AUD/USD: 0.9345EUR/USD: 1.3525It was a day of safe haven demand following the shooting down of the plane over the Ukraine and then the launching of Israeli military ground operations in Gaza. The big movers have been Gold, Silver and Oil, while in the currency markets the Yen is seeing good demand. Risk assets including the Aud and Kiwi are lower, in line with the weak close in the US equity markets. In the absence of any major economic data today it looks as though politics will be the main focus and any moves are likely to be centred on position squaring ahead of the weekend.
The Euro has had a steady session, with attention largely focused elsewhere, on a move into defensive assets after the shooting down of a plane over the Ukraine.
With little data out today, it looks as though we can expect a quiet end to the week as far as the Euro is concerned. It looks as though it may well hold on above the important support at 1.3500, but traders will be watching developments in Russia/Ukraine and will be wanting to square up early ahead of the weekend, so given that the market is short, it would appear that the short term risk may be skewed mildly to the topside.
If that is the case, today’s top is at 1.3540, above which would see sellers at 1.3560 and 1.3585 ahead of 1.3600. Given the increasingly negative look of the daily 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%).
Although the dailies are pointing lower, the shorter term indicators hint that today is unlikely to see too much of a move to the downside and we are currently sitting on the important support at the rising trend line, at the base of the wedge formation. A break of this would head into decent bids ahead of 1.3500, where the previous low was at 1.3502. There is supposedly a barrier here, so the buyers are likely to be strong as they act to protect it and it will not be easily broken. If/when we do head lower, 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).
Look for a day of 1.3510/70.
Economic data highlights will include:
EU Current Account, Rts/Michigan Consumer Sentiment Index
Jim LanglandsFX Charts www.fxcharts.com.au
