US$ buying relentless following the FOMC – more to come. Scotland vote today.

Despite a soft US CPI, then more importantly, the Fed’s FOMC statement – keeping rates at their current levels for a  “considerable time”, the dollar buying has been relentless and currently has all other currencies back pedalling furiously as they make new trend lows. More of the same looks likely and there is only one trade to watch right now although that may change if Scotland vote “Yes” in today’s referendum. The polls suggest otherwise. That aside, the US Housing data will be in focus but before then we get the NZQ2 GDP, RBA Annual Report and SNB Rate decision.

EUR/USD: 1.2840

Despite the fact that the Fed moderated their growth projections and left the wording of their statement unchanged, in keeping rates on hold for a “considerable time”, the Euro was unable to make any gains at the dollar’s expense in the way that the market had expected it might do. Janet Yellen did add that any action on rates is highly dependent on the degree of future economic growth and that she expects asset buying to finish at next month’s meeting, having been wound back bio another US$10 bio this month.

The Euro was not even able to make it to yesterday’s high on the announcement, and having had a quick spike to 1.2981 strong dollar demand has since seen the Euro fall sharply to a low, so far of 1.2835 at the end of the NY session.

It now looks as though we are now going to chop around here for a while as the market turns its focus to the Scottish vote, with the Euro likely to see some flow on volatility from any flows in the cross and EURGBP will be very active later on today. The dollar will also see flows to/from Sterling and we will also have the US Housing data later in the day.

Technically, having taken out the previous trend low at 1.2858, there really is not a lot to stop it heading to 1.2800 and then to the target area of 1.2780 (major rising trend support; from July 2001), which comes just ahead of the 9 July 2013 low at 1.2754.

On the topside, it seems that there is plenty of interest to buy dollars into any weakness. 1.2860 and then 1.2900 will now act as resistance but it does not appear that we are going to see it back up there today. If the Euro does squeeze higher, then 1.2940 will see sellers. I cannot really see it above here now, but if wrong, the session high at 1.2980 and then 1.3000 will act as strong resistance.

Stay long dollars but leave room to sell into rallies in the Euro, albeit they look likely to be rather shallow as the market chases the move towards the 1.2750 target.

Economic data highlights will include:

US Building Permits, Housing Starts, Jobless Claims, Philly Fed Mfg Survey, G20 Meeting.

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EUR/USD: 4 Hour

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USD/JPY: 108.50

The dollar shrugged off the weaker than expected US CPI and has taken off like a frightened rabbit following the release of the FOMC statement, taking out the 107.35 resistance and also 108.01 (Sept 19, 2008) in so far reaching 108.52.

This means that there is now not much resistance to be seen until the descending trend line, joining the Feb 2002/June 2007 highs, at 109.20 (see monthly chart below), beyond which could soar to the August 2008 high at 110.65. Above there would head on to the 76.4% Fibo level at 112.50 (124.13/75.56), albeit not for a while.

The downside will find support now at 108.00, below which would return to 107.35 which now seems like ancient history. Were we to break back below here at any time, then 107.00/106.80 would provide decent support but it won’t be for a while, if at all.

Today sees the Japanese Trade data and another Kuroda speech.

Economic data highlights will include:

Japan Trade Balance, BOJ Kuroda speech.

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USD/JPY:4 Hour

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GBP/USD: 1.6275

Cable was bid up to 1.6335 in early Europe ahead of the BOE Minutes, while the MPC once again voted 7-2 to keep rates unchanged. Further choppy trade followed with Cable making another new high at 1.6357 as a beneficiary of various polls saying the “No” vote in Scotland will win the day later on in the coming session.

The FOMC result halted  the enthusiasm for buying Sterling, which is now back at 1.6275 as I write, having just recovered from a 1.6248 low.

Trade is very choppy and is changing minute by minute, as it will do throughout the session. The Scottish vote will be later on today with the exit poll results beginning at around 21.30 GMT: (7.30 am Sydney time tomorrow morning), so look out for a hectic Friday in Asia for Cable!

In the meantime, with Cable now unchanged from this time yesterday, the points to watch are pretty much unchanged.

