AUD/USD: 0.8800EUR/USD: 1.2700Misses by both the German IFO and then the US Pending Home Sales has kept the market in check today, with not too much volatility while we wait on the outcome of today’s US Consumer Confidence/Durable Goods data, and more importantly, tomorrow’s FOMC meeting, from where the market is likely to take its direction for the latter half of the week. There is little data from Asia or the EU today so it maybe a session of sitting on hands until the US gets going
The Aud continues to chop sideways and shows a lack of any real conviction in either direction as it trades within the converging parameters of the triangle formation that has covered it in recent days.
A lack of any domestic data today looks like keeping it in a tight range, at least for the first half of the session, at least until the release of the US Sept Durable Goods and Oct Consumer Confidence figures. If these fail to provide any direction, then we will most likely have to wait for the FOMC tomorrow for guidance.
In the short term, we are currently sitting below the topside of the triangle, where 0.8820 has provided stiff resistance and which maybe continue to be the case today given the lack of any direction from the shorter term momentum indicators. If wrong, a break of 0.8820/25 would see a squeeze on towards 0.8842 (23.6% of 0.9502/0.8642) and then to 0.8860 (15 Oct high) and possibly to 0.8898 (9 Sept high). If seen I think it would present a better sell opportunity ahead of an eventual return to lower levels.
The downside will find bids at the 100/200 HMA’s, at around 0.8775/80, below which would head back to the bottom end of the triangle at 0.8730, but which currently looks too far off to worry about. If wrong, below there would revisit Friday’s base at 0.8720 below which we should look for a run down to 0.8700 and then to the recent lows at 0.8685, 0.8675 and 0.8651.
Jim LanglandsFX Charts www.fxchartsdaily.com
