US$ mixed. A busy week coming up. RBA decision (Tue), UK election (Thu), US Jobs/NFP (Fri) all in focus.

The dollar made a good comeback against the Yen, Cable Aud and Kiwi at the end of the week although the Euro (and Chf) remains very firm, underpinned in part by some slightly improved EU data and some very strong performances on the crosses. The dollar does not appear to be completely out of the woods yet though and conditions are going to remain choppy, and very much event driven. This week sees the UK election, which will be pivotal for cable. Elsewhere, the RBA meet tomorrow, while the main economic event of the week will be Friday’s US jobs numbers. There is plenty else aside, starting today with the EU Manufacturing PMI’s, EU Sentix Investor Confidence Survey, ISM NY Index and Factory Orders. Australia gets the TD Inflation, Building Permits, ANZ Job Ads and HSBC China Mfg PMI. It is a holiday in Japan, UK.

EUR/USD: 1.1195

The Euro remained firm on Friday, but below its 1.1290 high, after the dollar regained some of its recent lost ground despite the US construction spending data falling to a six-month low and manufacturing growth sitting at a two year low . However a jump in consumer sentiment and stronger-than-expected vehicle sales for April suggested that the economy was finding some footing and supported the dollar into the weekend and we will get further evidence of whether this is the case or not on Friday, when the US employment numbers are released (exp 5.4%, +215K). Given the recent soft US data and last month’s poor NFP of +126K, which came in well below expectations, this month’s predictions seem high to me, which would leave the way open for another downside surprise and further disappointment for the dollar. Before then, it will be busy throughout the week, beginning today with the Manufacturing PMI’s and the EU Sentix Investor Confidence Survey. It is a UK holiday so European conditions will be thinner than normal.

Technically, the Euro peaked very nicely up to the Fibo resistance at 1.1290 (23.6% of 1.3993/1.0461) before returning to the downside. Whether that is the top of the squeeze or not remains to be seen, but 1.1290 will again be very strong resistance, if seen, and above which the Euro would encounter further sellers at the 100 DMA at 1.1300, and so will not be an easy area to overcome. If wrong, above 1.1300 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 1.1175 and at 1.1110 (both minor), and then at 1.1090 (23.6% of 1.0520/1.1290). Below this is the 100 HMA at 1.1075, beneath which there would not be too much to hold it ahead of 1.1000 (38.2% of 1.0520/1.1290) 1, but which does not currently look likely to be seen yet.

While looking to sell the Euro for the medium term play, the dailies are still pointing higher, so it may be too early to do so yet and it looks likely to receive further support this week, particularly against Sterling, which is coming under heavy fire as the Election approaches (Thursday). As with Friday though, selling towards 1.1290/1.1300 with a tight stop may be the plan.

Economic data highlights will include:

M: EU Manufacturing PMI’s, EU Sentix Investor Confidence Survey, ISM NY Index, Factory Orders

T: EU Economic Growth Forecast, EU PPI, US Trade Balance, ISM Non Mfg PMI, Services/Composite PMI

W: ECB Non Monetary Policy Meeting, EU Services/Composite PMI’s, EU Retail Sales, ADP Employment data.

T: German Factory Orders, US Jobless Claims

F: German Industrial Production, Trade Balance, US Unemployment/NFP, Wholesale Inventories.

Meta Trader – AxiTrader   EUR/USD: 4 Hour

USD/JPY: 120.03

As we thought on Friday, Thursday’s bullish outside day did give the dollar the legs to head higher, breaking up through the daily cloud top at  120.00 and heading on to a high of 120.28, where the weekly Tenkan has capped it for the time being.

The 4 hour charts look positive, so further gains could well be seen but the dailies are, at this stage, still fairly flat so it may be that we are in for further choppy trade but at slightly higher levels.

Above Friday’s high would take the dollar on towards minor resistance at 120.60 and then to 120.85 (13 Apr high) and 121.00. 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 at 119.85 and at 119.50 (both minor), ahead of the 200 HMA (119.35) and the 100 HMA (119.20). Below this, which looks a little unlikely, would return to the daily cloud base at 118.92. Below there,  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%).

Look for 119.85/120.40 to cover it today. Note that is a Japan Holiday.

Economic data highlights will include:

M: Public Holiday

T:

W:

T:

F: BOJ Minutes.

Meta Trader – AxiTrader   USD/JPY: 4 Hour

GBP/USD: 1.5133

Cable is now fully in election mode and heading back to more realistic levels, given the strong possibility of a hung parliament at this week’s General Election, but not helped on Friday by the soft data that saw the UK Mfg PMI drop sharply to 51.9 in April (compared to prior month’s 54.4 and the expectation of a rise to 54.6), while mortgage approvals dropped to 61k, below expectation of 63k.

As with last week, I think Cable probably still has a fair bit of downside potential ahead of it ahead of the election, and probably even more-so after it, depending on how ungovernable the UK becomes.

