US$ mixed. Euro remains strong – Aud, Gbp, Yen under pressure. China/US Mfg data today.

The dollar made an attempt to recover today, after the better than expected jobless claims, and made some reasonable gains against most counter-parties, barring the Euro which remains extremely strong. The Aud (rate cut speculation/ lower iron ore price) and Cable (election jitters) in particular had a tough session. Asia, today, will get the Chinese manufacturing/non-manufacturing PMIs and the Japan CPI. It is the May Day holiday for much of Europe, and so should be pretty quiet until the US session when the ISM Manufacturing data and the R/M Consumer Confidence figures are due.

EUR/USD: 1.1222

The Euro remains very well underpinned, having made a new trend high at 1.1265, despite today’s U.S. data that showed signs of a stabilizing labor market, and saw the dollar pin back its losses against most of the other majors. The Euro also received good help from the crosses where it made good gains in particular against Sterling, Yen and Aud.

Today may be somewhat quieter, given the May Day holiday through parts of Asia and much of the EU.

Technically, there currently appears to be little turnaround in the Euro’s new found love of life, although it is approaching some fairly major resistance. It has already briefly touched the Fibo level at 1.1265 (38.2% of 1.2569/1.0461), above which, lies further resistance at 1.1290 (23.6% of 1.3993/1.0461) and the 100 DMA, now at 1.1302. Above this could see an acceleration to the topside, where the next port of call would be at 1.1378 (26 Feb high), 1.1400 and 1.1449 (19 Feb high) and then further out at 1.1533 (3 Feb high).

Back below 1.1200, the downside will see bids today at 1.1180 and at 1.1110 (both minor), and then at 1.1090 (23.6% of 1.0520/1.1265). Below this there would not be too much to hold it ahead of 1.1000 (100 HMA) and 1.0980 (38.2% of 1.0520/1.1265), but which does not currently look likely to be seen.

All up, a range bound session, at least until the NY open seems likely, when the US manufacturing ISM is due and which will provide the day’s real direction for the dollar. At this stage the Euro seems well underpinned but ahead of the strong resistance it might be a decent sell with a tight stop placed at around 1.1320

Economic data highlights will include:

Labour Day (EU), US ISM Mfg PMI, Reuters Michigan Consumer Sentiment Survey, Total Vehicle Sales.

Meta Trader – AxiTrader    EUR/USD: 4 Hour

USD/JPY: 119.41

The dollar made yet another attempt to break to the downside, today reaching a low of 118.49 before bouncing strongly back into the daily cloud and making a strong run higher, in following the firmer Treasury yields, to reach 119.89 after the improved US jobless claims.

The dollar has since given up some of its gains and a choppy day of 119/120 seems most likely, although the Japanese data may provide some ripples in Asia, but any real directional move looks likely to be delayed until the release of the USA Mfg ISM late in the day.

Technically there is not a whole lot of change despite the dollar having made a new high for the week, although the bullish outside day may signal further strength in the days to come.

If so, above today’s 119.89 high would run into the daily cloud top at 120.00. The  daily charts are still flat and do not really suggest that we are likely to see it up above here today but if wrong, a stronger rally would open the way for a move towards 120.85 (13 Apr high) and 121.00. As we said 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 now has support close by at the 200 HMA (119.30) and at the 100 HMA (119.00). Below this, which looks a little unlikely, would return to the daily cloud base at 118.90, and we need a daily close below this in order to resume any confidence in further downside momentum. If that were the case  118.50 would see good bids ahead of the 26 March low (118.32), the Fibo support at 118.20 (61.8% of 115.85/122.02) and 118.00, but below which there is not too much to provide support until 117.30 (76.4%).

Economic data highlights will include:

Japan CPI, Japan Mfg PMI, Vehicle Sales.

Meta Trader – AxiTrader    USD/JPY: 4 Hour

GBP/USD: 1.5353

Election jitters finally seeped through to Cable today which saw some sizeable losses, both against the dollar (falling from 1.5491 to 1.5303) and against the Euro (0.7187 to 0.7337).

In the short term, Cable is sitting between the 55 HMA (1.5380) and the 100 HMA (1.5300) and given that much of Europe is on holiday today (UK May Spring bank Holiday: Monday), these parameters may hold it for much of the session.

