US$ reverses early losses after firm housing data. Flash PMI's today. Eurogroup meeting tomorrow.

The US dollar was under some pressure early in the day but turned itself around after the improved US Housing data. US$Chf and Cable were the star performers, with the Chf under pressure after the SNB moved to widen the application of SNB rules on negative IR, while Cable surged on the more hawkish BOE Minutes. There is plenty of secondary data due today, headed by the flash PMI’s, but it may be another choppy session, driven by event risk, ahead of tomorrow’s Eurogroup meeting, where Greece will be the centre of attention. Before then, Asia will look to the HSBC flash China Mfg PMI for direction, while Australia gets the NAB Business Confidence Conditions.

EUR/USD: 1.0725

It was another choppy session today, driven higher in early Europe, to touch 1.0800 before reversing to a low of 1.0708 after a 6.1% jump in the U.S. home sales data lifted expectations that the Fed may soon hike interest rates.

Today will be another busy one for data, although the market is likely to again be rangebound ahead of Friday’s Eurogroup meeting, which will focus on the ongoing situation in Greece. The flash EU Manufacturing/Composite/ Services PMI’s will be released and then later on, it will be the turn of the US New Home Sales and the Jobless Claims to provide the direction.

Technically there is no real change.

On the topside, the 100 HMA is at 1.0760, beyond which, 1.0800 will again provide the initial resistance ahead of the previous peaks at 1.0820 and at 1.0848. Beyond here would then head towards the 8 April high at 1.0887 and to the Fibo resistance at 1.0911 (76.4% of 1.1034/1.0461). Above this looks unlikely in the near term, but further gains would see the Euro head on towards 1.0954 (7 Apr high) and then to the 1.1034 pivot, above which would put any thoughts of an immediate return to the downtrend on hold.

On the downside, below 1.0700 would head to the 200 HMA at 1.0685 and Tuesday’s lows at 1.0660. Below here would see support at minor Fibo levels at 1.0645 and then at 1.0600, below which would then take another look at the congestion ahead of 1.0500.

With the short term indicators being flat, another session largely confined to 1.07/1.08 seems likely, but with a mild downside bias to possibly tack a look at 1.0670/80.

Economic data highlights will include:

EU Provisional Consumer Confidence, German Consumer Confidence , EU  Flash Composite/ Services and Manufacturing PMI’s , US New Home Sales, Jobless Claims, Kansas Fed Activity..

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USD/JPY: 119.90

As we thought it might be, US$Jpy was confined to the 119.00/120.00 range yesterday although the upside has come under some pressure late in the day after the improved US housing data, lifting hopes of a rate hike sooner rather than later.

Although higher, with 120.00 possibly coming under pressure, there is no real change in the overall outlook.

The dollar is currently sitting right on the resistance offered by the daily Kijun. A break of this, and 120.00, would open the way for a rally towards 120.40 (daily cloud top), 120.85 (13 Apr high) and 121.00. As before, although unlikely to be seen yet, a topside break of 121.00 would open up the 20 March high at 121.20, the consolidation area at around 121.50 and the 10 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.

The downside would see the dollar head back to the daily Tenkan at 119.75 and then to the 200 HMA at 119.48, the 100 HMA/DMA (119.22) and the daily cloud base at 118.90. Below this would then head back to Monday’s low at 118.52, but which seems unlikely to be tested again for a while. If wrong, the next  support levels to watch, are at the 26 March low (118.32), the Fibo support at 118.20 (61.8% of 115.85/122.02) and at 118.00, but below which there is not too much to provide support until 117.30 (76.4%)…

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GBP/USD: 1.5035

Cable is higher today, supported by the slightly more hawkish than expected BoE Minutes, which noted that inflation expectations have shown signs of stabilization after recently weakening somewhat. Today will be the turn of the UK Retail sales to provide the action (exp 0.4% mm, 5.4% yy).

The cross (EurGbp) also saw a decent move, with Cable benefiting from safe haven flows out of the EU ahead of Friday’s EU meeting. The cross fell sharply from 0.7205 to 0.7121; Currently 0.7132.

Cable easily took out both 1.5000 and Friday’s 1.5052 peak, in reaching a high of 1.5078 before retreating a little following the firm US housing data.