Today is the Spring Bank Holiday so it may get a bit of a reprieve, but if Cable does continue its downside trajectory, then below Friday’s 1.5113 low would head back towards the top of the previous channel, within which it had traded for a year before last week’s topside break. This is at 1.5055, which ties in with the 55 DMA, a break of which would then target 1.5028 (50% pivot of 1.4565/1.5491) and 1.5000. Below here would open the way for a deeper decline, towards 1.4918 (61.8% of 1.4565/1.5491) and 1.4855 (21 April low) and 1.4785 (76.4%).

Fridays close has seen it move back below the 100 DMA (1.5160), which will be the first topside hurdle to overcome. Beyond there would open the way to 1.5190 (200 HMA) and 1.5325 (1000 HMA) although this looks unlikely to be seen again for quite a while.

Selling into any strength is the theme, looking for an eventual run to 1.5000 and (lots?!) lower.

Economic data highlights will include:

M: UK Bank Holiday

T:

W: UK Services PMI

T:  UK General Election

F: Trade Balance.

Meta Trader – AxiTrader    GBP/USD: 4 Hour

USD/CHF: 0.9322

US$Chf still looks heavy, and certainly the daily charts suggest that we could be in for some more downside pressure before any chance of any serious dollar recovery. If so, below Friday’s trend low of 0.9276 would find bids 0.9250 and at 0.9210 which lies at the base of the channel that US$Chf currently appears to be building for itself.

On the topside, Friday’s high of 0.9351 will see sellers ahead of 0.9400 and Thursday’s spike high of 0.9445, which ties in with the 100 HMA.

The plan appears to be one of buying dips with a SL placed sub 0.9200..

Meta Trader – AxiTrader   USD/CHF: 4 Hour

AUD/USD: 0.7848

The Aud headed lower again on Friday as the market appears to be reappraising the chances of an RBA rate cut tomorrow, after the previous short squeeze to 0.8074, on the back of higher Iron Ore prices and consequent lessening hopes of a cut. Having squeezed out many of the shorts, the Aud is now lower again, helped on its way by last week’s SMH article that indicated that the RBA will be cutting. That being the case (23 out of 27 surveyed economists say they will cut), the downside points to watch will be at Friday’s 0.7802 low, where the 100 Month MA now sits and which has acted as a pivot for the last 5 months, but below which would retest 0.7753 (61.8% of 0.7552/0.8074) and 0.7740 (55 DMA). Back below this would then open up 0.7700 and the 21 April low at 0.7697.

In the event of there being no rate cut, the Aud will see another sharp squeeze higher, but in the meantime the topside will today see sellers at 0.7855 (100 HMA) and then at the minor Fibo levels of the fall from 0.8074 at 0.7865 (23.6%), 0.7905 (38.2%) and 0.7938 (50%), although I think the Aud will be lucky to break much above 0.7880 today.

There is a fair bit of data due in the coming session, which will cause some ripples, but the overall directional move will take place tomorrow. While the hourlies are pointing a little higher as they recover from having become oversold, the dailies now appear to be topping out, so selling into strength appears to be the plan, with a SL placed above 0.7940.

Economic data highlights will include:

M: TD Inflation, Building Permits, ANZ Job Ads, HSBC China Mfg PMI

T: HIA New Home Sales, RBA Interest Rate Decision, Statement

W: Retail Sales, HSBC China Services PMI

T: AIG Construction PMI, Unemployment

F: China Trade Balance.

Meta Trader – AxiTrader   AUD/USD: 4 Hour

NZD/USD: 0.7529

The Kiwi took another leg lower in NY trading on Friday, breaking below the range base at 0.7570 and heading to a low of 0.7506 before a mild bounce to finish the week at 0.7535.

The key events this week will be the RBA Meeting, where a cut would again push the cross back towards parity, underpinning the Kiwi to an extent, and the NZ Q1 Jobs data on Wednesday. The Global Dairy Trade Index will also be released, at some stage late on Tuesday, which has not been supportive of the Kiwi for quite some while.

Currently sitting right on the 55 DMA, the points to watch for the Kiwi are at, on the downside, Friday’s 0.7502 low, below which would open up  0.7465 (50% pivot of 0.7175/0.7743), 0.7421 (13 Apr low) and 0.7399 (61.8% of 0.7175/0.7743).

The topside will now see sellers at 0.7570 and then at 0.7600 and the 200 HMA at 0.7630, although I don’t think we go close to it today.

While the hourlies are pointing a little higher, the 4 hour and the daily charts now appear to be topping out, so selling into strength appears to be the plan, with a SL placed above 0.7630.

Economic data highlights will include:

M:

T: Global Dairy Trade Index

W: Unemployment

T:

F:.

Meta Trader – AxiTrader    NZD/USD: 4 Hour

EURGBP: 0.7400

EURGBP: The cross moved sharply higher last week as Greece concerns faded, while at the same time the UK Election came firmly into focus. Technically, further upside looks possible. Right here, 0.7400 is 38.2% of 0.8038/ 0.7014, and the 100 DMA lies at 0.7445 so further headway will be tricky but the momentum indicators point higher and so if these can be overcome then the way is open for further progress towards 0.7525/35 where a couple of Fibo levels will slow it up..

