AUD/USD: 0.9335EUR/USD: 1.3195It has been a reasonably steady session in .the absence of any major data to move the market although the commodity bloc has generally had a solid session. Things could warm up today, with the German Unemployment and CPI due ahead of the US GDP, Pending Home sales, Jobless Claims, Personal Consumption/Expenditure Prices. Friday sees the EU CPI, and the market will be looking towards this, as a low reading could be the catalyst for Mario Draghi to act and to add liquidity, including the possibility of Quantative Easing, at next Thursday’s ECB meeting. Ahead of the EU/US data, Australia gets New Home sales and Private Capex figures while NZ gets the Business Confidence numbers
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Having made a new trend low at 1.3152 in Asia, the Euro has squeezed a bit higher as the consolidation continues since the gap lower at Mondays open. Currently at 1.3200, the Euro has been underpinned during the latter half of the session by what has been attributed to comments from the German finance minister Schaeuble, who said that the market may have “over-interpreted” the recent comments by Mario Draghi. He was referring to Draghi’s Jackson Hole comments that the ECB “stands ready to adjust policy stance further”.
Later on, a Reuter’s story quoting unnamed ECB sources stated that new ECB action at next week’s meeting is unlikely unless the August CPI data (Friday) shows the EU to be heading significantly towards deflation saw a bit of a squeeze higher with the Euro touching a brief high at 1.3215.
Since then the Euro has had a reasonably steady session and now awaits a busy day as we look ahead to the German Unemployment (exp 6.7%/-5K) and then later the provisional German CPI (exp 0.8%YY) and the US Q2 GDP(exp 4%YY). Pending Home sales and Consumption/Expenditure is also due, as well as the weekly jobless claims.
Technically there is little change, although it looks to me as though the Euro may have put in a short term base and given the positive momentum on the short term charts as they continue to unwind, could make an attempt to close the gap from Monday’s opening. Stronger than expected German data and/or weak US data would help it on its way.
Today’s session high has been 1.3215 (100 HMA) a break of which would hint at a return to 1.3235/40 which would close the gap and is where the minor descending trend resistance currently lies. Above here would head to the 200 HMA at 1.3270 and then possibly to 1.3300/15 where strong resistance is seen, this being the base of both the monthly (1.3300) and weekly cloud (1.3315).
On the downside, minor support lies at 1.3170 below which 1.3150 is again likely to be protected by option related buyers. Below that, there is not too much to hold it from heading quickly towards 1.3104 (6 Sept ’13 low), a break of which 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 support.
For today, buying dips appears to be the plan, with a stop and reverse placed below 1.3150. Use 1.3175/1.3235 as a guide, with the data to dictate the direction.
Further out, I still think the dollar will regain its legs as the trend continues and 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.
Economic data highlights will include:
German Unemployment, CPI, US GDP, Pending Home sales, Jobless Claims, Personal Consumption/Expenditure Prices
Jim LanglandsFX Charts www.fxcharts.com.au
