Euro on the back foot after Germany rejects Greek loan extension proposal. Flash PMI's today.

It has been another generally choppy session with Greek headlines again being the main focus, especially after Germany rejected the Greek proposal to extend the current loan conditions.. This looks set to be the case heading into the weekend, although the EU and US manufacturing PMI’s have the potential to create some waves. Otherwise there will be little to go on so it could be a rangebound session, dominated by political sound-bites from the EU. have a good weekend.

EUR/USD: 1.1361

The Euro has ended the day a little lower as the headlines over whether Greece will or will not receive further funding from the EU continued to dominate trade. This looks likely to be the theme again both today and probably over the weekend as well, and thus, another similarly choppy session could lie in store, with direction depending on the conflicting headlines that we are bound to see. Germany’s rejection of Greece’s extension proposal will not help the Euro heading into the weekend, and it is a Greek holiday on Monday at which nationalist tendencies are likely to come to the fore, so I think I would rather be short the Euro than long over the w/e. A low of 1.1355 was  seen today, and this is again coming under pressure in late NY trade at the time of writing.

Elsewhere today, the main economic focus will be on the flash EU &US Manufacturing PMI’s which are unlikely to do a great deal to assist the Euro. The EU Services/ Composite PMI’s will also be due.

Technically there is currently not much change from yesterday

On the downside, the Euro is at present sitting close  by the 200 HMA at 1.1365, ahead of the session low of 1.1355, below which would see further bids at yesterday’s low at 1.1330. Below there will again most likely see some more action around the recent 1.1300 pivot, ahead of the support in the 1.1270/80 area which is closely backed up by the Fibo support at 1.1260 (61.8% of 1.1097/1.1533). Under there would see further bids at 1.1220 and 1.1200, below which would see a run towards the trend lows (1.1097).

On the topside, 1.1400 will again most likely act as a pivot, but if we head above here in the unlikely event of some sort of agreement between Greece and the EU, then the Euro could potentially squeeze on towards the session high of 1.1449, where we now have a minor double top with Wednesday’s high. The Fibo resistance at 1.1437 (23.6% of 1.2570/1.1097) sill seems to be a hurdle but if the Euro can make a sustained run above it, then beyond 1.1450, we could head towards the daily Kijun (1.1470), the Feb 7 high of 1.1485 and possibly on to 1.1500.  If we were to see a move beyond 1.1500, then we would get a run towards the 3 Feb peak at 1.1533. Above there would see further sellers at the nearby Fibo resistance at 1.1542 (76.4% of 1.1679/1.1097), which would set up a run up towards 1.1600 (daily Kijun) and on to 1.1655 (38.2% of 1.2569/1.1097). If seen, such a rally could be seen as a potential sell opportunity, with a SL left on all short positions to be left above the 21 Jan high of 1.1680.

With the short term indicators being pretty flat, look for a rather lacklustre day, but possibly with a mild downside bias, heading into the weekend, but with political headlines always likely to cause a spike, so caution is warranted.

Economic data highlights will include:

EU Flash Manufacturing/ Services/Composite PMI’s, US Flash Manufacturing PMI.

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USD/JPY: 118.96

The dollar has had a squeezed a little higher today although it has done little of excitement and currently sits back, close to 119.00, after having seen a high of 119.17.

More of the same appears likely today. With the short term indicators giving very little hint in either direction and with the 100/200 HMA’s currently sitting at 118.80/119.05, these could act as a magnate for the coming session, with the Nomura Manufacturing PMI the only catalyst likely to provide any directional move.

Back above 119.00 would hint at a run towards the 119.41 high and then to minor Fibo resistance levels at 119.60 and 119.90, beyond which we could see another squeeze beyond 120.00 and on to last week’s 120.46 high, although unlikely to be seen today.

On the downside, below 118.80, the next point to watch will be at the session low and Fibo support at 118.40 (61.8% of 117.17/120.46), below which would head back to the previous session low of 118.23. A break of this will see a move to the daily Kijun (118.15) and then to 118.00. Below here would then head back into the previous 117/118 consolidation area and could even see the chance of a move towards the 116.40 area, mentioned above, although right now this looks over the horizon.

Further out, I still think that we are eventually heading towards, and probably above 121.00. If/when we do so, look for further advances towards the trend high at 121.85 (8 Dec), 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.

Look for another session not too far removed from 119.00

Economic data highlights will include:

Nomura Manufacturing PMI.

