AUD/USD: 0.8985EUR/USD: 1.2915The dollar has retreated a little after yesterday’s strong rally but reached a 6 year high against the Yen. While the overall trend has further to go, today could be one of consolidation in the absence of any major data, which would allow the short term indicators to unwind their overbought condition. The commodity bloc looks a little healthier too and could see a bit more of a short squeeze.
The dollar gave up some of its ground today, with the Euro managing to squeeze back above 1.2900 in choppy trade and after some mixed data from the US. Jobless Claims were better than expected (280K) while housing starts dropped to 0.96 mio in August (exp 1.04 mio) and building permits dropped to 1 mio (exp 1.045 mio).
There is not a lot of economic data out today so it may be a choppy session, with the market largely likely to be watching the outcome of the Scottish vote.
Technically the short term momentum indicators point higher but are running into resistance from the 100/200 HMA’s currently at 1.2925/30, beyond which would find further sellers at the descending trend resistance at 1.2950. A break of this level would see a run towards 1.3000 again, but which might be a hard nut to crack today. If wrong look for a run towards the Fibo level at 1.3038 (23.6% of 1.3700/1.2834).
On the downside, 1.2900 will provide the initial support, ahead of minor buyers at 1.2880 and 1.2850 which I doubt that we revisit today. If wrong, below the trend low of 1.2835 would take a look at 1.2800 and then head towards 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.
Look for a choppy but directionless session, with the Euro likely to be dragged around by Cable as the outcome of the referendum becomes clear.
Economic data highlights will include:
German PPI, EU C/Acc, CB Leading Indicator.
Jim LanglandsFX Charts www.fxchartsdaily.com
