Kiwi remains heavy, Aud choppy with more of the same looking likely today.
Stronger US data once again underpinned the dollar and equities today, with both the S+P and the Dow making new highs, while the Euro hit new trend lows. The US$ uptrend remains intact and further gains would seem to lie ahead, although today there is very little global data due for release and it could be a session of consolidation, allowing the short term technical indicators to unwind. Focus will now begin to turn to the US GDP (Thursday) and then to the EU CPI (Friday). A weak reading here could prompt a reaction from the ECB, who may finally pull the trigger on further easing, in the EU, at next week’s meeting (Sept 4).
EUR/USD: 1.3169
EurUsd consolidated for much to the session today until the stronger Durable Goods and Consumer Confidence combined to underpin the dollar, sending the Euro to new trend lows at 1.3164.
It currently sits just above here, just above the base of the descending channel and looks heavy, although in the absence of any data to drive direction in the coming session I would doubt that we are going to head too far away from current levels today. German Consumer Confidence is all that we have to go on, and while it may cause some ripples I would be surprised to see the Euro trade much outside of 1.3150/1.3200 in the session ahead.
The 4 hour charts remain heavily oversold and it maybe that we do eventually see some sort of bounce back to today’s session high at 1.3214 and eventually to fill the gap at 1.3240. Right now it looks unlikely, but above there, further resistance would be seen at around 1.3260 (100 HMA) and at the descending trend resistance currently at 1.3280. Although it is looking increasingly distant, beyond this could see a squeeze back towards 1.3300/15 where strong resistance is seen, this being the base of both the monthly (1.3300) and weekly cloud (1.3315).
Below 1.3165, the 9 Sept 2013 low and where the base of the descending channel now also lies, and should therefore act as strong support, there is not much to hold it from heading quickly towards 1.3104 (6 Sept ’13 low). Below that, the next target is found at the Fibo support (76.4% of 1.2754/ 1.3993) at 1.3045, which when seen should prove strong.
As before, in the longer term, the eventual target for the Euro appears to be the 9 July low 2013 at 1.2754, albeit that it looks somewhat distant for the time being.
For the coming session don’t look for too much, with 1.3150/00 looking likely to cover it. Further out, the US GDP is coming up tomorrow and on Friday we get the EU CPI. If the EU data remains soft, the Euro is going to come under heavy pressure ahead of next week’s (4 Sept) ECB meeting at which Mario Draghi may finally pull the trigger on further easing and perhaps even commence a policy of QE.
Keep an eye out for the result of the talks between Putin and the Ukranian President, Poroshenko in Minsk. Any surprise signs of a break out of commonsense could help the Euro out and provoke a bit of a squeeze higher, should sanctions look like being lifted.
Economic data highlights will include:
German Consumer Confidence
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 104.06
US$Jpy pretty much stuck to the script today trading a 103.74/104.17 range and currently sits at the same levels as at this time yesterday. Further upside progress is going to remain tricky as the market is long dollars and looking for levels to take profit as we approach month end and another day hanging close to 104.00 seems the most likely outcome.
The points to watch remain unchanged and on the topside 104.25 could again cap it today. Beyond there, option related sellers will protect 104.50 but I would be doubtful of seeing the dollar trade up towards here in the coming session. If wrong, as we said before, a break of 104.50 would head on towards 105.00, and beyond that, I suspect that we are eventually headed back up towards the 200 month MA at 106.50.
On the downside, below today’s 103.704 low would suggest a run back to 103.60 (23.6% of 101.50/104.26) and then at 103.23 (38.2%).
Look for 103.75/104.25 to cover it .
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.6545
Cable tried the topside today, but failed ahead of 1.6600, reaching 1.6595 before once again turning lower, closing the NY session just above the session lows of 1.6542.
The technical outlook remains much the same.
On the downside, the initial support, below the low, is at Monday’s gap low at 1.6535, a break of which would suggest a run towards 1.6500 and then eventually towards the 24 March low at 1.6462.
