AUD/USD: 0.8930EUR/USD: 1.2880There is no let up in the strength of the US$ with most counterpart currencies finishing on trend lows and looking as though there is going to be more of the same in the coming week. Commodities also took a hit, with Silver collapsing by 4% on Friday. The coming week will have Mario Draghi’s testimony to the EU in focus today, ahead of the flash manufacturing PMI’s tomorrow. Later in the week, the US Durable Goods and GDP will be the highlights. Australia will be looking to Glen Stevens speech on Wednesday for guidance. Japan gets the CPI, Friday.
The dollar finished the week on its highs against most currencies in posting its 10th consecutive week of gains as investors reflected on the outcome of the FOMC meeting, with traders speculating that U.S. interest rates will rise more quickly than had been previously expected which should continue to underpin the current rally..
The Euro is at 14 month lows and looks as though it is on its way to meet the long term objective at 1.2754 (9 July 2013 low) and with Mario Draghi due to speak today to the EU Governing Council on the outlook for the economy, he could well help it on its way. Elsewhere, there is a bit of secondary data out this week, starting with the flash manufacturing PMI’s tomorrow, but the focus will be on the US Durable Goods orders on Thursday and then on the US GDP on Friday.
Technically, the Euro has made a new trend low at 1.2827 and it would appear that 1.2800 is now not too far away. A break of 1.28 would then head towards the target area of 1.2780 (major rising trend support from July 2001 & 61.8% of 1.2041/1.3995), which comes just ahead of the 9 July 2013 low at 1.2754. The daily charts are reaching oversold levels and so the trend should slow here but I don’t think it is going to turn around much and once the charts have had the time to unwind, I suspect that we are in for a run towards the November 2012 low at 1.2660 and then 1.2500 (76.4%of 1.2041/1.3995). Below here we then look likely to ratchet our way lower towards the 22 July low at 1.2041.
On the topside, minor resistance is now seen at 1.2860 and it would appear that the Euro is going to struggle to make it back to 1.2900. If we do see a squeeze higher, then look for further sellers to emerge at the 100/200 HMA’s at 1.2915/20 and then again at the descending trend resistance at 1.2940. Right now 1.3000 is looking increasingly distant.
Stay short and sell rallies seems to be the plan.
Economic data highlights will include:
M: Mario Draghi Speech, US Existing Home sales
T: EU Flash Mfg PMI, US Flash Mfg PMI, Richmond Fed Mfg Index
W: German IFO, US New Home sales
T: US Durable Goods orders, Jobless Claims, Flash Composite PMI, Kansas fed Mfg Index
F: German Consumer Confidence, US GDP, Personal Consumption/Expenditure, Rts/Michigan Consumer Sentiment index.
Jim LanglandsFX Charts www.fxchartsdaily.com
