Solid US data, ECB comments support US$, keep the Euro under pressure.

Aud, Kiwi firm, as risk sentiment improves after a bounce in equities. RBA minutes ahead.

Solid US retail sales helped the dollar and equity markets today, while the Euro was under pressure from comments on monetary policy from various ECB board members. Improved risk sentiment assisted the commodity bloc currencies and also commodities, which were generally firm. Today’s focus will be on the EU/German ZEW Economic Sentiment Survey and the UK and US CPI. Before then RBA minutes will provide the interest in Asia.

EUR/USD: 1.3820

The Euro remained under pressure today following Mario Draghi’s weekend remarks in tying the exchange rate to monetary policy and which were followed up today by another ECB board member,  Noyer, who said that the ECB are prepared to ease rates if inflation remains low for an extended period.

The dollar was also assisted by the solid U.S. retail sales, which grew by 1.1% in March, exceeding expectations of 0.8%. February figures were revised up to 0.7% from a previously estimated 0.3% rise.

Today’s focus will be on the EU/German ZEW Economic Sentiment Survey and followed later by the US CPI.

Technically the Euro looks set to remain under some pressure, although while it holds above 1.3800 it may find the legs to squeeze up to fill the gap to Friday’s close at 1.3885. I don’t really see it, but if wrong, beyond there would potentially take a look at the Fibo resistance at 1.3895 (76.4% of 1.3966/1.3675) and the rally high at 1.3905, beyond which would target the 13 March high at 1.3966. Above that would suggest a run towards 1.4000 which won’t be easy to overcome as there well be plenty of option related sellers protecting it – and the ECB would not like it either -, but if/when the Euro finds the legs to head above here, 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.

On the downside, below 1.3800 would see bids at 1.3790 (200 HMA/ 50% pivot of 1.3672/1.3905), which lies ahead of 1.3761 (61.8%) and 1.3727 (76.4%). The rising trend support/ 100 DMA is currently at 1.3710 but which for now, looks out of reach.

The 1 and 4 hour indicators are conflicting and thus I suspect we are in for another tight day and would use 1.3790/1.3860 as a guide although the data could provide a bit of interest.

Economic data highlights will include:

EU/German ZEW Economic Sentiment Survey, EU Trade Balance, US CPI, NY State Mfg Index

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EUR/USD: 1 hour

USD/JPY: 101.75

The dollar managed to squeeze higher on the better than expected US retail sales figures but met with solid selling interest at 102.00 and has slowly drifted back to test the 100 HMA support at 101.70.

There is therefore little new to report and given that the charts are rather mixed , we could be in for more choppy trade in the next couple of days, and 101.20 /102.00 could well continue to largely cover it.

The 4 hour indicators are still recovering from having become oversold and as with yesterday, I am not sure that 101.20 is going to be seen today, but if wrong, then we should expect a run towards 101.00 and probably to the 4 Feb low at 100.75, roughly where rising trend support and the 200 DMA also lie, and thus should be strong support.

If we do see a squeeze to the topside, sellers will arrive once more at 101.95/102.00 (101.95: 23.6% of 104.12/101.31) and then at 102.15 (Thursday’s high). Above there would see an acceleration towards the daily cloud base, now at 102.35 (38.2% of 104.12/101.31), although this looks unlikely today. If wrong, then above there will see decent sellers at around 102.70 where the daily Kijun/Tenkan both currently sit, ahead of the 100 DMA at 102.95 and the daily cloud top at 103.10.

For today, once again, use 101.30/102.00 as a guide.

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USD/JPY: 1 hour

GBP/USD: 1.6725

Sterling stayed relatively well bid today, benefitting from inward flows from Eur/Gbp following the ECB comments, holding the support at 1.6700 (low, 1.6696) and squeezing up to 1.6743, before settling roughly in the middle, pretty much where it started the day.

Back below the session low would head towards the 200 HMA at 1.6680 and the 50% pivot of the move up from 1.6551/1.6821 at 1.6675. Below this, the 61.8% Fibo support lies at 1.6655, ahead of the rising trend support / 76.4% Fibo support at 1.6615.

