AUD/USD: 0.9306EUR/USD: 1.3170Stronger US data once again underpinned the dollar and equities today, with both the S+P and the Dow making new highs, while the Euro hit new trend lows. The US$ uptrend remains intact and further gains would seem to lie ahead, although today there is very little global data due for release and it could be a session of consolidation, allowing the short term technical indicators to unwind. Focus will now begin to turn to the US GDP (Thursday) and then to the EU CPI (Friday). A weak reading here could prompt a reaction from the ECB, who may finally pull the trigger on further easing, in the EU, at next week's meeting (Sept 4).
EurUsd consolidated for much to the session today until the stronger Durable Goods and Consumer Confidence combined to underpin the dollar, sending the Euro to new trend lows at 1.3164.
It currently sits just above here, just above the base of the descending channel and looks heavy, although in the absence of any data to drive direction in the coming session I would doubt that we are going to head too far away from current levels today. German Consumer Confidence is all that we have to go on, and while it may cause some ripples I would be surprised to see the Euro trade much outside of 1.3150/1.3200 in the session ahead.
The 4 hour charts remain heavily oversold and it maybe that we do eventually see some sort of bounce back to today’s session high at 1.3214 and eventually to fill the gap at 1.3240. Right now it looks unlikely, but above there, further resistance would be seen at around 1.3260 (100 HMA) and at the descending trend resistance currently at 1.3280. Although it is looking increasingly distant, beyond this could see a squeeze back towards 1.3300/15 where strong resistance is seen, this being the base of both the monthly (1.3300) and weekly cloud (1.3315).
Below 1.3165, the 9 Sept 2013 low and where the base of the descending channel now also lies, and should therefore act as strong support, there is not much to hold it from heading quickly towards 1.3104 (6 Sept ’13 low). Below that, the next target is found at the Fibo support (76.4% of 1.2754/ 1.3993) at 1.3045, which when seen should prove strong.
As before, in the longer term, 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.
For the coming session don’t look for too much, with 1.3150/00 looking likely to cover it. Further out, the US GDP is coming up tomorrow and on Friday we get the EU CPI. If the EU data remains soft, the Euro is going to come under heavy pressure ahead of next week’s (4 Sept) ECB meeting at which Mario Draghi may finally pull the trigger on further easing and perhaps even commence a policy of QE.
Keep an eye out for the result of the talks between Putin and the Ukranian President, Poroshenko in Minsk. Any surprise signs of a breakout of commonsense could help the Euro out and provoke a bit of a squeeze higher, should sanctions look like being lifted.
Economic data highlights will include:
German Consumer Confidence
Jim LanglandsFX Charts www.fxcharts.com.au