On the topside, minor descending trend resistance now sits at around 1.6575, above which would suggest another run towards 1.6600. This looks unlikely to day, but if wrong, above there would see further gains towards the 200 HMA at 1.6625. Beyond this would see a potential acceleration towards the top of the descending channel at 1.6680, but seems rather unlikely right now.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9175
US$Chf is at new trend highs following the firmer US data today, but is yet to reach 0.9200 and in the short term looks as though it may be running out of some upside momentum. The 4 hour charts are overbought and the RSI’s appear to be showing some divergence, so while the overall trend remains higher, in the short term we may need to consolidate to allow the shorter term charts to unwind.
On the downside 0.9160 (100/200 WMA’s) could continue to act as a magnate, ahead of Friday’s closing price at around 0.9140. Below here would see a return towards 0.9115 and 0.9100 although I don’t see the dollar below here today or probably even close. If wrong, further losses could take it back to the daily Tenkan at 0.9085. A break of this would see a return to 0.9060 (daily Kijun) but currently looks unlikely.
On the topside, above today’s 0.9180 high, would open up the chance for a run up towards 0.9200 and to the November 2013 high at 0.9249.
I suspect we are in for more consolidation today and possibly until the EU CPI on Friday. The plan remains unchanged though in looking for levels to buy dollars.
Meta Trader – AxiTrader USD/CHF: 4 Hour
AUD/USD: 0.9306
Having dropped to an Asian low of 0.9271, the Aud later rebounded to 0.9330 but has ended up close to 0.9300 again after the US$ made some gains on the back of the firm data, in what has been another day of choppy trade. There is little data out today to change the scenario and more of the same looks the most likely outcome, with 0.9300 seemingly acting as a bit of a magnate.
On the downside, minor support will again be seen at 0.9285 and then at the session low of 0.9271 below which, would head back to the important 0.9260 level but which looks unlikely today. Under here would retest last week’s 0.9236 low.
Further out, a sustained break of 0.9235/40 would most likely see an acceleration towards 0.9200, below which, the next target would be the 200 DMA/38.2% Fibo support of the rally from 0.8660/0.9505 at 0.9175. A break of this could see a deeper move towards minor support at around 0.9135 and then to 0.9100 and maybe to 0.9050 (50% pivot of 0.8660/0.9505.
On the topside, today’s top at 0.9330 is going to be tricky to overcome, and in the absence of any data today I suspect rather unlikely. If wrong, we could see a run up towards the pivot at around 0.9345, beyond which would head to 0.9355 (daily cloud base/Kijun) and then possibly back towards 0.9373(6 Aug high) and 0.9380 (61.8% of 0.9472/0.9236), where I think it would be approaching sell territory. If wrong, and the Aud is able to make further gains, then the way would open up for a run to 0.9400 and possibly to 0.9416 (76.4%).
Expect another choppy day of trade, either side of 0.9300, but keep an eye on iron ore prices, now down at $88 per tonne, which may begin to weigh on the Aud. Also watch out for the Construction data.
Economic data highlights will include:
Construction Work Indicator
Meta Trader – AxiTrader AUD/USD: 4 Hour
NZDUSD: 0.8330
The Kiwi remains heavy and has traded down to 0.8310, so far, with any bounce running into sellers ahead of 0.8350.
Further losses look quite possible, and a break of 0.8300 would hint at a run towards 0.8275(50% Fib of 0.7670-0.8839) and then 0.8242 (February 20 low,).Below this would suggest further losses towards the 5 Feb low (0.8187) and possibly to the 4 Feb low (0.8051).
On the topside, we need to regain 0.8350 to restore some stability. If that can be achieved, then further sellers will be seen at 0.8370 (100 HMA), a break of which will head back up towards 0.8385 and eventually to 0.8400. I don’t see it above here today, but if wrong; look for a run back to the 200 HMA at 0.8420.
Sell rallies seems to be the ongoing theme. The Food Price Index is coming up.
Economic data highlights will include:
NZ Food Price Index
Meta Trader – AxiTrader NZD/USD: 4 Hour
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