Aud, Kiwi sharply lower. EU CPI, US GDP to be today's focus.

The majors took a back seat today, while the Aud, Kiwi, Cad and Chf all got crushed, and with no real end in site to the current trend. The metals took a beating as well, while WTI and Equities had a volatile session, but came back to finish pretty much unchanged. Today will see the EU CPI and US GDP and a weak/strong combination from them will see the dollar rally resume in earnest. Have a good w/e.

EUR/USD: 1.1311

After dipping to a low in early Asian trade yesterday of 1.1260, the Euro has traded sideways to slightly higher for the rest of the session, ultimately coming to rest just above 1.1300 after an earlier squeeze up to 1.1367 following a Danish rate cut, underpinning Eur/Dkk .

More of the same looks possible today, although the markets will derive their direction from the release of the provisional January EU CPI (exp +0.5%, Core- 0.6% yy, ) and then the US Q4 GDP (exp 1.0% qq, 3.3%yy). A weak CPI/strong GDP combination will see the Euro under pressure again, with the dollar likely to extend its recent gains.

The charts look rather mixed and thus a fairly neutral stance is required right now, but with the daily charts looking as though they may be turning a bit higher, locking in some profit on short Euro positions, while aiming to re-sell into strength appears to be the plan. If the EU CPI is weak, then forget any chance of much of a rally!

The technical points to watch remain pretty much unchanged. On the topside, above today’s 1.1367 top, the 200 HMA is now at 1.1403, a break of which would take the Euro back to the weeks high at 1.1421 and then to the downtrend resistance currently at 1.1455, which is also 61.8% of 1.1680/1.1097. A break of this, albeit unlikely today, would trigger stops and could take the Euro sharply higher, potentially to 1.1500 and even to 1.1540 (76.4%).

The downside support levels below 1.1260 remain intact, and before then, the 100 HMA currently sits at 1.1280. 1.1220 will act as minor support ahead of 1.1200, below which would see a return towards the trend lows (1.1097), although this looks a little unlikely to be seen today.

Further out, as we keep reiterating, below 1.1097, the next obvious target is at 1.1000, where many analysts had previously been looking for a 2015 low, although the next realistic technical level is not seen until the September 2003 low at 1.0759, beyond which we are going to zero-in, eventually, on parity.

Look for a choppy session, with more range trading near to 1.1300.

Economic data highlights will include:

EU Provisional CPI, Unemployment, US Core Personal Consumption, GDP, Chicago Purchasing managers Index, Rts/Michigan Consumer Sentiment Index.

Meta Trader – AxiTrader   EUR/USD: 4 Hour

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USD/JPY: 118.41

US$Jpy continues to bounce around within the converging triangle formation, currently near the top end resistance, but below the recent highs.

It looks as though we may be in for a breakout fairly soon, but he dollar really needs to take out 118.80 in order to build confidence of a more sustained move to the topside.

The daily cloud top has come down from 118.70 to sit a current levels which will act as the immediate resistance, with further gains likely to face hurdles at 118.65 and then again at 118.80. If  this area is broken, then the dollar would head to 119.00, a break of which would then signal further gains towards the 12 Jan high at 119.30, beyond which 119.95 (8 Jan high) will come into view.

Further out look for a run towards 120.00 above which will suggest further gains towards the minor triple top at around 120.75. Eventually I suspect that we are heading towards 121.00, but not yet. If/when we do, do so, further advances towards the trend high at 121.85, above which would see a run towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time given the resistance levels sitting in between.

The downside will again find bids at 118.00, where the 100/200 HMA’s will provide the initial support. Below this could then head to the rising trend base, now at 117.45 and then at the recent lows at around 117.30.

There is a fair bit of Japanese data out today, but the main direction will come via the US GDP. While the hourlies are supportive, the 4 hour/daily charts remain non committal, so all up, some more range trade below 119.00 would not really surprise.

Economic data highlights will include:

CPI, Unemployment, Housing Starts, Construction Orders..

Meta Trader – AxiTrader   USD/JPY: 4 Hour

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GBP/USD: 1.5062

Cable headed lower today against both the dollar and the Euro, not assisted by some weak inflation expectations in the UK, falling to 1.5017 against the dollar, while the cross rose sharply to a high of 0.7527 from an earlier 0.7441 low.

