A busy week ahead, with Yellen, Draghi and Greece the centre of attention.

The currencies continued to chop around on Friday, driven by the latest headlines coming from the EU/Greek talks on the renegotiation of Greece’s debt. The end result was that the Euro finished up pretty much where it started, after an agreement of sorts, to extend the bailout period for 4 months. The winner was the Aud$, which benefited from the improved risk sentiment, while the Yen lagged, as the need for a safe-haven diminished. This week will be busy with plenty of data due for release but with the highlight probably going to be Janet Yellen’s semi-annual testimony to the US congress (Tue/Wed). The market will be watching closely for any possible hint as to when the first rate hike might occur, although she is likely to give very little away at this stage. Today leads off with the German IFO & the US Existing Home Sales, while later in the week key features will be a couple of speeches by Mario Draghi, the German GDP (Q4) & EU CPI (Tue), The EU/German CPI, EU targeted LTRO (Thur) and the US GDP, Durable Goods Orders (Fri).

EUR/USD: 1.1381

The Euro came under pressure in early European trade on Friday following the soft manufacturing PMI’s from both Germany and the EU, while the German PPI also missed expectations. It fell to a low of 1.1278 before rebounding sharply through the rest of the session, reaching a high of 1.1428 on improved hope of a deal over the Greek debt situation which were verified towards the end of the trading day. Greece finally secured a provisional deal from the EU to extend the bailout for four months, but will only get the financial assistance if it meets certain conditions, to be revealed in a letter to be delivered by Greece later today, although this was enough to keep the Euro underpinned through the rest of the session.

This coming week sees a fair mix of data, starting today with the German IFO and US Home Sales. Midweek sees Janet Yellen testifying to Congress, which will be closely scrutinised for hints of any deviation from the current policy and any change in the expectations of a Q2/Q3 rate hike. There will also be a couple of speeches from Mario Draghi. Also of note will be the EU CPI (Tue), the targeted LTRO figures and US CPI (Thur). On Friday we get a whole mix of data from the US, headed up by the Q4 GDP and the Durable Goods Orders, which given the recent weather are unlikely to be that inspiring and could put further pressure on the dollar at the end of the week.

Technically there is not really a whole lot to report after Friday finished with a continuation of the choppy consolidation, still using 1.1400 as a pivot, while the daily Kijun/Tenkan are converging right at the weekly close at 1.1385.

The short term indicators have now turned higher, in joining the dailies which also remain underpinned as they continue to recover from their previous oversold condition. 1.1400 will, once again act as a pivot, but if we head above Friday’s 1.1428 high, then the Euro could potentially squeeze on towards Thursday’s session high of 1.1449, where we now have a minor double top. The Fibo resistance at 1.1437 (23.6% of 1.2570/1.1097) will again be a hurdle but if the Euro can make a sustained run above it, then beyond 1.1450, we could head towards, the Feb 7 high of 1.1485 and possibly on to 1.1500.  If we were to see a move beyond 1.1500, then we would get a run towards the 3 Feb peak at 1.1533 above which would see further sellers at the nearby Fibo resistance at 1.1542 (76.4% of 1.1679/1.1097) and then maybe towards 1.1600 (daily Kijun) and on to 1.1655 (38.2% of 1.2569/1.1097). If seen, such a rally could be seen as a potential sell opportunity, with a SL left on all short positions to be left above the 21 Jan high of 1.1680.

On the downside, the 100/200 HMA’s are meeting at 1.1375 and will provide minor support, below which we could see a move back to 1.1300 and the 1.1278 low, although this looks unlikely while the Greek news remains positive. This would again  be closely backed up by the Fibo support at 1.1260 (61.8% of 1.1097/1.1533) but a break of which would see further bids at 1.1220 and 1.1200, below which would see a run towards the trend lows (1.1097).

For the coming session look for more choppy trade and once again use 1.14 as a pivot.

Economic data highlights will include:

M: German IFO, US Existing Home sales

T: German GDP (Q4), EU CPI,  Mario Draghi Speech, US Consumer Confidence, Janet Yellen testifies to Congress

W: Mario Draghi Speech, Janet Yellen testifies to Congress

T: German/EU Consumer Confidence, Unemployment, CPI, EU targeted LTRO, US CPI, House Price Index, Jobless Claims

F: US GDP, Durable Goods Orders, Chicago Purchasing managers Index, Pending Home Sales, Rts/Michigan Consumer Sentiment Index, Personal Consumption.

Meta Trader – AxiTrader   EUR/USD: 4 Hour

…

USD/JPY: 119.00

US$Jpy was choppy on Friday but stuck largely to the script of recent sessions and finished unchanged on the day, after having seen a 118.29/119.18 range.