The downside looks well supported now at 0.7350 and 0.7300, both Fibo levels of the rally from 0.7014 to 0.7417 and buying the dips currently seems to be the plan with a SL, sub 0.7300.

Meta Trader – AxiTrader   EURGBP: Daily

EURJPY: 134.50

EURJPY:  134.50. The cross headed sharply higher last week after having trading down to 129.00, before finishing just below the week’s  high, seen on Friday at 135.27. With both the daily and weekly indicators pointing higher, a test of the 200 WMA at 136.85 and the 200 DMA at 137.25 would seem possible, although before then good resistance lies immediately ahead at the 100 DMA and then at 135.10 (38.2% of 149.77/126.08). The 4 hour charts are overbought, and ahead of the Fibo resistance, it may be a good short term sell (with a SL placed above Friday’s high) looking for a correction towards 133.80 and possibly to Fibo support at 133.10 (23.6% of 126.08/135.27) and even to 131.75 (38.2%). The longer term outlook though, seems to be headed higher and medium term players may prefer to wait to buy a dip.

Meta Trader – AxiTrader    EURJPY: Daily

GBPJPY: 181.75

GBPJPY: After reaching 184.46, the cross made a key day reversal on Friday and looks to have plenty of downside ahead of it. Rallies would see resistance at the 100 HMA at 182.65 so leave some room on the topside, which would allow the short term charts the chance to recover their currently oversold condition but keep stops on shorts above 183.00. Above the descending trend resistance at any time, currently at 184.50, would prove me wrong about the short side and would probably be a precursor of a move towards 186/187, although I don’t see this happening.

If the downside momentum does continue, the 200 HMA at 181.35 will be the first support ahead of 181.00. Below here would then head towards the Fibo support at 180.85 (38.2% of 174.87/184.46) and then potentially much lower, towards 178.52 (61.8%) or even 177.14 (76.4%). It will be a whippy week given the UK election, so keep stops firmly in place.

Meta Trader – AxiTrader    GBPJPY: Daily

…

EURAUD: 1.4250

EURAUD:  The cross made a weekly key bullish reversal last week in rallying from 1.3677, where the 200 Week MA propped it up, to 1.4354, before settling at 1.4260. A retest of the high would run into the 100/200 DMAs, but above which would head on towards the 3 April high at 1.4410 and then towards the 100 Week MA at 1.4560 and to 1.4600.The downside will now find bids at 1.4190 and at 1.4095 (23.6/38.2% of 1.3677/1.4354), which if seen would appear to be a decent buying opportunity. Back below 1.4000 would negate the upside and bring about further choppy trade and potentially another look at the 200 WMA.

Meta Trader – AxiTrader    EURAUD Daily

DXY: 95.21

 The DXY again turned sharply lower last week, where after a brief squeeze up to 97.28 on Monday it then dived to a low of 94.39 on Thursday before closing Friday at 95.21.

The momentum indicators, (as per the charts, below) still look negative and it would seem that for the time being the dollar is going to remain under pressure for a while to come, particularly against the Euro (which makes up 57.6% of the DXY basket), although it has made some good gains in the last couple of sessions against Cable (11.9%) and the Yen (13.6%)

In bottoming out at 94.39, the Index held the strong support at 94.33 (38.2% of 84.47/100/39) which will again provide the main base in the coming days, although the 100 DMA lies at 94.78 and will provide interim support. Below 94.39 though would hint at a run towards 94.00 and then to the 3 Feb low at 93.25 and to the next support at 92.45 (50%% of 84.47/100/39). This lies just ahead of the major Fibo level at 92.20 (38.2% of 78.90/100.39) and should be very strong, if we get there.

The topside will now see nearby sellers at the breakdown level at 95.80, above which would head back towards 96.17 (26 March low) and on to the Fibo resistances which will arrive at 96.53 (38.2% of 99.98/94.39) and at 97.15 (50%). Further out 98.67 (76.4%) and 99.99 (100%) will provide levels to watch ahead of 100.00.

Although looking somewhat distant right now, targets beyond 100 remain unchanged at 100.39 (13 Mar high) and at 101.77 (61.8% of 121.02/70.69) a break of which would head towards the March 2003 high at 102.15. In the longer term the Jan 2003 high at 103.20 would come into view but right now looks as though it will take a while to get there.

To repeat what we said last week, the bigger picture outlook remains unchanged in that that the lower price action from the 100.39 trend high is seen as part of a larger consolidation pattern and we could yet see another run towards 94.30, which could be seen as the third leg of a corrective leg lower. In the longer term though, the dollar’s up trend is expected to resume, eventually back to and well beyond the current peak at 100.39..

www.tradingview.com    DXY: Daily

DXY: Weekly