US$ firmer on rate speculation following Yellen comments.

Aud, Kiwi recover from their lows ahead of Australian Business Confidence data.

The dollar is generally stronger today as the market ponders Janet Yellen’s comments of the previous day. The coming session looks to be fairly tight given the comparative lack of data, although the EU Inflation numbers may cause some volatility if the data differs markedly from expectations. Australia get the NAB Business Conditions, while later in the US we get the Building Permits, Housing Starts.

EUR/USD: 1.3525

The dollar is generally a bit stronger again today on the back of speculation that the Fed is heading toward tightening monetary policy and moving away from the current low interest rate environment.

Against the Euro, the dollar has seen a steady climb through the session currently trading at a one month high, currently holding above the important 1.3500 handle, but helped along today by a better than expected PPI.

The coming session will be guided largely by the release of the EU CPI, which if below expectations (0.5%yy (Core 0.8%yy)) will see a more concerted test of the downside and could will head below 1.3500 as speculation of an ECB easing increases.

The indicators are generally pointing to the downside but the Euro is currently sitting on strong support, as can be seen on the daily chart below, so caution should be warranted. If it can break below the current rising trend/Fibo support then the 1.3502 previous low will come under serious pressure.

A break of 1.3500 would hint at an acceleration for a move south towards 1.3415 (200 WMA), 1.3370 (50% pivot % of 1.2754/1.3995) and eventually 1.3300 (100 WMA) and 1.3294 (7 Nov ’13 low).

On the topside, 1.3550 will now see the immediate sellers ahead of 1.3570 and 1.3600. Given the negative feel of the indicators, I don’t really see it back above 1.3600 today, but if wrong, and the Euro does head higher over the next couple of days, offers in the 1.3640/50 area remain solid, where the minor Fibo resistance at 1.3646 (61.8% of 1.3700/1.3562) would provide strong resistance. A break of this level would see the Euro head on to 1.3665 (76.4%/ daily cloud base/200 DMA) but now looks a long way off. Further out, the Euro would find sellers at 1.3700, a break which would see a run up towards 1.3730(100 DMA), which should be solid resistance although a break of this level would head on towards 1.3803 (61.8%).

Aside from the EU inflation numbers, the US housing and jobs data will be the main focus of the session. Look for 1.3500/60 to largely cover it today, with the EU CPI to provide the direction.

Economic data highlights will include:

EU CPI, US Building permits, Housing Starts, Jobless claims, Philly Fed Mfg Survey.

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EUR/USD: Daily

EurUsd : 4 Hour

USD/JPY: 101.70

US$/Jpy has traded a 15 point range today. There is nothing to add.

As previously, above 101.75, sellers are lined up at 101.80 (daily Kijun), the 200 DMA (101.90) and the daily cloud base (101.95). Beyond 102.00, which looks a little unlikely today, 102.15 (100 DMA) will provide some resistance, above which could see a run up to the recent high at 102.35.

On the downside, 101.60 and then 101.50 will again provide support. Below this would head back towards 101.20 and then to last week’s spike low at 101.06. If the dollar heads back below 101.00, which currently looks unlikely, we would see a return to strong support at the 9 May low at 100.80. If this were to give way, then look for a run towards 100.60 (50% pivot of 95.78/105.43), below which we could be in for a sharp run towards 100.00 and 99.47 (61.8%).

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USD/JPY: 4 Hour

GBP/USD: 1.7136

Cable did little today, but remains relatively firm following the post CPI leap to 1.7192 on Tuesday, despite today’s disclosure of May’s softer than expected UK earnings growth number at 0.3% (exp 0.5%). Although the earnings data came in slightly below par, the UK data remains generally firm, as seen from the drop in unemployment today from 6.6% to 6.5%, and the market is still eyeing the chance of an early UK rate hike, which should continue to underpin Cable, particularly against the Euro, where rates look to be going the other way. EurGbp made a 2 year low today (0.7890), and having broken 0.7900 looks to be headed to the long term target at 0.7752 (23 July 2012 low).

Technically there is little change today for Cable.