More of the same could be in store today, although the BOJ Minutes will be released and could cause some ripples.

Back above Friday’s high(200 HMA; 119.05) would hint at a run towards the daily Tenkan (119.35), the minor double top at 119.44 and then towards minor Fibo resistance levels at 119.60 and 119.90, beyond which we could see another squeeze beyond 120.00 and on to the 11 Feb,  120.46 high, although unlikely to be seen yet. Note that the daily cloud top which previously has been acting a hurdle to further progress, now seems to have been left behind, having fallen to around Friday’s low at 118.30, and will now provide some support.

On the downside, below 118.85 (100 HMA), the next point to watch will be at the Fibo support at 118.40 (61.8% of 117.17/120.46), below which would head back to Friday’s low (daily cloud top) and the previous session low of 118.23. A break of this will see a move to the daily Kijun (118.15) and then to 118.00. Below here would then head back into the previous 117/118 consolidation area and could even see the chance of a move towards the 116.40 area, mentioned above, although right now this looks over the horizon.

Further out, I still think that we are eventually heading towards, and probably above 121.00. If/when we do so, look for further advances towards the trend high at 121.85 (8 Dec), above which would see a run towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time given the resistance levels sitting in between.

Look for more choppy trade today, close to current levels, but as before I prefer to trade it from the long side.

Economic data highlights will include:

M: BOJ Minutes

T:

W:

T:

F: Japan CPI, Unemployment, Industrial Production, Housing Starts, Construction Orders .

Meta Trader – AxiTrader   USD/JPY: 4 Hour

…

GBP/USD: 1.5395

Cable took a hit on Friday in falling to 1.5342 on the back of the disappointing UK Retail Sales, before recovering to 1.5400 as stories of a Greece/EU deal began to filter through the market.

Direction will continue to come from news headlines, with little UK data due this week and so the choppy conditions appear set to continue.

While the dailies still point higher, the 4 indicators tend to suggest some bearish divergence, indicating that we could once again see some mild downside pressure. A sustained break down below 1.5400 (100 HMA: 1.5395) would again have potential for a return to the Fibo support at 1.5363 (23.6% of 1.4987/1.5479) where the  200 HMA also sits, at 1.5360. Below that would revisit Friday’s low (1.5342) and then possibly the 17 Feb low at 1.5320. Although unlikely to be seen today, 1.5300 would provide the next support ahead of the Fibo level at 1.5295 (38.2% of 1.4987/1.5479).

On the topside, above Friday’s 1.5433 high, would then hint at a return to the current trend high at 1.5479 (1.5473:23.6% of 1.7191/1.4950). If this can be successfully taken out, then look for further gains to 1.5500 above which it all gets rather messy given the previous consolidation in the 1.5500/1.5620 area and any upward momentum could begin to slow. The daily cloud top is at 1.5525 which should prove a hurdle to further gains as will the top of the descending channel, currently at around 1.5580 and the 100 DMA, sitting just above 1.5600.

Economic data highlights will include:

M:

T: UK Mortgage Approvals

W:

T:

F: UK Consumer Confidence, GDP (Q4).

Meta Trader – AxiTrader    GBP/USD: 4 Hour

…

USD/CHF: 0.9382

Despite a pretty solid attempt to overcome the Fibo resistance 0.9505 (61.8% of 1.0240/0.8326) on Friday, the dollar came up short ahead of the 100 DMA (0.9539) in reversing sharply lower, from a high of 0.9534 and headed south,  to a low of 0.9375 on the back of the more positive stories emanating from Greece.

While the short term charts have a bearish look about them, for a possible retest of Friday’s lows, and possibly a move back towards 0.9300, the dailies are still positive, and I would therefore leave the pair alone for a while. A break of the rising trend support, as per the chart, could trigger some stops to take the dollar lower, so worth keeping an eye on.

The cross is proving very volatile – trading on Friday in a wide 1.0665/1.0810 range, an while this remains the case, I would rather stick to the Euro than try my chances with the Chf.

In the longer term, I still prefer to buy the dollar, but probably not yet. I am still hoping for a reversal to 0.9000/0.9100 to do so, but am not brave enough to go short in looking for the move lower in case Greece unfolds into a horror story, which I think it eventually will.

Economic data highlights will include:

M:

T: Swiss Unemployment

W:

T:

F:.

Meta Trader – AxiTrader    USD/CHF: 4 Hour

…

AUD/USD: 0.7835

The Aud finished the week on a positive note, near recent highs as a soft US$ emerged in the latter half of Friday’s session and assisted by the improved positive risk sentiment as  the stories of the EU/Greece deal did the rounds.

