All eyes on Janet Yellen. German GDP, EU CPI & US Consumer Confidence also due.

A soft than expected German IFO  coupled with ongoing Greek concerns pushed the Euro lower today, although the US had some soft housing data of its own which interrupted the dollar’s rise and saw the other major’s recover some of their earlier losses. Focus now turns to Janet Yellen’s testimony to Congress, later in the coming session, although there is plenty else besides to provide some interest. From the EU we get the German GDP (Q4), EU CPI (Jan), and the BOE Governor will be testifying to the UK Parliament, while Mario Draghi will also be speaking. From the US, aside from Janet Yellen, the US Consumer Confidence data will be released. It is going to be a busy session.

EUR/USD: 1.1336

The Euro headed mildly lower after the slightly disappointing German IFO business climate rose to a 7 month high of 106.8 in February, but missed expectation of 107.2. Doubts over whether Greece will be able to overcome their debt issues, despite the 4 month extension agreed to on Friday also weighed on the Euro.

The dollar was generally underpinned as traders await Janet Yellen’s testimony to Congress, hoping that there may be a hint on the timing of an interest rate hike, although weak US New Home Sales stopped it in its tracks and caused a minor reversal but further gains were limited once Greece delayed its list of reforms for the Euro group until Tuesday morning.

Technically there is little change while the Euro remains inside its 3 week range of 1.1260/1.1530 and in the short term the bias stays neutral.

While the consolidation continues, it has at least allowed the daily charts to unwind from their oversold condition and I suspect that we are heading for a break at some stage this week, possibly later today if Janet Yellen does provide any insight to the timing of a rate hike. Before she testifies, there will be some important data from the EU, with both the German GDP and the EU CPI due for release, while Mario Draghi will also be speaking, although it is not directly related to the markets. The US Consumer Confidence will also be released.

Technically, despite being a bit lower, there is not too much change in outlook. Below today’s 1.1295 low would test the bottom of the range at Friday’s low (1.1278) which is closely backed up by the Fibo support at 1.1260 (61.8% of 1.1097/1.1533), but a break of which would head towards further bids at 1.1220 and 1.1200. Below there would see a run towards the trend lows (1.1097) and eventually beyond towards 1.1000 and lower.

On the topside, 1.1395 has been the session high. A break of 1.1400 would see a return towards Friday’s 1.1428 peak, above which the Euro could then potentially squeeze on towards Thursday’s session high of 1.1449, where we have a minor double top. The Fibo resistance at 1.1437 (23.6% of 1.2570/1.1097) will again be a hurdle but if the Euro can make a sustained run above it, then beyond 1.1450, we could head towards, 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 which would see further sellers at the nearby Fibo resistance at 1.1542 (76.4% of 1.1679/1.1097) and then maybe 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.

For the coming session I suspected that we are going to remain in the 1.13/1.14 range until Yellen speaks (although the EU data could quickly change that theory), but the overall view remains unchanged, this being to trade from the short side, looking for an eventual break of 1.1260 and a move towards 1.1100 and eventually lower.

Economic data highlights will include:

German GDP (Q4), EU CPI, Mario Draghi Speech, US Consumer Confidence, Janet Yellen testifies to Congress..

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USD/JPY: 118.88

US$ Jpy has traded a 118.81/119.34 range as it continues to use 119.00 as a pivot and this will probably be the case until Janet Yellen gives the market any cause to differ.

I still prefer to play it from the long side although Japanese exporters are said to be selling rallies into the month-end and may prevent further gains in the short term, although there are US$4.4 bio of 120.00 option strikes expiring this week and these could act as a magnet in coming sessions.

Technically there is little change. The 100/200 HMA’s are converging at 119.00 and in the short term we seem unlikely to travel too far from here. The daily Tenkan (119.35) provided the cap today and will continue to be resistance, but a break of which would head to the minor double top at 119.44 and then towards minor Fibo resistance levels at 119.60 and 119.90. Beyond here we could see another squeeze beyond 120.00 and on to the 11 Feb, 120.46 high, although unlikely to be seen yet.

On the downside, below today’s 118.81 low, the next point to watch will be at the Fibo support at 118.40 (61.8% of 117.17/120.46), below which would head back to Friday’s low (daily cloud top) and 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.

