AUD/USD: 0.9440EUR/USD: 1.3660A strong US ADP Jobs release underpinned the dollar ahead of the upcoming US Jobs/NFP outcome. It is going to be a busy session today as the US winds down for the July 4 long weekend, and aside from the NFP we have the ECB meeting and Mario Draghi's press conference and the EU Retail Sales to contend with. Asia will also see some data which may hopefully provide some volatility, with the Australian AIG Services PMI, Building Permits and Retail Sales and the China Non Mfg PMI & HSBC Services PMI all due.
The dollar is firmer following the release of solid the US ADP employment data which came in, ahead of today’s NFP, at 281k in June, much better than consensus of 205k and May’s 179k. Today will be a busy session ahead of the US July 4 holiday tomorrow, and aside from the US Jobs/NFP (exp 6.3%, 213K) data, the ECB meeting / press conference will take place. The EU Retail Sales are also due. No change is expected from the ECB although Mario Draghi may well take the opportunity to talk the Euro lower by hinting at other forms of economic stimulus that would assist economic growth.
The Fed’s Janet Yellen was speaking today and said that an appetite for risk is on the rise, although she sees no need to alter the current accommodative U.S. monetary policy at this time. The market took her comments in its stride.
On the topside, the Euro will find sellers at the session high of 1.3680 ahead of yesterdays top at 1.3700. A break of this level would see a run up towards 1.3737 (50% pivot/100 DMA/daily cloud base), which should be solid resistance although a break of this level would head on towards 1.3803 (61.8%).
The downside has seen the Euro close back below the 200 DMA at 1.3670, – which could continue to act as a pivot – and head down to the support at 1.3640. A break of this would see a fall towards Friday’s day’s low of 1.3608 and to 1.3600 where the minor rising trend support lies. A break of 1.3600 would head to last Thursday’s low at 1.3573 and then to various minor support levels ahead of the Fibo support at 1.3518 (38.2% of 1.2754/1.3995) which will again provide strong support ahead of the post-ECB spike low at 1.3502. A break below 1.3500 would head towards the medium term target at the base of the rising wedge/weekly cloud top, at around 1.3460, 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).
The 4 hour charts still point lower although the dailies still look positive so it could be a choppy session, but overall, the Euro looks set to remain reasonably well underpinned over the next few days. However, if Mario Draghi remains dovish in his press conference and the NFP is as solid as the ADP was, then 1.3600 will come under pressure pretty quickly.
Economic data highlights will include:
EU Services, Composite PMI’s, Retail Sales, ECB IR Decision/Press Conference, US Unemployment/NFP, Trade Balance, Services, Composite, Non Mfg PMI’s
Jim LanglandsFX Charts www.fxcharts.com.au