The week ahead will continue to be thin in the absence of China, but to start with the indicators are looking positive, suggesting the possibility of a more sustained test of 0.7850, beyond which will want to take a look at the 6 Feb top at 0.7876, which should be strong resistance. Above here could see  a run towards 0.7895 (23.6% of 0.8794/0.7625) and then to the 50% pivot of 0.8230/0.7625 at 0.7925, although probably not ahead of the main risks of the week, these being Janet Yellen’s testimony to Congress (Wed/Thur), and then locally, the Capex (Thur). Above here could then see a run back towards the Fibo resistance at 0.7995 (61.8% of 0.8230/0.7625) for a more sustained look at 0.8000, above which would trigger a serious amount of stops.

On the downside, the 100 HMA is at 0.7805 and backed up by the 200 HMA at 0.7775 which would keep us within the recent range. A break of this would see further bids at last Thursday’s low at 0.7756 below which could  head back to Tuesday’s brief low, at 0.7740, seen immediately after the release of the RBA Minutes. Below there, 0.7720/25 will be the next support ahead of 0.7700, a break of which would then head to minor support at 0.7665/70 and possibly on to last Thursday’s session low of 0.7643.

A more positive bias could see a run towards the 0.7900 level today, although in the longer term I am still looking for the Aud to head lower. Watch for Yellen on Wednesday though, as any sign of dovishness from her, hinting of a delay in any possible rate hike from the Fed will have the US$ heading sharply lower, sending the Aud higher.

Economic data highlights will include:

M: Chinese NY

T: Chinese NY

W: Chinese NY, Australian Construction Work Done, Wage Price Index, HSBC flash China Mfg PMI

T: Private Capital Expenditure

F: New Home Sales, Private Sector Credit.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

…

NZD/USD: 0.7516

The Kiwi had a comparatively quiet Friday trading a narrow 0.7510/53 range as it continues to consolidate its recent gains above 0.7500.

Look for more of the same today, with direction today to be provided by the RBNZ inflation Outlook.

The short term charts are not offering much assistance, although the 4 hour charts  do look a little negative and if 0.7500/10 support  does give way, look for a run back to Fibo support at 0.7480 (23.6% of 0.7175/0.7573) and to the 200 HMA at 0.7475.

The daily indicators do remain positive though, and while that is the case any downside price action may be limited. If the Kiwi does head higher then look for another run up to 0.7550 and then to the trend high at 0.7573.  Above this, the Kiwi could then advance to the 22 Jan high at 0.7582 will be the next stop ahead of 0.7600 and the Fibo resistance at 0.7615 (61.8% of 0.7889/0.7175). Beyond this would open up 0.7618 (5 Jan low) and then 0.7689 (15 Jan low), ahead of the next Fibo resistance at 0.7718(76.4%).

Economic data highlights will include:

M: RBNZ Inflation Expectations

T:

W:

T: NZ Trade Balance

F: NZ Building Permits.

Meta Trader – AxiTrader    NZD/USD: 4 Hour

…

EURGBP: 0.7385

EURGBP: 0.7385 The cross finished the week unchanged, just below 0.7400 after recovering from a new trend low at 0.7340, and more choppy trade within this vicinity may lie in store in the coming sessions. As with last week, while the overall trend remains lower, as evidenced by the weekly charts, the dailies are oversold and appear to be searching for a recovery to higher levels. If last week’s 0.7443 high can be overcome then further gains towards 0.7500 which I think should cap it, although we could see a return to 0.7592 (3 Feb high) and even to the 0.7640 area if a positive agreement between Greece and the EU can be arranged. If so I would be looking to sell it, looking for an eventual continuation of the longer term downtrend.

On the downside, if the downtrend does continue from here, look for a return to 0.7370, below which the 200 Month MA at 0.7355. If seen, the 200 MMA should again act as very strong support ahead of last week’s spike low to 0.7340, but below here would suggest another leg lower towards the equally strong support at the major Fibo level at 0.7250 (61.8% of 0.5680/0.9802) although it is too early to think of this.

Meta Trader – AxiTrader    EURGBP:Daily

…

EURJPY: 135.40

In line with the choppy action elsewhere, the crosses have largely consolidated over the last week, with EurJpy being no exception, finishing pretty much unchanged over the course of the week, right on the 100/200 HMA’s after a Monday/Friday range of 133.55/136.22.

