AUD/USD: 0.9275EUR/USD: 1.2900The dollar was strong again today assisted by a report, indicating that investors are underestimating how quickly rates will rise once the Fed begins hiking. Cable was unable to pick itself off the flow following the weekend poll on the Scotland independence vote. Commodity currencies reversed lower, pressured by the stronger US$ and weaker commodity prices. More US$ strength lies ahead
After sitting near Friday’s 1.2950 closing price for much of the day the dollar made further gains after the release of a Fed research report that indicated that markets are underestimating how quickly rates will rise once the Fed begins the cycle. NY sent the Euro lower, following the lead from the sharp rally seen in the run up to 106.00 in $/Jpy, reaching a low of 1.2888 before bouncing back to around 1.2900 at the end of the session.
With the .2900 support having now given way, the path appears to be open for a larger fall towards the 1.2750/80 target, although with no data to speak of today the Euro may find a bit of stability, allowing the 4 hour charts to unwind their oversold condition.
Back above 1.2900 would see minor resistance at 1.2925 and then again at 1.2950. It seems unlikely that we are headed above here today, but if incorrect, then Friday’s post-NFP high at 1.2987 will see further sellers ahead of 1.3000. Technical levels above there, although probably unlikely to be bothered, are at 1.3030 (100 HMA), 1.3045 (daily Tenkan) 1.3070 (23.6% of 1.3700/ 1.2988) and 1.3090 (200 HMA).
On the downside, back below the session low, there really is not a lot to stop it heading to 1.2800 and then to the target area of 1.2780 (major rising trend support; from July 2001) which comes just ahead of the 9 July 2013 low at 1.2754.
For today, look for some choppy trade, including the chance of a new trend low, but ultimately I suspect that by the end of the session we may not be too far from where we are now..
Jim LanglandsFX Charts www.fxchartsdaily.com
