Aud, Kiwi and other risk positions on hold until the NFP later today.
The ECB, having left rates unchanged, stated that it is prepared to take action to combat low inflation/growth, sending the Euro lower. Elsewhere, the US$ is mixed, although Cable is weaker following soft UK data. Markets look set to remain steady until the US Jobs data/NFP later today, at which an improved reading is generally expected following the recent weather-related under-performance of the last couple of months.
EUR/USD: Daily
USD/JPY: Daily
GBP/USD: 4 hour
USD/CHF: 4 hour
AUD/USD: 4 hour
NZD/USD: 4 Hour
The ECB, having left rates unchanged, stated that it is prepared to take action to combat low inflation/growth, sending the Euro lower. Elsewhere, the US$ is mixed, although Cable is weaker following soft UK data. Markets look set to remain steady until the US Jobs data/NFP later today, at which an improved reading is generally expected following the recent weather-related under-performance of the last couple of months.
EUR/USD: 1.3715
The euro fell to a 5 week low against the dollar today, after Mario Draghi reiterated that the ECB is prepared to take action to stave off the risk of deflation in the EZ, despite leaving rates unchanged. He added that the Euro’s exchange rate is an increasingly important factor in the bank’s medium-term assessment, causing an immediate spike to the downside, although the bids at around 1.3700 are currently holding.
Elsewhere today, the ISM non-manufacturing index rose slightly less than expected to 53.1 in March, while the jobless claims were also slight worse than expectations, leaving equities flat on the day.
The market is now likely to hang around here until the US Jobs data later on today, where the expectations are for a rise of 200K (Deutsche Bank expects 275K).
While 1.3700 holds, then we could yet see a bit of a squeeze higher in the Euro as shorts cover ahead of the NFP, but the 4 hour and daily charts do point lower and therefore, if/when this support does give way, we should expect further dips towards 1.3680/85 which should prove strong. This is where several technical levels converge, including the top of the daily cloud, the 100 DMA, 23.6% retracement of 1.2753/1.3966 and the rising trend support from the 1.2753 low. A break of this though, would head back towards the Fibo support at 1.3660 (61.8% of 1.3475/1.3966) below which, the 27 Feb low at 1.3643 will come into view ahead of the 76.4% Fibo support at 1.3595.
On the topside, minor resistance will arrive at 1.3750 ahead of further sellers that will be seen near the 100/200 HMA’s at around 1.3770/75. It looks unlikely that we will head much above here today, and I don’t think we are going to see 1.3800 unless the NFP badly misses expectations. The resistance above 1.3800 remains strong, with 1.3808 (1.3803: Daily Kijun, 38.2% of 1.3966/1.3704) and 1.3820 (Daily Tenkan) providing the initial hurdles ahead of 1.3833 (50% pivot of 1.3966/1.3704). A break of this would see a move on towards 1.3865 (61.8%) and the recent spike high at 1.3875. I cannot really see this being tested again for a while, but beyond there would head towards the minor trend resistance at 1.3900, above which would suggest a retest of 1.3966 and eventually 1.4000. If we ever get there, this area won’t be easy to overcome as there well be plenty of option related sellers protecting it, but if/when the Euro finds the legs to head above it, there is not a lot to stop it heading on to the next major Fibo resistance at 1.4240 (76.4% of 1.4940/1.2041) which was also the Oct 2011 high.
Selling rallies looks to be the way of it, but the downside will see strong bids, so overall, I suspect the price action will be choppy. Before the NFP, German Factory Orders may provide some volatility.
Keep an eye on the DXY which looks as though it is breaking above important resistance. Currently sitting right on the 100 DMA at 80.44, a break above the 27 Feb high of 80.56 would mean a possible run up to the 200 DMA at 80.89. This would mean the Euro being down around 1.3600, possibly a bit lower.
Economic data highlights will include:
German Factory Orders, US Employment, NFP
Meta Trader – AxiTraderEUR/USD: Daily
USD/JPY: 103.90
The dollar is once again struggling to overcome 104.00, although a decent reading from the NFP, may provide the impetus to head higher. The day’s range has only been 30 points and it looks likely to be very quiet until the US data, and the technical points to watch remain pretty much unchanged.
If we can overcome the session high of 104.10, then we might head on towards the major Fibo resistance will come into view at 104.31(76.4% of 105.42/100.75). Beyond there lies the descending trend resistance at around 104.50, which lies ahead of further minor resistance at around 104.80/90 ahead of 105.00
On the downside, back below today’s 103.80 low would head towards minor 103.45 support(100 HMA), a break of which would see a run towards 103.00 (38.2% of 100.20/104.10). Under 103.00 would see further buyers at around 102.75 (200HMA).
The dailies point higher, but the 4 hourlies do remain overbought so while I think the Yen is going to remain under pressure in the days to come, it looks as though the dollar is going to have to fight hard to make any real progress towards 105.00. An NFP reading well above expectations would negate that theory and would probably see the dollar head higher very quickly.
