AUD/USD: 0.9395EUR/USD: 1.3465The dollar remains bid against the majors today after breaking through an important technical level against the Euro, and looks as though it is building the momentum for a bigger move over the coming weeks. Stronger housing data helped bond yields to head higher and underpinned the view that the US economy is expanding enough for the Fed to raise interest rates next year. Elsewhere, easing tensions with Russia allowed stocks to rebound. Today's focus will be on the Australian CPI and then later on the BOE Minutes. That aside it will be pretty thin on the data front and focus will remain on Russia etc
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Early Europe triggered stops to take the Euro below 1.3500, for it to sit just above 1.3480 by the time the US data revealed that inflation came in pretty much to expectations,- although the core figure slightly missed expectations, - while June U.S. home sales hit an eight month-high, suggesting the housing market is gradually regaining momentum, underpinning bond yields, and kept the bid tone in the dollar, which finished the US session just above its high against the Euro, of 1.3459.
Having now taken out the major support in the 1.3475/1.3500 area, the Euro looks as though it may see further declines, although it should be noted that the short term charts are oversold and may need some time to unwind. With the speculative market already running very short of the Euro, some sort of corrective short squeeze cannot be ruled out, with sellers likely to be seen at 1.3480 and again at 1.3500. Stops are building above 1.3510, which could once again take us back towards Mondays 1.3548 peak. Beyond there looks doubtful now, but above 1.3550, would head to sellers at 1.3570 and 1.3585, ahead of 1.3600. Given the ongoing negative look of the daily indicators, I don’t really see it back above 1.3600 for quite a while now, 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.
On the downside, 1.3450 is apparently being protected by option barrier buyers, but below here, there is then not too much support to be seen ahead of 1.3415 (200 WMA). Below 1.3400, would head to 1.3370 (50% pivot % of 1.2754/1.3995) and eventually to 1.3300 (100 WMA) and 1.3294 (7 Nov ’13 low).
With not much data due out today, traders will focus on geopolitical events, with the meeting in Brussels to discuss Russian sanctions being of immediate interest.
The BOE Minutes might see some action in Eur/Gbp, which might see the Euro jump about a bit.
Use 1.3450/1.3500 as a guide today, looking for an eventual move to/below 1.3400.
Economic data highlights will include:
Consumer Confidence (provisional)
Jim LanglandsFX Charts www.fxcharts.com.au
