Safe haven demand back in focus after plane shot down.

Risk assets, including Aud and Kiwi are lower, with more potential downside to come.

It was a day of safe haven demand following the shooting down of the plane over the Ukraine and then the launching of Israeli military ground operations in Gaza. The big movers have been Gold, Silver and Oil, while in the currency markets the Yen is seeing good demand. Risk assets including the Aud and Kiwi are lower, in line with the weak close in the US equity markets. In the absence of any major economic data today it looks as though politics will be the main focus and any moves are likely to be centred on position squaring ahead of the weekend.

EUR/USD: 1.3525

The Euro has had a steady session, with attention largely focused elsewhere, on a move into defensive assets after the shooting down of a plane over the Ukraine.

With little data out today, it looks as though we can expect a quiet end to the week as far as the Euro is concerned. It looks as though it may well hold on above the important support at 1.3500, but traders will be watching developments in Russia/Ukraine and will be wanting to square up early ahead of the weekend, so given that the market is short, it would appear that the short term risk may be skewed mildly to the topside.

If that is the case, today’s top is at 1.3540, above which would see sellers at 1.3560 and 1.3585 ahead of 1.3600. Given the increasingly negative look of the daily 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%).

Although the dailies are pointing lower, the shorter term indicators hint that today is unlikely to see too much of a move to the downside and we are currently sitting on the important support at the rising trend line, at the base of the wedge formation. A break of this would head into decent bids ahead of 1.3500, where the previous low was at 1.3502. There is supposedly a barrier here, so the buyers are likely to be strong as they act to protect it and it will not be easily broken. If/when we do head lower, 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).

Look for a day of 1.3510/70.

Economic data highlights will include:

EU Current Account, Rts/Michigan Consumer Sentiment Index

Meta Trader – AxiTrader

EUR/USD: 4 Hour

USD/JPY: 101.25

The Yen remained bid throughout the session with demand increasing after the news of the plane being shot down saw an increase in safe haven demand. This looks unlikely to change in the coming session and the short term indicators are pointing to a possible test of 101.00.

Good bids lie ahead of that though, with market talk of semi official bids at around 101.00. Below here though very large stops are supposed to lie at 100.70, which if taken out could lead to a quick test of 100.00 and possibly lower.

Technically, the support at 101.20 is currently holding, a break of which would head towards 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%).

On the topside, sellers will now arrive at 101.50 and then at the day’s peak at 101.68. As we said yesterday, more offers will arrive at 101.75, and then 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.

It looks as though the Yen will stay in demand today and heading into the weekend, but for the time being it would seem that 101.00 may stay intact. Look for 101.10/50 to cover it today.

Meta Trader – AxiTrader

USD/JPY: 4 Hour

GBP/USD: 1.7105

Cable had a lively session falling sharply from 1.7140 to a low of 1.7085 as traders moved into the safe haven of the dollar, but has since recovered to sit back at 1.7110.

More action close to 1.7100 would not surprise as we head into the weekend and it looks as though the recent choppy consolidation is likely to continue.

Today’s session low of 1.7085 will be the first support ahead of the previous session low of 1.7058. I don’t really see it below here today, but if wrong, then look for a run back towards 1.7000 (38.2% of 1.6992/1.7192).

On the topside, the 100/200 HMA’s are close by at around 1.7120, beyond which 1.7143 has been today’s session high and will provide 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.

Meta Trader – AxiTrader

GBP/USD: 4 Hour

USD/CHF: 0.8975

The dollar has consolidated its recent gains and is sitting just below the previous session highs of 0.8989, with another session of similar trade looking likely today.

As we said before, 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. 0.9050 is the weekly cloud base and will be strong resistance if/when seen although a weekly close around here would mean that we have broken clear of the weekly Tenkan (0.8945) and the Kijun (0.8925), which are now supports.

The downside still has minor support at 0.8960, which currently remains intact, 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. As with yesterday, use 0.8950/0.9000 as a guide today

Meta Trader – AxiTrader

USD/CHF: 4 Hour

AUD/USD: 0.9355

Having had a reasonably solid session through much of the day, reaching 0.9391 after the release of the mixed US data today, the Aud took a bit of a nosedive heading into the NY close, coming off in sympathy with a weak close in US stocks, following on from the shooting down of a plane over the Ukraine and then the news that Israel has launch military operations in Gaza.

The Aud has so far been down to 0.9352, so far avoiding the stops that are said to lie beneath 0.9350. That may not be so far away though if the move away from risk assets continues, and if 0.9350 does give way, then look for a run towards 0.9320 (61.8% of 0.9220/0.9505/18 June low) and then 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 the session high at 0.9392. I don’t really think we are going above 0.9400 today but 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.

As with yesterday, use 0.9320/85 as a guide.

Economic data highlights will include:

China House Price Index

Meta Trader – AxiTrader

AUD/USD: 4 Hour

NZDUSD: 0.8670

The Kiwi had another tough session and after reaching a high of 0.8720 it has fallen sharply to reach the target at 0.8670 (38.2% of 0.8401/0.8835). From here momentum may slow somewhat in order to allow the short term charts to recover their oversold condition, but further targets at the June 25 low at 0.8662 and then the June 17 low at 0.8642. Below here would head to 0.8618 (50% pivot of 0.8401/0.8835) and eventually to 0.8568 (76.4% of 0.8401/0.8835).

On the topside, 0.8700 and 0.8720 will see sellers, but it looks unlikely to head up here again today. If wrong minor Fibo resistance will be seen at 0.9730 and 0.8770, and for the time being 0.8800 looks increasingly distant.

Use 0.8655/0.8685 to cover it.

Meta Trader – AxiTrader

NZD/USD: 4 Hour