AUD/USD: 0.9398EUR/USD: 1.3608The US$ remained under pressure today following the FOMC decision although the big movers have been Gold and Silver which are up about 3.5% and 5% respectively. The DXY has headed lower and the dollar looks as though it may be in for a tough time early next week. Today though, looks to be one of consolidation given the lack of any major data. Have a good w/e.
The dollar remained under pressure today as markets took the Fed’s message of keeping rates low for a “considerable time” seriously, causing a stop loss hunt in early Europe that took the Euro up to a high of 1.3642, since when, it has consolidated above the previous 1.3600 resistance.
It might have made further gains had it not been for the US data which generally beat expectations and helped to underpin the dollar. The Philly Fed Mfg index rose to an 8 month high of 17.8 in June from 15.4 in May, against expectations of a fall to 14, while the initial jobless benefits declined by 6,000 to 312K from 318K.
Today’s data schedule is fairly light and with nothing from the US it could be another session of chopping around close to 1.3600.
While the 4 hour charts remain positive and could eventually see further upside momentum, the hourlies have turned lower and for the next few hours at least I would be surprised to see us take out the earlier session high. A reasonably neutral stance is therefore currently required and I would suspect that a range of 1.3580/1.3640 should largely cover it today.
Should 1.3640 be taken out, the Euro would then target the 6 June high at 1.3676, which in turn lies just ahead of important Fibo resistance at 1.3687 (38.2% of 1.3994/1.2502). Above that 1.3700 and then 1.3737 (50% pivot) would come into play ahead of 1.3803 (61.8%).
Back below the previous resistance at around 1.3580 would see a return towards the base of the recent range, where the Fibo support at 1.3518 (38.2% of 1.2754/1.3995) will again find bids ahead of the post-ECB spike low at 1.3502, which would again be strong support. A break below 1.3500 would head towards the medium term target at the base of the rising wedge, at around 1.3440, where we would be squaring up shorts and looking for a bounce. If wrong on this, a break of the wedge base would hint at a further move south towards 1.3370 (50% pivot % of 1.2754/1.3995) and then to 1.3294 (7 Nov ’13 low).
As I said, 1.3580/1.3640 may continue to cover it today, with the dollar likely to remain under some mild pressure heading into the weekend. The DXY has once again failed at 80.60, now at 80.31, and looks as though we could be in for a run back towards 80.00, albeit probably not till next week.
Economic data highlights will include:
EcoFin Meeting, EU Current Account, Consumer Confidence, German PPI
Jim LanglandsFX Charts www.fxcharts.com.au
