AUD/USD: 0.9365EUR/USD: 1.3525The dollar is generally stronger today as the market ponders Janet Yellen's comments of the previous day. The coming session looks to be fairly tight given the comparative lack of data, although the EU Inflation numbers may cause some volatility if the data differs markedly from expectations. Australia gets the NAB Business Conditions, while later in the US we get the Building Permits, Housing Starts.
The dollar is generally a bit stronger again today on the back of speculation that the Fed is heading toward tightening monetary policy and moving away from the current low interest rate environment.
Against the Euro, the dollar has seen a steady climb through the session currently trading at a one month high, currently holding above the important 1.3500 handle, but helped along today by a better than expected PPI.
The coming session will be guided largely by the release of the EU CPI, which if below expectations (0.5%yy (Core 0.8%yy)) will see a more concerted test of the downside and could will head below 1.3500 as speculation of an ECB easing increases.
The indicators are generally pointing to the downside but the Euro is currently sitting on strong support, as can be seen on the daily chart below, so caution should be warranted. If it can break below the current rising trend/Fibo support then the 1.3502 previous low will come under serious pressure.
A break of 1.3500 would hint at an acceleration for a move south towards 1.3415 (200 WMA), 1.3370 (50% pivot % of 1.2754/1.3995) and eventually 1.3300 (100 WMA) and 1.3294 (7 Nov ’13 low).
On the topside, 1.3550 will now see the immediate sellers ahead of 1.3570 and 1.3600. Given the negative feel of the indicators, I don’t really see it back above 1.3600 today, but if wrong, and the Euro does head higher over the next couple of days, offers in the 1.3640/50 area remain solid, where the minor Fibo resistance at 1.3646 (61.8% of 1.3700/1.3562) would provide strong resistance. A break of this level would see the Euro head on to 1.3665 (76.4%/ daily cloud base/200 DMA) but now looks a long way off. Further out, the Euro would find sellers at 1.3700, a break which would see a run up towards 1.3730(100 DMA), which should be solid resistance although a break of this level would head on towards 1.3803 (61.8%).
Aside from the EU inflation numbers, the US housing and jobs data will be the main focus of the session. Look for 1.3500/60 to largely cover it today, with the EU CPI to provide the direction.
Economic data highlights will include:
EU CPI, US Building permits, Housing Starts, Jobless claims, Philly Fed Mfg Survey.
Jim LanglandsFX Charts www.fxcharts.com.au