While the 4 hours are pointing lower, the dailies remain positive, so at this stage I would not be getting overly bearish on Cable, particularly while the Euro remains so strong. The UK manufacturing data will be released later on and a decent outcome here could yet see a good bounce in Cable.

Technically, below 1.5300 will find bids at the Fibo support at 1.5275 (23.6% of 1.4565/1.5498) which lines up with the rising trend support and should prove strong, if seen.

Above 1.5400, the topside will run into sellers at 1.5440 (minor) and then at the session high at 1.5490. If the dollar were to come under heavy pressure again, then above 1.5500 would see Cable head on to the 26 Feb high at 1.5551, which should be very strong resistance, with 1.5558 being 38.2% of the fall from 1.7191/1.4565. Above that would head towards the 31 Dec high at 1.5619.

Economic data highlights will include:

UK Mfg PMI

Meta Trader – AxiTrader    GBP/USD: 4 Hour

USD/CHF: 0.9323

A choppy session has seen the dollar remain under pressure, making new trend lows at 0.9307 after earlier giving 0.9445 a nudge on the topside.

As with yesterday, the dailies appear to be picking up some downside momentum, so we could see a return to the lows where 0.9310 (50% of 0.8336/1.0291) will again provide support, but a break of which would head towards 0.9250 and then to 0.9200.

Above the session high, the topside will find sellers at the previous support at the 3 April low at 0.9453 a break of which could head back towards the 100 DMA at 0.9485 and to 0.9500, which looks unlikely to be seen today, but if wrong should now prove quite a tough nut to crack.  If wrong then the dollar will be back within the messy 0.95/0.97 range.

Meta Trader – AxiTrader    USD/CHF: 4 Hour

AUD/USD: 0.7911

Several factors combined to send the Aud lower over the session, not the least of which was the strong rally in EurAud, the 4.5% fall in the Iron Ore price and an article in the SMH indicating that the RBA will cut rates next week.

After opening the day above 0.8000, it has since travelled down to 0.7863 before settling near 0.7900. Direction today will be directed by the local Manufacturing PMI and from the China Official Mfg/Non-Mfg PMI’s, and then later in the day, by the US Mfg data.

It could be quite a choppy session, in rather thin conditions given the May Day holiday and the charts do look rather mixed. The 4 hour charts remain negative, although the dailies still look strong, and if the US data is weak later in the day, then the Aud could well regain some or all of yesterday’s losses.

On the topside, sellers will arrive at the 100 HMA (0.7925) and then at 0.7950. Above this would see a return to test 0.8000 and possibly to 0.8025 and 0.8070 although this does seem too far off to worry about at present.

The downside will find bids at the 0.7863 low and then at the 200 HMA at 0.7840. Below here will then head towards 0.7815 (50% of 0.7552/0.8074) and to 0.7755 (61.8%), but probably not today.

Economic data highlights will include:

AIG Manufacturing PMI, PPI, China Official Mfg/Non Mfg PMIs.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

NZD/USD: 0.7619

The Kiwi has had a choppy session after falling hard following yesterday’s RBNZ meeting, supported later in the day by selling of AudNzd as the Aud came under some pressure of its own.

Currently pretty much unchanged after bouncing from a low of 0.7575, it looks like being another choppy day possibly confined within a 0.7580/0.7650 range.

The 200/100 HMAs (0.7640/0.7650) will provide the initial resistance ahead of 0.7670 and 0.7700. Above here would take another look at the strong resistance in the 0.7740 area, where the Kiwi again topped out today (0.7743) but seems unlikely in the short term. If wrong, a break of 0.7740 could see the Kiwi accelerate towards Fibo resistance at 0.7804 (38.2% of 0.8842/0.7175) and the 200 DMA at 0.7830.

On the downside, back below 0.7600 would take another look at 0.7575 and at the rising trend support at 0.7560, ahead of 0.7530 (38.2% of 0.7175/0.7743). A break of this would see a deeper correction towards 0.7465 (50% pivot of 0.7175/0.7743).

A choppy 0.7580/0.7650 range would not surprise.

Meta Trader – AxiTrader    NZD/USD: 4 Hour