If Cable heads below 1.5000, then  1.4985, and Friday’s spike low at 1.4950, will see buyers, although I don’t see this area being bothered today unless the US GDP drives the US$ strongly higher. If wrong, below 1.4950 would head to 1.4915 (61.8% of 1.3502/1.7191) and then, some way off, towards the July 2013 low at 1.4813. Below this could get ugly as there is not too much to hold Cable up ahead of the 76.4% Fibo level (1.3502/1.7191) at 1.4375

On the topside, 1.1500 will be the initial resistance, above which will head back into the consolidation area, and the likelihood of more 1.51.1.5225 trade.

Economic data highlights will include:

Mortgage Approvals, Nett Lending.

Meta Trader – AxiTrader    GBP/USD: 4 Hour

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USD/CHF: 0.9240

The Swiss Franc was at the centre of interest again today, weakening against the euro and the U.S. dollar on renewed speculation of intervention by the SNB, climbing sharply during the Europe/US session to reach our objective at 0.9250, and just short of the 200 DMA at 0.9268.

As before, with liquidity being extremely thin I would tend to leave it alone. We have squared our small long dollar position up here, although the indicators do look positive and suggest the chance of a run potentially back to 0.9359 (15 Oct 14 low) and even to the 100 DMA at 0.9550.

Buying dips at around 0.9000/0.91000 may still be a plan, although otherwise I am sitting this one out for now.

Meta Trader – AxiTrader    USD/CHF: 4 Hour

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AUD/USD: 0.7765

The Aud got hammered again yesterday, trading in heavy mode all day, initially following the Kiwi, on the back of the RBNZ statement, and then falling sharply once Europe got going, in part, as the result of an article in the Australian Telegraph that the RBA will cut rates on Tuesday. Terry Macrann who wrote the article is widely followed, but his track record over the last couple of years has not exactly been spectacular and while he may well be correct on this occasion, I would tend to be cautious on the prospect of a Feb rate cut. I suspect that the Aud$, being at its current levels is more or less doing the job of the RBA for them. At the last meeting, in December, the Aud was at 0.8440, since when we have had an 8.25% fall in the currency. If I were at the RBA, I would feel that this is as good as a rate cut anyway, and would think that with the currency making the economy more competitive, I would be tempted to sit on my hands and to keep my powder dry for a possible cut later in the year. In the meantime I would be waiting to see how the weaker currency flows into the economy..

If the RBA do cut, then the Aud will head towards the July 2009 low at 0.7700 and then towards the Fibo extension level at 0.7655 (100% of 0.8230/0.7857 from 0.8003). Beyond here we are looking at the RBA’s stated target at 0.7500, albeit not today.

On the topside, we are now at/below the 200 Month MA (0.7765) and this could act as a magnate in the short term. We are unlikely to head too much higher than this unless speculation of a rate cut next week diminishes although a squeeze towards 0.7800 should not be ruled out given that the hourlies are oversold and appear to be turning higher. Beyond 0.7800, which looks somewhat unlikely today, would find sellers at around 0.7840 (23.6% of 0.8230/0.7720).

If the RBA don’t cut, there will be an almighty short squeeze next week, so we are in for some interesting sessions ahead. All up though, trading from the short side remains the theme, with today’s EU/US data to be the drivers.

Look for 0.7720/0.7815 as a guide

Economic data highlights will include:

Private Sector Credit, PPI.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

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NZD/USD: 0.7259

The RBNZ statement sent the Kiwi sharply lower at yesterday’s open and it has shown no sign of recovery since. In doing so, it has taken out the 21 March 2011 low at 0.7289 and there is now little support to be seen  until  the spike low at 0.7115 (17 Mar 2011).

The topside is going to find plenty of interested sellers on any rally towards 0.7310/15, above which could head back towards the first Fibo resistance at 0.7390 (23.6% of 0.7880/0.7233).

Trading from the short side and selling rallies remains the theme. The hourlies are now very oversold, so in the short term I would expect some consolidation, and possibly a bit a squeeze higher, but the longer term trend remains resolutely lower.

Look for 0.7225/0.7300 today.

Meta Trader – AxiTrader    NZD/USD: 4 Hour

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