AUD/USD: 0.9315EUR/USD: 1.3365It has been a choppy session in currency markets although the majors have finished the session largely unchanged against the dollar, with the commodity bloc showing the best gains. Some conciliatory comments from Putin regarding the Ukraine helped equities head higher while the other major mover was oil, where WTI fell 2% after the soft data today suggested the possibility lower demand while supply remains abundant. Today should be largely quiet given that much of Europe is on holiday. There is nothing due in Asia. The UK gets the GDP while from the US the focus will be on the PPI and Consumer Sentiment data.
Having headed lower after the weaker than expected German/ French CPI’s, the Euro based out at 1.3348 following the slightly weaker than expected EU CPI/GDP numbers (German 2Q GDP -0.2%, France 0.0%, EU 0.0%) and then recovered to a high of 1.3396 as short covering set in ahead of renewed selling at 1.3400 capped further gains. Further choppy trading ensued and the Euro later hit a session high of 1.3407 following the worse than expected US jobless claims that saw the dollar come under some pressure, before recovering later on, to finish the day pretty much where it had started.
With much of Europe on holiday today, the market will have to wait for the US data to provide any direction, but as the week winds up, further consolidation above the 1.3335 area would not really surprise.
The points to watch remain the same.
The short term triple bottom at around 1.3335 remains intact and this needs to give way before the Euro can head lower towards 1.3294 (7 Nov ’13 low) below which, more distant targets are seen at 1.3228 (61.8% of 1.2754/1.3993) and then eventually at 1.3104 (6 Sept ’13 low).
A break back above Wednesday’s top at 1.3415 would see an acceleration towards last Friday’s spike high at 1.3433. Above there, which looks a bit unlikely today, we could then be in for a run up towards 1.3470 (38.2% of 1.3699/1.3332) and possibly 1.3485 (23.6% of 1.3993/1.3332/ daily Kijun). Above this would see more stops triggered and could force an acceleration higher towards 1.3500, which previously acted as strong support and should now provide good resistance. A break of 1.3500 would test 1.3525 (38.2% of 1.3993/1.3332), beyond which could head up to the base of the previous wedge formation (blue line), currently at around 1.3575.
The bigger picture remains unchanged. While the dollar uptrend remains intact, the eventual target for the Euro appears to be the 9 July low 2013 at 1.2754, albeit that it looks somewhat distant for the time being.
Today’s plan again remains pretty much unchanged. Continue to hold a core short position but leave room to sell into strength with a SL above 1.3440, but looking for a run below 1.3335 towards 1.3300 and eventually a fair bit lower.
Economic data highlights will include:
EU Assumption Day holiday, US PPI, Industrial Production, Capacity Utilisation, Rts/Michigan Consumer Sentiment Survey
Jim LanglandsFX Charts www.fxcharts.com.au
