The dollar gave back some of its recent gains today, despite some firm US data as the market focuses on Janet Yellen's speech, due later on at Jackson Hole. It will be a busy end to the week, with Mario Draghi lined up to follow Yellen, where the market will be waiting to see if he uses the forum to announce a further easing of liquidity to boost growth in the EU. Until the fireworks begin it will be a session of sitting on hands, so a good day to catch up with the admin! Have a good w/e.
The Euro managed to withstand the mostly softer manufacturing PMI’s from the EU and having made a new trend low at 1.3242 in Asia, has squeezed a bit higher, despite some firm US data, as the market now waits for the major events of the weeks, these being the speeches from Janet Yellen and Mario Draghi at Jackson Hole. The general feeling seems to be that while Yellen will retain her cautious outlook for the US economy, Mario Draghi could well use the occasion to announce some form of easing in order to boost the EU economy, including the possibility of introducing quantative easing.
The US dollar would seem to be the winner if it all turns out as expected, but the market is heavily short the Euro, in anticipation of further dollar gains, and the 4 hour charts are now turning to point higher so we could yet be in for a short squeeze that would take the Euro to back above 1.3300.
Currently sitting just below session highs at 1.3287, if the Euro does turn higher, then above 1.3300 would take us back towards the descending trend resistance/100 HMA at 1.3320 and then the 200 HMA at 1.3340 (1.3348: 23.6% of 1.3699/1.3242). Above 1.3350 would suggest a further squeeze higher towards 1.3400 and possibly to the recent tops in the 1.3415/30 area.
While the short term charts do suggest the chance of a squeeze, the dailies still point lower and eventually I think the 1.3242 low will give way for a run towards 1.3228 (61.8% of 1.2754/1.3993), below which there is not a huge amount of support to hold the Euro up ahead of 1.3104 (6 Sept ’13 low).
There is no other data out ahead of Jackson Hole so find something else to do until then.It could be a rather hectic end to the week later on though so be cautious..
Economic data highlights will include:
Jackson Hole Symposium
Jim LanglandsFX Charts www.fxcharts.com.au