Meta Trader – AxiTraderUSD/JPY: Daily
GBP/USD: 1.6590
Cable headed quickly higher to 1.6660 after comments from BOE Governor Mark Carney that interest rates could increase ahead of the election. That was as good as it got for Cable though, as it reversed sharply on the release of the weak UK services PMI and has so far traded down to 1.6570 support (daily Kijun).
I suspect we are possibly heading a little lower, and below the session low will find bids at 1.6540 where rising trend /Fibo support converge. A break of that could bring about deeper declines, although the daily charts are flat and do not suggest any major move in either direction. Below 1.6535 (daily cloud base) though, could see a run towards 1.6500 and then the 100 DMA (1.6475) and the 24 March low at 1.6462.
On the topside, 1.6600 will now be the initial resistance ahead of sellers at around 1.6620 and then the 200 HMA at 1.6635. It looks unlikely that we are heading above here today, but if wrong, further sellers will arrive at today’s 1.6660 session high.
While being mildly bearish, I would not have too much in it either way, and it could be that we are in for a choppy session within a range of 1.6540/1.6620.
Meta Trader – AxiTraderGBP/USD: 4 hour
USD/CHF: 0.8910
US$/Chf has finally cracked 0.8900 and headed up to the strong resistance at 0.8925 (descending trend /50% of 0.9143/0.8698). This wont be easy to overcome, but above here the dollar could head on to the 100 DMA/daily cloud base at 0.8950, which will also be strong, but above which would head to the Fibo resistance (23.6% of 0.9838/0.8698) at 0.8962. Above there could see an acceleration towards the next resistance at 0.8980 (61.8% of 0.9143/0.8698) and then picking up some speed as it breaks above the top of the daily cloud, as it heads towards 0.9046 (76.4%) and the 200 DMA at 0.9085.
On the downside, 0.8900 is the initial minor support ahead of 0.8870 ahead of rising trend support at around 0.8850 (daily tenkan). Back below here would see a deeper decline, perhaps towards 0.8800 (0.8810 – daily Kijun), but this looks unlikely and for the time being I prefer to trade from the long side, looking for an eventual break of 0.8930 for a move towards 0.9000+.
Meta Trader – AxiTraderUSD/CHF: 4 hour
AUD/USD: 0.9230
The Aud has had a quiet session, trading with a mildly softer bias as the charts unwind their slightly overbought nature, and currently seems happy to trade the range between the 100/200 HMA (0.9245/0.9220).
With the NFP coming up later, the Aud looks likely to be quiet for much of the session, and a decent reading could see the Aud come under some pressure as the US dollar climbs higher. Right now I prefer to still trade it from the long side and prefer to buy dips in the 0.9150/0.9200 area. A break of 0.9150 though, would mean a break of the head/shoulder neckline that we have been watching for a while, so reasonably tight stops on any longs should be left under 0.9135 (100 DMA). Fresh shorts are likely to be opened up around here, looking for a quick return to 0.9000 and possibly lower.
In the meantime, support lies at 0.9200 and below here at 0.9185 (38.2% of 0.8660/0.9303) and 0.9175 (daily tenkan). If we do head below here, keep a close eye on the action at 0.9150.
On the topside, back above 0.9245 would head on to 0.9275 and then to the recent 0.9303 high. Above here, the next port of call would be the Fibo levels at 0.9339 (61.8% of 0.9757/0.8660) and possibly to 0.9387 (38.2% of 1.0582/0.8660). Beyond this, there is not a lot ahead of 0.9450 (weekly cloud base) and 0.9494 (76.4% of 0.9757/0.8660). At this stage these are a long way off and with the short term indicators looking to be pointing a bit lower, upside progress today may be a bit limited.
The dailies are also rolling over and the head shoulder target is too far over the horizon to consider being realistic, but while 0.9150 holds then buying dips for an eventual run towards the SHS target at 0.9590 remains the strategy.
For today use 0.9200/50 as a guide and then wait for the NFP. Buying dips with a SL under the 100 DMA remains the strategy.
Meta Trader – AxiTraderAUD/USD: 4 hour
NZD/USD: 0.8540
The Kiwi has yet to show any real signs of recovery, after beginning its slide after the Fonterra auction on Wednesday. Today’s range has been 0.8513/80 and we are currently sitting towards the lower end of it, with the longer term charts suggesting the possibility of further losses to come.
In the short term, the charts are now a bit oversold and we could yet get a bit of a squeeze back to around the day’s high, above which the 100/200 HMA’s are currently both just above 0.8600 and will see sellers. Above here looks doubtful, but if wrong could see a run towards 0.8630.
On the downside, below 0.8515 would suggest a look at 0.8500 (daily kijun – 0.8490), below which would head towards Fibo support at around 0.8453 (38.2% of 0.8051/0.8700).
With the dailies now pointing lower, I suspect that any rallies towards 0.8600 will be sell opportunities, but all will depend on the NFP reading.
Meta Trader – AxiTraderNZD/USD: 4 Hour
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