AUD/USD: 0.9305EUR/USD: 1.3375Improved Services/Factory data helped the dollar make some reasonable gains today, ahead of tomorrows ECB and BOE meetings No changes are expected from either but there could be a change of tone from either/both of them which could see some volatility in both Sterling and the Euro. today is a bit thin with regards to economic data with the German Factory Orders and US Trade Balance being the highlights. NZ has Employment numbers coming up shortly
The soft Italian Services PMI saw the Euro sell down to 1.3400, where it was initially supported by the German number that came in slightly higher than expectations. This was only temporary and once the stronger US non-Mfg PMI came in above forecasts the dollar continued its climb, sending the Euro down to a 1.3558 low from where it has so far made a mild bounce, assisted by option related bids protecting 1.3350.
We have the German Factory Orders and US Trade Balance to focus on today, but the market is really going to be looking towards tomorrow’s ECB meeting and Mario Draghi’s press conference. Should he lean towards a dovish tone again, the support at 1.3350 (200 WMA) will not last long and the Euro will head towards the next meaningful target at 1.3294 (7 Nov ’13 low), a break of which would head towards 1.3228 (61.8% of 1.2754/1.3993) and then eventually to 1.3104 (6 Sept ’13 low).
On the topside, 1.3400 (100 HMA) will now act as the immediate resistance and I would be doubtful of seeing it much above here today. If wrong, a further squeeze would see a return to the 1.3425/30 (100 WMA) area. This now looks unlikely to be seen any time soon, but if wrong we could head back towards Friday’s high at 1.3445 (daily Tenkan). Beyond there, 1.3500 and 1.3510 – descending trend resistance/23.6% of 1.3993/1.3357 will see good seller and should we ever get back above here, the daily Kijun at 1.3530 will provide some resistance.
Look for some consolidation today within the 1.3350/1.3400 area, but with the view remaining that we should be selling rallies, looking eventually for a run towards the long term target at the 9 July low 2013 at 1.2754.
Economic data highlights will include:
German Factory Orders, US Trade Balance
Jim LanglandsFX Charts www.fxcharts.com.au