On the topside, Cable is making an attempt to break back up into the daily cloud (1.5040), beyond which, a break of today’s high would see a run towards 1.5100, the 9 March high at 1.5136 and the next Fibo level at 1.5170 (61.8% of 1.5551/1.4565). If seen, 1.5135/70 will be a very strong area of resistance, also being the top of the long term descending channel and the larger degree of Fibo resistance (23.6% of 1.7191/1.4565).

The downside will find near term support at 1.5000, below which would head back towards the 100 HMA at 1.4950 and the rising trend support at 1.4930. Below this would open up the chance of 1.4900 and lower, towards Fibo support at 1.4885 (38.2% of 1.4565/1.5078), 1.4865 (daily Kijun) and yesterday’s 1.4855 session low.

The 4 hour/daily charts look to have further gains in store, but wait for the Retail Sales to provide the direction.

Economic data highlights will include:

UK Retail Sales.

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USD/CHF: 0.9713

US$Chf has rallied over 2 big figures from the low of 0.9500 to reach 0.9711 and is finishing close its highs after the SNB extended the reach of negative interest rates. There were many exemptions to the rules on negative rates, including public entities and pension funds, but which have now been drawn into the web. The move by the SNB is being seen as the opening the path for another cut in official rates, which is likely to keep the Chf under pressure.

The spike higher has put the 4 hour charts on a more positive course and above the session highs would see further gains towards 0.9770 (minor) and then to 0.9800 (descending trend resistance). Above this lies the 13 April high at 0.9862 and the 61.8% Fibo resistance of 1.0126/0.9453 at 0.9868, so this should be very strong, if/when seen.

The downside will find support at the 200 HMA at 0.9645 and then at 0.9625 and 0.9600 (both minor).

Economic data highlights will include:

Swiss Trade Balance.

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AUD/USD: 0.7751

A market caught short of Aud was squeezed up to a high of 0.7806 after yesterday’s slightly firmer than expected CPI, although it has faded from there since then to currently sit at 0.7760.

Today will be the turn of the NAB Business Conditions/Confidence (prev 2) and HSBC flash China PMI (prev 49.6) to provide the action.

Unless the data surprises one way or the other, we could well be confined to the 0.7700/0.7800 range ahead of the Eurogroup Meeting tomorrow, which will also see the US Durable Goods.  RBA Governor Stevens will be talking at the AFR Banking Wealth Summit on 28 April and could take another swipe at the Aud.

Technically there is little change in the overall picture.

Currently sitting on the 100 HMA, the topside will find sellers at the descending trend resistance, now at 0.7800. A break of this, and the session high at 0.7806, would then progress towards Friday’s high of 0.7842, above which would suggest a run towards 0.7884 (26 March high), 0.7904 (25 March high) and to the trend high at 0.7937.

The downside will see bids at 0.7745 (minor) and then at the 200 HMA at 0.7700.

Further out, below 0.7700 would head to the week’s low at 0.7682, ahead of the minor Fibo supports at 0.7665 and 0.7620. If/when we ever head back below 0.7600, decent support would lie at 0.7575, 0.7550 and at the trend low of 0.7532 (2 April low). Below this, the RBA’s line in the sand at 0.7500 will provide stronger support but a break of which would open up the way to 0.7414 (Oct 2010 low). Beneath this there is a bit of a black 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 even 0.6000!), but this is going to be some way off yet.

Economic data highlights will include:

NAB Business Conditions/Confidence, HSBC China Manufacturing PMI (Flash).

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NZD/USD: 0.7664

The Kiwi again squeezed up to the 0.7740 trend high (today’s high: 0.7737), where we now have a double top, before turning lower once again, to currently sit at 0.7667, under some pressure from the stronger US dollar following the improved US housing data.

The topside will now see sellers at 0.7680 (100 HMA) ahead of 0.7700, beyond which the Kiwi could then take another look at 0.7720 and at Friday’s 0.7740 peak, above which would suggest a run towards 0.7800 (23.6% of 0.8842/0.7175) and to the 200 DMA at 0.7872.

The short term charts actually point mildly lower, so a run to the downside would see a move towards 0.7635 (minor) and then to 0.7610 (23.6% of 0.7175/0.7740). Below this would head back into the consolidation zone, where further choppy trade would seem likely ahead of 0.7585 (200 HMA) and 0.7530 (38.2%).

Look for 0.7600/0.7700 to cover it with a mild bias to the downside..

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