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GBP/USD: 1.5455

Cable had a wild ride today, falling to 1.5332 as the result of weak UK CBI sales data and to general early US$ strength before rebounding strongly to a high of 1.5475 assisted by the weak US housing data but also by demand for Sterling through the cross as EurGbp headed to new trend lows of 0.7325.

Later today, Mark Carney and several other MPC members will testify to the Treasury Select Committee and will be the main focus of the day for Sterling until Janet Yellen testifies. Carney will most likely say that the next interest rate move will be a hike but will probably put no date on when this is likely to happen and seems to be a long way off.

Technically, Cable has given both sides of the 2 week range a nudge today without managing a break out in either direction. The short term charts look positive although we are sitting up against Fibo resistance at 1.5473 (23.6% of 1.7191/1.4950) which has proved a hurdle too far to overcome in recent weeks. If this level 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.

Back to the downside, there is minor support at 1.5430 ahead of the 100 /200 HMA’s seen at 1.5405/1.5380 and then the rising trend support seen at around 1.5345. Below today’s 1.5332 low would then revisit the 17 Feb low at 1.5320. Although unlikely to be seen today, 1.5300 would provide the next support ahead of the Fibo level at 1.5295 (38.2% of 1.4987/1.5479).

Economic data highlights will include:

UK Mortgage Approvals, BOE Governor Carney to testify to Parliament.

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USD/CHF: 0.9511

US$Chf held the rising trend support today and rose from a low of 0.9386 to a high of 0.9525 and still holds on above 0.9500, sitting right on the Fibo resistance (61.8% of 1.0232/0.8322).

I would still leave this pair alone for a while. A break of the rising trend support, as per the chart, could yet trigger stops to take the dollar lower and so is worth keeping an eye on.

The cross is proving volatile – trading a 1.0682/1.0791 range today, and while this remains the case, I would rather stick to the Euro than try my chances with the Chf.

Economic data highlights will include:

Swiss Unemployment..

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AUD/USD: 0.7796

The Aud had had enough of trying to break up through 0.7850 by the time Europe got in and turned lower, accelerating on a break of 0.7810 and headed quickly to the 200 HMA at 0.7780 which has so far held, although bounces have been rather muted. The rally has been capped, so far, by the 100 HMA at 0.7810 and thus the short term range could be set for the coming session in the absence of any local data or any interest from China, still out for the New Year celebrations. The next action looks to arrive from Janet Yellen’s testimony and until then it could be rather quiet.

If wrong, below 0.7780 would see a run towards last Thursday’s low at 0.7756, below which could head back to Tuesday’s brief low, at 0.7740 (daily Tenkan), seen immediately after the release of the RBA Minutes. 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.

On the topside, above 0.7810, there seems to be plenty of interest to sell the Aud at 0.7835/45 area and I would be rather doubtful of seeing this today. If wrong, look for a more sustained test of 0.7850, beyond which will want to take a look at the 6 Feb top at 0.7876, which should be strong resistance. Above here could see 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 here could then see a run back towards the Fibo resistance at 0.7995 (61.8% of 0.8230/0.7625) for a more sustained look at 0.8000, above which would trigger a serious amount of stops.

Economic data highlights will include:

Chinese NY.

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NZD/USD: 0.7521

The Kiwi had a choppy 0.7468/0.7546 range and still holds on above 0.7500 although I suspect that today may be a bit quieter as traders await Yellen’s testimony.  The RBNZ Inflation Expectation is due later on but I suspect it will provide little reaction ahead of Janet Yellen’s testimony. Fonterra are also due to release their milk payout figure which may rise due to the recent upbeat milk auctions, albeit that they have been on diminished volume. No time is set for the release and while it could be today, more likely the figure will be released tomorrow, but is worth keeping an eye out for.

The 100 HMA (0.7530) and 200HMA (0.7488) may well provide the parameters until the NY session, but outside which, today’s 0.7546 peak should cap it.

If wrong, and the Kiwi does head higher, then look for another run up to 0.7550, where plenty of sellers are supposedly lined up, 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%).

On the downside, below today’s low would see further support at 0.7480 (23.6% of 0.7175/0.7573) and at the rising trend support at 0.7460. A break of this would trigger stops and see a run towards Fibo support at 0.7420 (38.2% of 0.7175/0.7573).

Economic data highlights will include:

RBNZ Inflation Expectation

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