AUD/USD: 0.9205EUR/USD: 1.2935The dollar remained firm today, underpinned by speculation as to when the Fed may begin raising rates, although the Euro has managed to find some stability, late in the day, despite earlier making a new trend low. The real loser was the Aud, which broke some important support and appears to have more downside potential, which could be realised today if the Consumer Confidence and China data are below par. Elsewhere, apart from the UK Inflation hearing, there is little data due and it could be a rangebound session.
Having made a new trend low at 1.2858, the Euro has squeezed a little higher as it attempts to stabilise following the recent sell-off. The dollar needs to take a breather as there is plenty more left in the current rally although given the lack of any data again today it could mean another choppy but rather directionless session, which would at least allow the 4 hour charts to unwind a little.
If anything, the technicals appear to suggest that the Euro could squeeze a little higher today, perhaps towards minor resistance at 100 HMA at 1.2970 and then the post NFP high at 1.2987. I don’t really think we are heading above here but if wrong 1.3000 would provide strong resistance, a break of which would head to 1.3055 (200HMA/23.6% of 1.3700/ 1.2958).
On the downside, below the session low of 1.2858, as we said yesterday, 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.
Don’t expect too much today apart from the chance of a squeeze back towards 1.2985,but in the longer term the short squeeze is a chance to get set for the next leg lower
Jim LanglandsFX Charts www.fxchartsdaily.com
