Survey, Yellen speech
Jim LanglandsFX Charts www.fxcharts.com.au
