AUD/USD: 0.9300EUR/USD: 1.3600Thin market conditions saw the dollar lose some of its recent positive momentum after the mixed US data and the majors were generally in consolidation mode as the market begins to look towards next weeks ECB I/R decision. The Aud was the biggest winner as it moved away from key support. Elsewhere, the S+P made its third new all time high in a row. Today's will look to the German Retail Sales for inspiration, later to be followed by the US Personal Consumption/Expenditure, Chicago PMI, Rts/Michigan Consumer Sentiment Index.
The dollar lost some of its recent positive momentum today, unchanged against the Euro following the release of mixed US economic data, in what was a fairly thin session, being an EU holiday. The Q1 GDP growth was revised down to -1.0%, much weaker than the estimate of -0.6%. The markets did not seem too bothered with the disappointing number as it was heavily affected by the bad winter weather and was offset by the better than expected jobless claims which dropped by 27k to (exp 321k).
There is little change from a technical point of view and another session of sitting close to 1.3600 would not really surprise.
The dollar is holding on above the major Fibo support at 1.3595 (76.4% of 1.3475/1.3995) and Wednesday’s low of 1.3588, and this may well continue today given the mildly positive look of the short term indicators. There is talk of good Asian demand at these levels. A downside break would see further bids at 1.3560 (27 Feb low) and then at 1.3520 (38.2% of 1.2754/1.3995). As we said before, 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 today’s high of 1.3625 (200 HMA) would see further sellers at 1.3635 (200 DMA), which should be strong resistance, but a break of which would most likely head towards the previous session high at 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.
Look for a similar range to yesterday, using 1.3585/1.3635 as a guide.
Keep an eye on the US bond yields. The 30-year fell to 3.328% today after earlier hitting 3.278%, an 11-1/2-month low, while the 10 years are at 2.44% having reached 2.402%. If the trend continues, which technically looks quite possible, the dollar is going to find increasingly strong headwinds in front of it even though the market wants to sell the Euro in anticipation of an ECB rate cut next week.
German Retail Sales, US Personal Consumption/Expenditure, Chicago PMI, Rts/Michigan Consumer Sentiment Index
Jim LanglandsFX Charts www.fxcharts.com.au