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GBP/USD: 1.5407

Sterling has had an inside day, consolidating its recent gains in trading a tight 1.5403/64 range and looking as though it could be a similar day today, although the UK Retail Sales may provide some volatility (exp -0.2%mm +5.9%yy; Jan).

While the dailies still point higher, the shorter term indicators tend to suggest that we could see some mild downside pressure, so below the rising trend support at 1.5400 (100 HMA: 1.5395) would have potential for a return to the Fibo support at 1.5363 (23.6% of 1.4987/1.5479) and then the 200 HMA at 1.5340, although I am not sure that we see it down here today. If wrong, the 17 Feb low at 1.5320 and then 1.5300 would provide support ahead of the next Fibo support at 1.5295 (38.2%  of 1.4987/1.5479).

On the topside, above the session high would then hint at a return to would then look to regain 1.5479 (1.5473:23.6% of 1.7191/1.4950). If this can be successfully taken out, then look for further gains to 1.5500 above which it all gets rather messy given the previous consolidation in the 1.5500/1.5620 area and any upward momentum could begin to slow. The daily cloud top is at 1.5525 which should prove a hurdle to further gains as will the top of the descending channel, currently at around 1.5580 and the 100 DMA, sitting just above 1.5600.

All up, a range of 1.5375/1.5455 would not really surprise, with Cable receiving some support through the cross after Germany rejected the Greek proposal for a 6 month loan extension.

Economic data highlights will include:

PSNBR, Retail Sales.

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USD/CHF: 0.9494

The dollar has continued to squeeze higher, almost reaching the Fibo target today of 0.9505 (61.8% of 1.0240/0.8326).

As before, I would continue to stand aside from the Chf right now and would wait to see if we get a decent correction towards 0.9100/0.9200, although this looks increasingly unlikely in the near term. If so, look to go long around there, with a SL below 0.9100, or preferably below 0.900.

On the topside, if the dollar can overcome the Fibo resistance, then look for a continuation of the slow grind towards the 100 DMA at 0.9540.

Rising trend support is now seen at around 0.9350.

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AUD/USD: 0.7785

The Aud has continued its choppy price action, gyrating either side of 0.7800 and currently sitting at 0.7890, after some spike moves in either direction, that has culminated in a 0.7757/0.7842 day.

While I retain and overall bearish stance on the Aud, the daily indicators still have a positive bias, and that being the case, the downtrend is unlikely to resume in earnest for the time being and I suspect we are in for some more of the same choppy trade heading into next week.

Back above 0.7800, 0.7840 seems to have the topside capped for now, but a break of which would hint at a run back towards the 6 Feb top at 0.7876, which should be strong resistance.

A doji formed on today’s candlestick charts and the daily RSI diverged on the new short term high, suggesting that the recent short squeeze may have run its course. If wrong, above 0.7840/50 could see in for a run towards 0.7895 (23.6% of 0.8794/0.7625) and then to the 50% pivot of 0.8230/0.7625 at 0.7925, above which could then see a run back towards the Fibo resistance at 0.7995 (61.8% of 0.8230/0.7625).

Back below minor support at 0.7773 (200 HMA) would revisit the day’s low at 0.7756 and then possibly could head back to Tuesday’s brief low, seen immediately after the release of the RBA Minutes, at 0.7740. Below there, 0.7720/25 will be the next support ahead of 0.7700, a break of which would then head to minor support at 0.7665/70 and possibly on to last Thursday’s session low of 0.7643.

Look for another choppy session, but with a mild downside bias, using 0.7740/0.7830 as a guide.

Economic data highlights will include:

China NY.

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NZD/USD: 0.7513

The Kiwi is a little lower but is holding onto its gains above 0.7500 after a range today of 0.7506/72.

The 4 hour charts look a little negative and if 0.7500 does give way, look for a run back to Fibo support at 0.7480 (23.6% of 0.7175/0.7573) and then to the 200 HMA at 0.7462.

The daily indicators do remain positive, and while that is the case any downside price action may be limited. If the Kiwi does head higher then look for another run up to 0.7550 and then to the trend high at 0.7573.  Above this, the Kiwi could then advance to the 22 Jan high at 0.7582 will be the next stop ahead of 0.7600 and the Fibo resistance at 0.7615 (61.8% of 0.7889/0.7175). Beyond this would open up 0.7618 (5 Jan low) and then 0.7689 (15 Jan low), ahead of the next Fibo resistance at 0.7718(76.4%).

A day of 0.7480/0.7540 would not surprise.

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