The Euro finally gave up trying to make a break for the topside and has headed lower to reach the medium term target with a good chance of further losses in the days to come. The commodity bloc have had a slightly better session and equities have recovered the losses of the last couple of days after some cautious words from the Fed with regard to any impending rate hike. In the absence of any major data until the US Durable Goods orders, it looks as though we could be in for some sideways action today, although RBA Governor, Glen Stevens, will be speaking and may try to talk the Aud lower once more. BOE Governor Carney will also be speaking later in the session.
EUR/USD: 1.2780
Although the German IFO came in a bit weaker than had been expected, the Euro initially held up well but eventually began to slide lower, and once it broke below 1.2820 it accelerated, falling through the 1.2800 support to make a new trend low at 1.2773, thus meeting the long held target at 1.2780 (61.8% of 1.2041/1.3995).
While the strongest US new home sales in 6 years underpinned the dollar today, the softer IFO came on the back of the recent weak ZEW and PMI readings and will keep pressure on the ECB to do more to stimulate growth. Mario Draghi reiterated that the risks to the EU economy remain to the downside, emphasizing that “the risk of doing too little is higher than the risk of doing too much”, which does not bode well for the Euro, and I notice some banks are now calling for parity with the dollar by 2017.
There has been little bounce so far, and with the short term charts’ pointing lower it looks as though the Euro could head on towards the next target at the 9 July 2013 low at 1.2754 and the 31 March 2013 low at 1.2744. This should prove very strong support and with the daily charts now rather oversold we could see a bit of a bounce, or at least some consolidation, although right now there is little evidence of any bounce at all on the horizon. The Euro is finishing the NY session on its lows and if we do make a sustained run below 1.2740/50 we could be in for a quick decline back towards the Nov 201 low at 1.2660, below which there is little to hold it until 1.2500 (76.4%of 1.2041/1.3995). A break of this would then open up the path for a steeper decline towards the 22 July low at 1.2041.
On the topside, 1.2800/15 will now be the first area of resistance and it does not look as though we are going back above here today, but if wrong, look for a run back to 1.2840. The session high has been 1.2863, which is where the 100 HMA currently sits, a break of which would head back to the descending trend resistance at 1.2880.
We have the Durable Goods orders today, and the dollar’s direction will depend largely on the outcome of the data, but continuing to play the Euro from the short side appears to be the way to go.
Economic data highlights will include:
US Durable Goods Orders, Jobless Claims, Flash Composite PMI, Kansas fed Mfg Index.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 109.00
Despite several attempts to push US$Jpy lower it has once again bounced back, and currently sits near session highs at 109.00 as it continues to consolidate below the recent peaks at 109.15 and 109.45.
More of the same looks possible today, at least until the release of the US data, but in the bigger picture nothing has changed and once 109.50 is overcome then the next realistic target is at 110.65 (August 2008 high), above which would head on to 112.50 (76.4% Fibo level of 124.13/75.56). A break of this would suggest that the dollar is on its way to the July 2007 high at 123.65 although we have a lot of work to do before then.
The downside will see bids today at 108.80 (100 HMA) and then again at around the session low at 108.45 and again at 108.25. I doubt we are heading down here, but if wrong we could see further losses towards 108.15, where the 200 HMA would provide decent support..
Meta Trader – AxiTraderUSD/JPY:4 Hour
GBP/USD: 1.6340
Cable again made it back into the 1.6400/15 zone that we have been watching for the last couple of sessions but it was unable to make any further progress and eventually turned lower, in unison with the Euro, and currently sits close to the session low of 1.6327.
The choppy trade looks set to continue, but with Cable currently in the process of breaking down through the rising trend support it could well be headed back towards 1.6315 (200 HMA) and 1.6300. A break of this would head to the 19 Sept low at 1.6280 and the 18 Sept low at 1.6240, with further support seen at 1.6230 (61.8% 1.6051/1.6523). A break of this would head back to 1.6160 but looks unlikely at present.
The topside is going to see sellers at 1.6370 (100 HMA) and I don’t think we are likely to head much above 1.6400 again today. If wrong, a move back above 1.6415 would suggest a run up to 1.6435 and possibly to 1.6480.
Look for more choppy trade largely confined to 1.6300/1.638) today, with a bias to selling into strength..
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9455
US$Chf rallied in unison with the softer Euro today and finally reached our target at 0.9455, where it currently sits.
Having broken above the problematic 0.9400 area, further progress for the dollar would see the path open up for a move, above 0.9500, and on towards 0.9534 (July 2013 high) and then to 0.9565 (76.4% Fibo level of 0.9838/0.8698).
The downside will now see buyers at 0.9430 (minor) and again at 0.9400. Below here looks a bit unlikely today, but 0.9380 and 0.9360 would be levels to watch, and if seen, would be buy opportunities..
Meta Trader – AxiTraderUSD/CHF:4 Hour
AUD/USD: 0.8883
Europe tried to take the Aud higher, but having made it to 0.8896 it ran out of steam and has since chopped around below here, allowing the shorter term charts to unwind their oversold condition.
The Aud now looks as though it is in the process of breaking above the recent steep downtrend trend resistance and if 0.8900 can be overcome, we could get a bit of a squeeze up towards 0.8925 and possibly to the first Fibo resistance at 0.8980 (23.6% of 0.9472/0.8830). Above there would see a further squeeze towards 0.9000, which should be strong resistance, this being both psychological and also where the long term previous support – now resistance – trend line lies. I dont really see it up at these levels, but if wrong, it would present a decent sell opportunity
The downside will today see bids at 0.8845 and again at 0.8830. It does not appear that we are going under here today, but the greater trend does remain lower, and below 0.8830 would head quickly to 0.8800 and the 1.618 Fibo extension of the head/shoulder target at 0.8790. Below there will see bids at the rising trend support off the July 2007 low at 0.7721, at 0.8775 and eventually it looks as though we are going to want to retest the January low at 0.8660, but that will take a while.
For today, look for a similar sort of day to yesterday and use 0.8830/0.8900 as a guide, with the chance of a squeeze to the topside although Glen Stevens will be speaking to the Economic Forum in Melbourne. He rarely misses an opportunity to talk the Aud lower, although right now it seems to be doing a pretty good job of it, on its own!
Economic data highlights will include:
RBA Glen Stevens speech.
Meta Trader – AxiTraderAUD/USD:4 Hour
NZD/USD: 0.8077
As with the Aud, the Kiwi is consolidating above its trend lows and it would seem that more of the same is likely today.
On the downside, bids will again be seen at 0.8050 (4 Feb low) and then at today’s session low at 0.8038. A break of that would see 0.8000 come under fire, below which would see a run to the Fibo support at 0.7985 (76.4% of 0.7670-0.8839) and then the channel base at 0.7970.
Resistance is seen at 0.8090 (minor) and above there at the 100/200 HMA’s at 0.8110 and at 0.8130.
In the absence of any data today, look for more consolidation with the chance of a squeeze higher, but any decent rally should provide a medium term sell opportunity for an eventual return to the downside..
Meta Trader – AxiTraderNZD/USD:4 Hour
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