The downside still has minor support at 1.7120, where the 100/200 HMA’s converge, which lie just above the session low, where we saw a brief visit to 1.7112. Back below 1.7100 would see the chance of a return to yesterdays low at 1.7058, but which currently looks unlikely.

1.7150 has been today’s session high and will provide the immediate resistance ahead of the 1.7190/1.7200 area, which will not be easily overcome. If /when it is taken out, then look for an accelerated move towards the next major resistance level, which is not to be seen until 1.7331 (50% pivot of the long term move from 2.1160/1.3547). Beyond that, there is not a great deal to stop Cable heading to the August 2008 high, which is not to be seen until 1.7516. Not today.

Use 1.7120/70 as a guide today.

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GBP/USD: 4 Hour

USD/CHF: 0.8985

The dollar has continued to push higher, today reaching 0.8988, and finishing the NY session just below its highs.

While the 4 hour charts are pointing higher, the hourlies are somewhat overbought and further progress will be tricky over the next few hours.

Resistance lies right ahead at 0.8992 (76.4% of 0.9035/0.8855) which in turn comes ahead of the previously tricky 0.8995/0.9005 area. A break of 0.9010 would allow for a run up to 0.9035 but at this stage it looks unlikely to happen today.

The downside now has minor support at 0.8960 and then at 0.8945 (200 DMA), below which would hint at a false upside break out of the channel, suggesting a decline back towards 0.8920 and then to the recent base at around 0.8900. Under here looks unlikely, but if wrong, look for a potential test of 0.8885, with stronger support at the 100 DMA at 0.8870. While I don’t think we are likely to see it down here for a while, a break of 0.8870 would see the chance of a run back to last week’s low at 0.8855, below which, look for further support at 0.8830/40.

Trading from the long side does appear to be the strategy but we may see a bit of a dip before looking to go long. Use 0.8950/0.9000 as a guide today

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USD/CHF: 4 Hour

AUD/USD: 0.9368

The Aud has recovered from its sell-off to 0.9329 yesterday following the release of the China GDP, to finish towards the upper end of the day’s range, ahead of today’s release of the NAB Business Confidence data.

The dailies do appear to be pointing a bit lower, although there is not a great deal of momentum behind any move, and the 4 hour charts actually look a bit more positive today, so I suspect therefore that over the next few days we are probably largely stuck within a 0.9300/0.9400 range.

Support, below the session low comes in at 0.9320 (61.8% of 0.9220/0.9505/18 June low) and then at 0.9300. Below 0.9300 would see a run towards 0.9275 (76.4%) and as we said before, if the Aud breaks under 0.9250, then the downside could really accelerate, but at this stage is considered unlikely.

On the topside, 0.9375/85 will again see sellers, above which would head back to 0.9400 but I don’t really think we are going up here today. If wrong, look for a run up towards 0.9425 and beyond, towards the recent high at 0.9455 and to the 10 April high at 0.9460. Beyond this would then head on towards 0.9495(76.4% of 0.9757/0.8660) and last week’s top at 0.9505, a break of which, there would be little to stop the Aud heading towards the 6 June high at 0.9543. Above here, the long term objective from the major head/shoulder reversal is now at 0.9665.

For the time being, use 0.9320/85 as a guide.

Economic data highlights will include:

NAB Business Confidence, RBA Asst Gov Edey Speech

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AUD/USD: 4 Hour

NZDUSD: 0.8710

The Kiwi had a tough session following the release of the softer than expected CPI data, falling to a low of 0.8688, as longs bailed out on the diminished expectation of an RBNZ rate hike on 24 July.

It has since recovered to trade above 0.8700 but still looks rather precariously placed and a retest of the lows over the next couple of sessions would not surprise.

Resistance now lies at 0.8730 and 0.8750. I would be surprised to see it back above here in the near term, but above 0.8750, would target 0.8780 and 0.8800 once more.

If the Kiwi does head lower, then below 0.8785 would target 0.8670 (38.2% of 0.8401/0.8835), the June 25 low at 0.8662 and then the June 17 low (0.8642).

I think selling rallies towards 0.8750 is the way to go, looking for an eventual run towards 0.8650.

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NZD/USD: 4 Hour