A “No” vote should see Sterling take a bid tone, and back above 1.6300, it would take a look at the 1.6357 session high. Beyond there could see an acceleration towards 1.6430, which come ahead of more solid sellers to be seen at 1.6480 (38.2%).

In the event of a No vote winning the day Cable will collapse. 1.6000 would quickly come under scrutiny and while I don’t think this is likely, if it were to happen, then there is not a whole lot to hold it  up and it could target 1.5725 (61.8% of 1.4813/1.7191) and then 1.5380 (76.4%). Below there, would see a return to 1.4813, the July 2013 and potentially even to 1.4230, the May 2010 low.

Tread very carefully. My own view is that the No vote will win and that we should see a relief rally in Sterling. However if we see it at 1.6400+, I think it would again be a sell in view of the outlook for further dollar strength in the weeks ahead.

Economic data highlights will include:

Scottish Referendum Vote, UK Retail Sales

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GBP/USD: Daily

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USD/CHF: 0.9420

US$/Chf has soared higher, taking out the strong 0.9400 resistance that we have been discussing recently in so far hitting a high of 0.9424.

The volatility is likely to continue today, with the SNB rate decision due and with traders wary of the SNB following the lead of the ECB in introducing negative rates.

Technically we are now looking at a run op towards the 6 Sept 2013 high at 0.9455, above which there is little to stop the dollar heading to 0.9570 (76.4% Fibo level of 0.9838/0.8698).

Dips should find support at the previous trend high at 0.9393, below which would see a potential run back to the break out level at around 0.9350. I would doubt that we are heading under here today but if wrong look for further losses towards the session low of 0.9320 and 0.9300.

Some consolidation may be in order today after the decent move we have just seen, but the SNB may well try and push the Chf lower.

Look to build further long dollar positions.

Economic data highlights will include:

Trade Balance, SNB I/R Decision

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USD/CHF:4 Hour

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AUD/USD: 0.8950

Having spiked up to 0.9085 on the news of the weak US CPI, the Aud then slid lower, but briefly spiked again to 0.9075 on the initial news of the FOMC keeping the “considerable time” phrase in the statement before turning sharply lower, taking out plenty of support levels and heading to a new trend low of 0.8950, reaching the head/shoulder target at 0.8960 in doing so. .By heading below 0.8980, the Aud has also taken out some very important levels, these being the rising monthly trend line from 2008 and the 61.8% Fibo retrace of 0.8660/0.9505 and has potential quite bearish consequences for the Aud. The next levels to watch are at 0.8923 (12 March low), 0.8890 (3 March low) and 0.8860 (76.4% of 0.8860/0.9505). .If we see a rally, 0.8980 will act as the initial resistance, beyond which sellers will now line up at 0.9000. Above here looks doubtful today although the next substantial resistance above here would not be seen until around 0.9070 (descending trend resistance/23.6% of 0.9398/0.8950). .Watch for the RBA Bulletin/Annual report today which could do its bit to push the Aud lower, although right now it doesn’t seem like too much assistance is required!Stay short, Sell rallies..Economic data highlights will include:

.China House Price Index, RBA Bulletin/Annual report

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AUD/USD:4 Hour

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NZD/USD: 0.8090

After spiking up to 0.8195 on the release of the weaker US CPI, the Kiwi has been slapped lower following the FOMC and has made a new trend low at 0.8076 although it has since bounced and now sits close to 0.8100. .I suspect we might be in for some short term consolidation, but the demand for US dollars would suggest that the Kiwi is going to remain under pressure, and below the 0.8076 low would target the 2014 low at 0.8051 on Feb 4, from where it previously bounced sharply. Below that would probably head quickly to 0.8000 and lower, to Fibo support at 0.7985 (76.4% of 0.7670-0.8839). .On the topside, back above 0.8100, which may prove tricky, will take a look at the previous trend low at 0.8122, and then above this at 0.8145 (minor) and then 0.8190/00. It does not look as though we are going above here any time soon and rallies still appear to be sell opportunities. .We have the Q2 GDP coming up and then the General Election on Saturday so it could all get a little choppy after today’s strong move, but trading from the short side remains the name of the game..Economic data highlights will include:NZ GDP,Meta Trader – AxiTrader

NZD/USD:4 Hour

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DXY: 84.63

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DXY: Daily