AUD/USD: 0.9375EUR/USD: 1.3595Markets consolidated Friday, with the US$ recovering some of its lost ground following last weeks FOMC statement and we could be in for more sideways trade, possibly until Wednesday, when the US GDP will be released. The global manufacturing PMI’s will be today’s focus, starting with the HSBC China number, which will give the Aud and Kiwi some short term direction.
The dollar regained some of its lost ground from the FOMC inspired selloff, on Friday, as U.S. bond yields held steady, with the Euro finishing a little lower at 1.3600 after having recovered from a European low of 1.3564
Today’s action will be driven by the global manufacturing PMI’s, but In the absence of any major data releases I suspect we are likely to be in for a couple of sessions of choppy trade near current levels, which could well last until the US GDP & Durable Goods orders on Wednesday.
Technically, the short term indicators are mixed but the dailies do still point higher and at some stage a retest of last week’s high at 1.3642 would not really surprise. Beyond here, 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 beneath the 100 HMA at 1.3580 would see a return towards Friday’s low/200 HMA at 1.3564, below which would once again open up to 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 be strong support. A break below 1.3500 would head towards the medium term target at the base of the rising wedge/weekly cloud top, at around 1.3430, 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 1.3400 (200 WMA), 1.3370 (50% pivot % of 1.2754/1.3995) and then to 1.3294 (7 Nov ’13 low) and 1.3260 (100 WMA).
For today look for another session confined roughly within Friday’s range and thus use 1.3565/1.3430 as a guide. A test of 1.36750 may eventually be on the cards, but I think that if/when we get there it is probably a sell once more, for another run to the downside.
Further out though, as we approach the Northern Hemisphere holiday season though, it could be that we are in for a rather tiresome couple of months drifting around, but going nowhere fast.
Economic data highlights will include:
M: EU Flash Mfg/Services/Composite PMI’s, US Markit Flash Mfg PMI, Chicago Fed Mfg Activity, Existing Home sales
T: German IFO, US Consumer Confidence, New Home Sales, Richmond Fed Mfg Activity, Case Schiller House Price Index
W: German Consumer Confidence, US GDP, Durable Goods, US Services PMI
T: EU Council Meeting, US Personal Consumption/Expenditure, Personal Income/ Spending,
F: EU Business Climate, German CPI, Rts/Mich Consumer Sentiment Index
Jim LanglandsFX Charts www.fxcharts.com.au
