AUD/USD: 0.8758EUR/USD: 1.2680The dollar continued its march higher on Friday making trend highs against most of the other majors, assisted by the firm, upwardly revised US Q2 GDP reading. It does not look like much will change this week, and the Euro should remain under pressure ahead of the German and EZ CPI’s due for release on Tuesday/Wednesday which come ahead of Thursday’s ECB meeting, at which Mario Draghi is again likely to be extremely dovish in his outlook and may announce further stimulatory measures for the EU. Plenty of other secondary data ahead of Friday’s US Jobs/NFP numbers should ensure a busy week.
The Aud continued its slide on Friday, reaching a low of 0.8747, before a minor bounce into the close to finish at 0.8765.
Even lower levels look likely in the day’s ahead, although the Aud may see some support early in the week, having closed right on the major rising trend support off the July 2007 low at 0.7721.
A break down through 0.8745/50 would see a run to minor supports at the 4 Feb 2014 low at 0.8730 and then at the 31 Jan low at 0.8694. Below here will then want to take a look at the 24 January low at 0.8660, which should act as strong support but below which would then head to the July 2013 at 0.8632. Below here there is little to suggest that the Aud will pull up ahead of the 50% pivot of the long term rally from 0.6006/1.1082, at 0.8538.
The topside looks a little limited as long as this US$ strength continues, but if we do see a squeeze higher we could get back to the descending trend resistance at 0.8800. Above here would trigger stops and could see a run up to the 100 HMA at 0.8840 and then to the Fibo (23.6% of 0.9473/0.8747) resistance at 0.8900, where the 200 HMA lies and I think that any rally towards 0.8850 should be treated as a sell opportunity for an eventual look at the base of the major channel at 0.8500 and possibly a fair bit lower. A sustained move back above 0.8850 though, would tend to turn the bias back to neutral for some consolidation before heading lower once again.
Economic data highlights will include:
T: ANZ Business Confidence, Private Sector Credit, RBA Annual Report, HSBC Mfg China PMI
W: NBS Mfg PMI, Aust Retail Sales, China National Day
T:,Aust TD Inflation, HIA New Home sales, Building Permits, Trade Balance, China National Day
F: AIG Services PMI, China National Day.
Jim LanglandsFX Charts www.fxchartsdaily.com
