AUD/USD: 0.9360EUR/USD: 1.3595The strong NFP gave the dollar a boost heading into the US long weekend and it would appear that there could be more to come in the rally, with the technicals looking a little more positive at the start of the week. There is a fair bit of data out in the coming week, particularly from China which has a big release on Tuesday. Other highlights will be the BOJ IR decision (Tues), Australian Unemployment, FOMC minutes (Wed), BOE IR decision (Thur). Today kicks things off wit the German Industrial Production and US Consumer Credit Change, while down under we get the NZ Business Confidence followed by the AIG Construction PMI, ANZ Job Ads. Good luck.
The dollar made back some of its recent lost ground following the US Jobs/NFP data on Thursday, ahead of the US long weekend, and having held 1.3600 though Asia Friday, drifted off to a low of 1.3585 before settling back to close near 1.3600 at the end of the week. The ECB decision to sit on its hands on Thursday was as expected and with Mario Draghi saying nothing new, volatility was limited on the announcement.
The week ahead sees some secondary data from both the EU and US, with the FOMC Minutes being a focus. A continued soft dovish bias will put the brakes on any further rally in the dollar.
Technically, the Euro does look as though it may now be building for a run to the downside, and having closed below 1.3600 (daily Kijun) we could head back down to Friday's low at the minor Fibo support at 1.3583 (61.8% of 1.3512/1.3700), last Thursday’s low at 1.3573 and then to 1.3557 (76.4%). Below here would head to the greater degree of Fibo support at 1.3518 (38.2% of 1.2754/1.3995) which will see good bids ahead of the post-ECB spike low at 1.3502. The base of the rising wedge now lies at around these levels as well, so if we see 1.3500 I think I would be squaring up short positions at the first attempt to break through it as it should be strong support. If wrong on this, a break of the wedge base would hint at a further move south towards 1.3415 (200 WMA), 1.3370 (50% pivot % of 1.2754/1.3995) and then to 1.3300 (100 WMA) and 1.3294 (7 Nov ’13 low).
On the topside, back above 1.3600, resistance will now be found at the daily Tenkan at 1.3635 above which would head back to 1.3650. I don’t really see it above there today but the 200 DMA at 1.3670 should act as further resistance, if seen. The Euro would find sellers at 1.3680 ahead of last week’s top at 1.3700. A break of this level would see a run up towards 1.3730/37 (100 DMA/daily cloud base), which should be solid resistance although a break of this level would head on towards 1.3803 (61.8%).
Looking to sell rallies appears to be the plan and today I would be using 1.3620/1.3570 as a guide. Given that the US have not been around since Thursday, it could be that they arrive at work needing to buy some dollars, which may give the Euro something to think about on the downside. Having said that, the short term charts are pointing mildly higher so I don't think the dollar will run away to the upside.
Economic data highlights will include:
M: German Industrial Production, US Consumer Credit Change
T: German Current Account, Trade Balance
W: FOMC Minutes
T: ECB Monthly Report, US Jobless Claims, Whole sale Inventories
F: German CPI, Rts/Michigan Consumer Sentiment Index - provisional
Jim LanglandsFX Charts www.fxcharts.com.au
