The Euro fell to a 10-day low against the dollar on Tuesday, putting in the worst quarterly performance in its 15-year history. The US$ was mixed (although the quarter was the best performance since Q3 2008), putting in a generally solid performance, while weakening mildly against the Jpy. Equities gave up the gains of the previous session with a sharp decline late in the day, put down end-of-quarter/pre Easter position squaring. Today will be a busy one, starting with the Japanese Tankan and closely followed by the global manufacturing PMI’s, beginning with Australia, Japan and China. Liquidity is going to get thinner so any moves could become exaggerated.
EUR/USD: 1.0746
Despite some better than expected EU data, where the CPI climbed back to -0.1% yy in March versus expectation of -0.4% yy, with the Core CPI figure dropping to -0.1% yy (exp-0.2% yy) the Euro remained heavy, finishing its worst quarterly result since its introduction in 1997. EU unemployment rate rose to 11.3% in February versus expectation of 11.2%.
Today the focus will turn to the manufacturing PMI’s, with another weak set of readings from the EU likely to keep the Euro under pressure.
Technically, the Euro has made a daily close below the Tenkan (1.0810) that we mentioned yesterday, which is going to add to the downside momentum. Below the current session low of 1.01712 the next port of call will arrive at the Fibo support at 1.0687 (61.8% of 1.0461/1.1057) below which there is minor support at 1.0650 and then the next Fibo support at 1.0601 (76.4%).
On the topside, minor resistance lies at 1.0775 and 1.0800/10 ahead of 1.0825 and the 200/100 HMA’s, at around 1.0850. I don’t think we head back above here today, but if wrong look for further gains towards 1.0900, which if seen would again be a decent level to be looking towards selling the Euro again.
A choppy day looks in store, with a continuing downside bias seemingly the most likely outcome, but I suspect that ahead of Friday’s NFP the momentum may ease somewhat as the market consolidates its positions.We are likely to see some position squaring ahead of Easter and liquidity is going to become thinner so keep stops in place as moves could be exaggerated.
Economic data highlights will include:
EU Non M-P meeting, Manufacturing PMI’s, US ADP Jobs data, ISM Manufacturing PMI.
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 119.95
US$Jpy is a bit weaker today, back below 120.00 at the time of writing, and from a technical point of view it looks as though we could have another day of similar trade ahead. We do have the Tankan coming up today but another session of using 120 as a pivot would not surprise.
On the downside, the daily Tenkan at 119.75 will again provide support, a break of which would see a return to the previous sticky area at 119.40/50. If the dollar does turn lower, then below 119.40 would open up the daily cloud top at 119.00 which will provide decent support ahead of the 100 DMA at 118.75, Thursday’s 118.32 lows and the thin daily cloud base at 118.15.
Back to the topside, the daily Kijun is at 120.15 and we need a daily close above here, which is not happening today, to give added momentum to head higher. The session high has been 120.35, above which would see a run towards the descending trend resistance at 120.50 and then to the 20 March high at 121.20. Although unlikely to be seen yet, a topside break of this would open up 121.50 and the 20 March high at 122.02. If/when this level can be overcome, the way would open up for a run towards the 15 July 2007 high at 122.42, and in the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time.
Economic data highlights will include:
Tankan, Nomura Manufacturing PMI.
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.4833
Better than expected data, where the Q4 UK current account deficit narrowed to Gbp -25.3b, while the GDP was revised up to 0.6% qq allowed Cable to rally off its lows and to head up from 1.4754 to a high of 1.4870.
The hourly charts actually look as though they are currently forming a small pennant formation, and if this turns out to be the case would see Cable head back towards 1.4920, although the 200 HMA is currently providing a cap at these levels ahead of further sellers likely to be seen at 1.4900. If Cable turns lower from here, forget the pennant theory.
Further out 1.5000 will again be strong resistance, having capped it at the last three attempts and which if seen would be a decent sell, bearing in mind that there would be stops placed above 1.50 which could temporarily drive Cable higher, towards 1.5050/1051. Doubtful.
Back to the downside, 1.4800 and 1.4750 will again provide the intra-day supports. Below this would then open the way to move to the recent lows at 1.4713, 1.4685 and at 1.4633, although the latter of these may be a stretch too far today.
All up, more choppy trade looks to be in store, but with a mild bias in the short term to move a bit higher.
Economic data highlights will include:
UK Manufacturing PMI.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9722
The dollar has taken out 0.9700 and has headed on to a high of 0.9755.
Further progress looks a little unlikely today and a session of choppy trade near current levels would not surprise.
If wrong, above 0.9750 would open up the way for a run towards 0.9800/15, while the downside would see bids at 0.9680 and then 0.9650.
Meta Trader – AxiTrader USD/CHF: 4 Hour
AUD/USD: 0.7610
The Aud remains under pressure but has recovered from session lows of 0.7590 as it awaits the outcome of the local Building Permits data and then the domestic and HSBC China Manufacturing PMI’s.
The downside still appears to be the most likely direction, and should this be the case, then below 0.7590 will find decent bids at the 11 Mar low at 0.7559. A break of this would then hint at a run to the RBA’s stated target of 0.7500, and as before, I think we are eventually heading there and a fair bit lower over time. Below 0.7500 there is not too much to hold the Aud ahead of 0.7414 (Oct 2010 low) beneath which there is a bit of a hole until the very strong support at around 0.7200 where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773/1.1082 and 0.7180:76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and eventually 0.6000!), but this is going to be some way off yet.
Rallies today should be limited to around 0.7640 although we could see a run towards 0.7665 if the data surprises to the upside. I don’t think we head above here today, but if wrong, then 0.7700 and possibly to the Fibo resistance at 0.7725 (38.2% of 0.7937/0.7590) would come into view.
Selling rallies remains the theme.
Economic data highlights will include:
Building Permits, AIG Manufacturing PMI, Official/HSBC China Manufacturing PMI’s.
Meta Trader – AxiTrader AUD/USD: 4 Hour
NZD/USD: 0.7472
The Kiwi is 15 points lower after a choppy but rather directionless session, after having recovered from a 0.7455 low and more of the same looks in store today.
On the downside, below the current session low would head towards 0.7440, but seems unlikely today, although the 4 hour charts are building some downside momentum,so it seems that this will be the direction to follow. Below 0.7440 would open up 0.7400 and 0.7380 (61.8% of 0.7175/0.7694)
On the topside, 0.7500 will see sellers ahead of further minor levels at 0.7520, 0.7535 and the 200 HMA at 0.7555
Selling rallies remains the favoured strategy, looking for an eventual run towards 0.7400, and lower.
Meta Trader – AxiTrader NZD/USD: 4 Hour
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