AUD/USD: 0.8715EUR/USD: 1.2475While the US$ was generally fairly steady against the majors today, Cable continued to suffer in the wake of the dovish BOE Inflation report and Oil hit a 3 year low – and appears to be headed lower still. Today’s action will focus on the provisional German/EU GDP data and then later, on the US Retail Sales and R/M Consumer Confidence figures
The Aud is currently pretty much where it was in late Asia yesterday, after a choppy session that saw the Aud recover from the RBA inspired session low of 0.8663 to reach a high in Europe of 0.8763.
This was always going to be strong resistance (0.8760: 5 Nov high/ 0.8765 (23.6% of 0.9498/0.8540) and if we do see it back there it will be a tough level to break given that it is now backed up by the descending trend support from the 5 May high at 0.9401. The short term indicators seem to be running out of some steam on the topside, but if 0.8765 can be overcome then we could be in for a run towards 0.8800 and possibly to as high as 0.8865 (38.2%0.9398/0.8540). I don’t really see it happening.
The NY session has seen a steady drift lower on the back of weak equity and commodity markets, and with little bounce it is sitting just above the NY low late in the day. With little data due in Asia (and all eyes on the G20) it could be fairly quiet over the next few hours, so any action may be delayed until the release of the EZ Q3 GDP and US retails sales.
Back below 0.8700 would head back towards the 100 HMA at 0.8680 and then to the session low/200 HMA at around 0.8660. I don’t really see it below here today but if wrong prepare for a return to 0.8640 and eventually to 0.8600.
Further out, nothing has changed, and I think that we should be using the strength as a longer term sell opportunity (albeit probably at higher levels closer to 0.8800) as eventually I suspect that we will head back below 0.8600, below which would see a run towards 0.8570 and then possibly to last week’s low at 0.8540. As we said before, this will provide very strong support, being both 50% of the move from 0.6006/1.1082 and also the base of the monthly cloud. A break of this level though, and a November close below it, would have very bearish implications, for a test of the major channel base at around 0.8474 and then the May 2010 lows at 0.8066.
Jim LanglandsFX Charts www.fxchartsdaily.com