Further choppy action, with a neutral bias, may continue. I would not be overly involved right here and it would take a move to above the 100 week MA at 136.70 to bring any enthusiasm for a more directional move towards Fibo resistance at 137.57 (38.2% of 149.77/130.15) where I think it may be a sell opportunity, with at tight stop placed at around 138.10.

On the downside, the charts are rather messy and it could be that 134/135 may continue to hold it in the short term. Below 134 would open the way to the 9 Feb low at 133.67 and then  to last week’s brief visit to 133.22. Below here would hint at a further decline towards the 4 Feb low at 132.54..

Meta Trader – AxiTrader     EURJPY:4 Hour

…

GBPAUD: 1.9625

GBPAUD: 1.9625 .The cross was choppy last week, sticking roughly to the range that we suspected it might in the previous week’s outlook,  but closing towards the lower end of the  weeks 1.9570/1.9910 range. While the weekly charts look positive, the dailies  are turning lower after having become overbought, and 1.9570 could well come under renewed pressure, below which, there is not too much to hold the cross until the Feb. 10 low at 1.9458, although that seems some way off.

On the topside, 1.9700/50 will provide minor resistance, ahead of 1.9900. I am doubtful of heading back above 2.0000 in the near term, although if wrong, a break of the current trend high at 2.0028 would then head towards the more distant, August 09 high at 2.0266. More choppy corrective trade with a mild downside bias seems to be in store.

Meta Trader – AxiTrader                                                                                                                                   GBPAUD: 4 Hour 
GBPAUD: Daily

…

EURAUD: 1.4525

EURJPY: 1.4525. The cross was choppy again last week but finished a bit lower after sticking to parameters of 1.4385/1.4728, closing pretty much in the middle of the range. Given that the indicators are giving little assistance in either direction it could again be volatile this week but with little bias either way. The 50% pivot of the fall from 1.5330/1.4194 is at 1.4645, while the 200 HMA currently sits at 1.4620, so this area could again act as a pivot. Back above here would see a run back towards  last week’s high at 1.4728 and then on to the previous weeks high at 1.4805 and then on towards the previous high at 1.4893.

On the downside, below 1.4420, where the 100 WMA provides strong support, would see a return to last weeks 1.4385 low and then on towards 1.4250 and possibly to 1.4000 although this seems unlikely for a while. Look for more in the 1.4400/1.4800 for now..

Meta Trader – AxiTrader    EURAUD: 4 Hour

…

 

DXY: 94.34

The DXY finished the week pretty much unchanged from the previous week’s close, this time at 94..33, but with little change to the technical outlook, although the daily charts do give the appearance of either building a descending topping formation, or more likely in my opinion, a bullish flag that could eventually take the DXY a lot higher.

Right now, the daily momentum indicators look a bit soft and do not suggest that we are going to push too much higher in the coming sessions and even point to the chance of slightly lower levels in the week ahead. The weeklies are also overbought and while the indicators still have some way to go before they cross lower, suggesting that the current dollar uptrend is over, I think that some caution at these levels is still warranted by the dollar bulls.

If the dollar does head lower, then below last week’s 93.89 low would open the chance of another run towards the previous week’s 93.25 low. A break of this would suggest a deeper decline towards 92.15 (21 Jan low), below which the first major Fibo supports come into view at 91.54 and 89.12 (23.6%/38.2% of 78.87/95.42) respectively. In between these two levels, the 200 month MA currently sits at 89.78.

If the DXY resumes its run higher, then above last Wednesday’s high at 95.10 would then target the important trend high at 95.48. A break of this, which I am not sure that we are likely to see this week, would suggest that the bull flag option is unfolding and would head to towards the next major target at 95.85 (50% pivot of 121.02/70.69). Once this is out of the way, we are likely to be in for an acceleration of the move as there is little to stop the index heading on towards the August 2003 high at 99.49, although I think that this move will need to take place later in the year as the current run is beginning to look a little exhausted, and it may be that the dollar will need some more time to gather its breath before an assault on to new highs. In the longer term though, the target remains at 101.75 (61.8% of 121.02/70.69).

For the time being it may well be that we are going to chop around in a wide range between the 93.25 support and the 95.48 high, albeit with a minor downside bias to start the week. This would at least have the effect of the squeezing some of the weaker, stale dollar longs  if 1.1450 can be overcome and would then allow the daily charts to build the legs for the next move to the topside. We shall see.

My preference is still to trade and build a long dollar position, looking for the next leg higher in the uptrend, which I suspect will be a strong one. In the meantime we sit and wait. Patience is a virtue!.

www.tradingview.com                                                                                                                                           DXY : Daily

…

DXY: Weekly.

www.tradingview.com