On the topside, above the day’s high, intraday resistance lies at the 100 HMA at 1.6753 and then at 1.6785. If we crack 1.6800, which I doubt today, Cable would head back to 1.6821, which is going to be strong resistance, but a break of which would suggest a run towards 1.6875.

Today looks likely to be a re-run of yesterday’s session, but the UK CPI (exp 0.2%mm/1.6% yy) could provide some volatility. In the meantime use 1.6690/1.6750 as a guide.

Economic data highlights will include:

UK CPI, PPI, RPI

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GBP/USD: 4 hour

USD/CHF: 0.8798

The dollar is a little higher, in line with the weakness in the Euro and the intraday indicators look as though some mild further gains could be in order. The dailies do not yet look all that positive though, so I would not be getting too carried away on the topside.

However the dollar has broken back above the minor Fibo resistance and 100 HMA at around 0.8785/90 and if we can make a sustained run above 0.8800, we could see a bit of a squeeze towards 0.8822 (38.2% of 0.8953/0.8743) and then 0.8850 (50%).  It seems unlikely that we are going much above there in the near future and 0.8900 looks out of touch, but if wrong we could yet be in for another look at last week’s 0.8953 high.

Back to the downside will see bids at around 0.8770 with more at 0.8740/50. I doubt we are headed below here today we could head to the strong support at 0.8700. If/when we trade under here, there is not an awful lot of support ahead of the base of the channel (red line) which is at around 0.8570, so keep stops on longs tight incase the 0.8700 support does give way.

In the short term, I still prefer to buy dollars at around 0.8765/75 with a SL under 0.8740.

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USD/CHF: 1 hour

AUD/USD: 0.9420

The Aud moved a bit higher today, after an early 0.9375 low, and is closing the NY session just below its 0.9425 top. The strength in the Aud is possibly a bit surprising, given the strength of the US retail sales which generally underpinned the US dollar, but the consequent rally in the US equities markets has aided risk sentiment.

The daily charts are pointing higher, although they are in danger of becoming overbought and sentiment towards the Aud is mixed. Last week’s fall in equities began to question risk appetite and increased global growth concerns. However the move lower in equities also saw a move back into EM assets which is helping to underpin the Aud.

We prefer to stay with the trend, and once again look to buy dips towards the rising trend support, now at 0.9365. Ahead of that, there will be bids at 0.9400 and then at 0.9390 (100 HMA). A break of 0.9365 could trigger stops and produce a deeper setback, towards 0.9250 and possibly to 0.9200, although this currently looks unlikely.

On the topside, above 0.9425 would see a squeeze up towards last week’s 0.9460 high, beyond which we should expect a run towards 0.9494 (76.4% of 0.9757/0.8660). Above here, 0.9542 is the 6 Nov high, and the longer term strategy of looking for a run towards the SHS target at 0.9580 remains intact.

The RBA minutes are due later on but are unlikely to produce much that we don’t already know and for today, I suspect 0.9400/50 could cover it. If we do head below 0.9400 though we may see a more severe test of the rising trend support, so keep stops relatively tight.

Economic data highlights will include:

RBA Minutes, WBC Leading Index

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AUD/USD: 4 hour

NZD/USD: 0.8680

The Kiwi was choppy today and generally followed equities around, initially heading lower as Asia followed through from Fridays weak US close, before recovering later on as the US markets rallied after the better than expected US Retail Sales.

Another day of chopping around would not surprise , and in the short term it looks as though the Kiwi is happy to use the 100/200 HMA as a range (0.8685/0.8632).

If we do break higher, which the hourlies suggest could be possible, then 0.8700/05 will be a tough hurdle and I don’t expect to see a retest of last week’s high of 0.8745 over the next couple of days. If wrong, then above here would see a run towards 0.8800 and the July 2011 high of 8842.

On the downside, I don’t think we are going below today’s low at 0.8632 today, but if wrong, we are likely to head towards 0.8600 (rising trend support 61.8% of 0.8513/0.8745). Below the rising trend support would be a bit problematic for the Kiwi and could see a deeper decline towards 0.8560 and possibly to the 3 April low at 0.8513.

For today use 0.8640/0.8700 as a guide

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NZD/USD: 4 Hour