AUD/USD: 0.9235EUR/USD: 1.3595The dollar made further mild gains today against most currencies, with the exception of the Yen, where it is a touch lower. Cable and Kiwi are under particular pressure although we could be in for a reasonably quiet session ahead, with much of Europe closed for Ascension Day. Australia gets the Capex and New Home sales data which may push the Aud around a bit, but otherwise there is little until the provisional US GDP later in the day. S+P made another all time high before a mild retreat, while WTI took a hit, falling nearly $2 pb at one stage.
The dollar continued to trade with a firm bias today as the Euro remained under pressure, falling below 1.3600 amid increasing speculation of a monetary policy easing next week by the ECB.
Much of Europe is closed today for the Ascension Day holiday so for the most part it could be fairly quiet, although later in the session the US will get the provisional GDP figure (exp -0.2%qq) and also the pending home sales to drive the dollar around.
Having broken down to a low of 1.3588 the dollar has taken out the major Fibo support at 1.3595 (76.4% of 1.3475/1.3995) with the next support to be seen at 1.3560 (27 Feb low) and then at 1.3520 (38.2% of 1.2754/1.3995). While the dailies do point lower, the divergence of the 4 hour charts continues to hint that further downside price action could be a rather slow process.
On the topside, back above 1.3600 would see sellers at 1.3635 (200 DMA), which should be strong, but above which, the 200 HMA is at 1.3665 (previous session high; 1.3668) and will also be decent resistance. Beyond here would head back towards 1.3685 (23.6% of 1.3995/1.3588) and then towards 1.3700, above which the 100 DMA is at 1.3735. I am not sure that we are heading up here any time soon.
For today, look for a fairly quiet session, mostly close to current levels.
I suspect that 1.3575/1.3615 for the most part should cover it, with most of the action likely to come after the release of the US data. Some analysts are talking of a contraction of 0.5%qq for the GDP, which would not do the dollar any good and could bring about some squaring of long positions, potentially sending the Euro a bit higher. A dip to 1.3550/70 may provide a decent short term buying opportunity today with a SL placed sub 1.3540.
Note that the DXY (chart below) has reached critical levels at around 80.60. A failure here could see a nasty reversal, sending the dollar lower once more. Alternatively, if 80.60 can be overcome, then we can expect an accelerated run towards 81.00.
Economic data highlights will include:
Ascension Day Holiday – EU, US GDP (Provisional), Pending Home Sales
Jim LanglandsFX Charts www.fxcharts.com.au
