AUD/USD: 0.8750EUR/USD: 1.2630The Euro fell again today following the soft EU inflation data, although the dollar eased back after the US Consumer Confidence data failed to meet expectations. The Euro might find itself in further trouble today once the EU manufacturing PMI's are released, with a poor outcome likely to put further pressure on Mario Draghi at the ECB meeting, tomorrow. The Chinese manufacturing data kicks things off today, with Asia also focusing on the Japanese Tankan and PMI and the Australian Retail Sales. Later in the session we get the US ADP Jobs and ISM manufacturing numbers.
The Aud erased it early losses to 0.8693 and climbed to a session high of 0.8767 before giving up some ground and consolidating near 0.8750 towards the end of the US session.
Today’s direction will come care of the local Retail Sales (exp 0.4% mm) and the official China manufacturing data. Anything weaker than the expected 51.0 will see the pressure return to the downside for the Aud, which may want to take another look at 0.8700 and lower.
If we do head below 0.8700, the previous session low at 0.8688 ties in roughly with the 31 Jan low at 0.8694 and should provide some decent support. If broken, the Aud would want to take a look at long term target at the previous trend low, the 24 January low at 0.8660, which should also 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 market is now getting short though, so if the data is better than expected we could see a squeeze higher – which the shorter term momentum indicators suggest could be the case. Above 0.8765 would trigger stops and would most likely head back towards 0.8800 and then, possibly, on towards 0.8835 (200 HMA). I don’t see it up here but if wrong it should be used as a sell opportunity for lower levels which seem likely to lie ahead while the US$ runs down everything in its path.
Economic data highlights will include:
NBS Mfg PMI, Aust Retail Sales, China National Day.
Jim LanglandsFX Charts
