A busy week ahead. Focus on IR decisions due from BOE, ECB, RBA & BOC and then US Jobs/NFP.

February finished with the dollar largely consolidating last Thursday’s gains but with little directional price action on Friday, although the Euro and the Yen were both relatively weak on the day. The coming week will be busy, and the initial interest will be on the surprise weekend China 0.25% cut in the RRR and the official manufacturing PMI which came in just above expectations at 49.9. Beyond that, the main focus is going to be on the interest rate decisions from the ECB, BOE, RBA and the BOC which all come ahead of Friday’s US Jobs data and NFP data. Today kicks things off  a busy session, with the the global PMI’s, the EU CPI and Unemployment, US Consumption/Expenditure and Construction Spending all due. Australia will also be busy, as aside from working out the Chinese data we get the local AIG manufacturing PMI, the TD Inflation data, HIA New Home Sales and the China HSBC manufacturing PMI. Later in the week, other highlights will be GDP and Retail Sales data from the EU/Germany and Australia and the US ADP Jobs data. Enough to keep us on our toes, and not forgetting Greece!

EUR/USD: 1.1191

The Euro spent most of Friday chopping around either side of 1.1200, but finished on a weak note, just above the lows of 1.1175 after the US Q4 GDP beat expectations and assisted the dollar, but with further gains curtailed, after a big miss by the Chicago PMI which was blamed on the recent bad weather, so presumably we should see a decent rebound next time round.

The coming week will be busy with the main events due to take place on Thursday, when the ECB meeting and interest rate decision will take place  (no change expected) ahead of the commencement of the ECB QE program on March 15, and then on Friday when we get the US Jobs data/NFP (exp 5.6%/235K). The week kicks off today though with the manufacturing PMI’s, EU Unemployment and the EU Feb CPI (exp -0.5% headline, +0.6% Core).

Technically there is little change to Friday, although the Euro did put in a marginal new trend low. The short term charts have now largely unwound their oversold condition which would allow the Euro to head lower if the EU manufacturing PMI’s come in beneath expectations.

As we said on Friday, the current level is not going to give way easily, this being very important Fibo support (1.1209: 61.8% of 0.8225/1.6037) although the February close has seen the Euro finish marginally below it so if/when we do break significantly away from 1.1200, we would then potentially see a run towards the trend low, seen on Jan 26, at 1.1097. Below this there is again little to support to be seen until the Sept 2003 low at 1.0759 and while I think that  this lies ahead, I would imagine that a fair bit of work needs doing before then.

On the topside, 1.1200 is again going to act as a pivot for today by the looks of it, with bounces likely to run into sellers at minor Fibo resistance levels of Friday’s fall, at 1.1222, 1.1250 and at 1.1300, and I would be surprised to see it above here for a while. If wrong, then further resistance would be seen within the previous 1.13/1.14 consolidation area (100/200 HMA’s at 1.1340/1.1360), above which would see the Fibo run into resistance at 1.1437 (23.6% of 1.2570/1.1097) and 1.1449, where we have a minor double top.

Trading from the short side and selling rallies seems to be the way to go again, while keeping an eye on the raft of data due later in the day but with the focus being on the events later in the week.

Economic data highlights will include:

M: EU Mfg PMI’s, EU CPI, Unemployment, US Personal Consumption/Expenditure, Construction Spending, ISM Mfg PMI

T: German Retail Sales, EU PPI, ISM NY Index

W: EU Services PMI’s, Retail Sales, ADP Employment, US Markit Composite PMI, ISM Non-Mfg PMI

T: ECB IR Decision/Press Conference, German Factory Orders, US Jobless Claims, Factory Orders,

F: EU GDP, US Unemployment/NFP, Consumer Credit..

Meta Trader – AxiTrader    EUR/USD: 4 Hour

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USD/JPY: 119.56

US$Jpy managed to extend its rally to 119.80 on Friday, where exporter and range-trading speculative offers capped it ahead of last Tuesday’s 119.84 midweek peak, with the dollar assisted by stronger US yields. There is little domestic news to give direction this week and direction will be driven by external factors, with the focus being on Friday’s US jobs data and the direction, once again of US yields.

Technically, things look increasingly positive for the dollar after trading all of Friday above the daily Tenkan at 119.04, with the Kijun (118.60) and the Cloud top (118.10) looking increasingly distant.

If we do head higher, then above 119.83 would see the dollar head back towards 120.00 where the descending trend resistance at 120.10 will prove to be a hurdle, but beyond which we could see another squeeze towards the 11 Feb, 120.46 high, although unlikely to be seen today.

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.

On the downside, back below 119.50 will find bids at 119.00/119.10 (Daily Tenkan: 119.04, 100/200 HMA’s 110.10/00). I doubt that we head below here today) but if wrong, further bids would arrive at last Thursday’s low at 118.62 low, where the daily Kijun will again prop the dollar up. Below that lies the  base of the rising channel and minor Fibo support at 118.40 (61.8% of 117.17/120.46), beneath which would head back to the recent 118.23 low and to the daily cloud top, now at 118.05. Below 118.00 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, although right now this looks over the horizon.

As with the medium term outlook mentioned last week, the price action remains choppy, but buying dips, looking for a break of 120.00 remains the theme although the break to the topsides may not happen today.

Economic data highlights will include:

M: Nomura Mfg PMI, Capital Spending

T:

W: Japan Services PMI

T:

F: Leading Index, Coincident Index.

Meta Trader – AxiTrader    USD/JPY: 4 Hour

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GBP/USD: 1.5427

Cable had a choppy 1.5384/1.5458 session on Friday, retaining a generally soft tone against the dollar after Thursday’s sharp fall, but generally underpinned against the Euro which is undermined by the Greek concerns, with the cross heading to a new low of 0.7245.

This week sees the BOE Interest Rate Decision, although no change is expected, and focus will now begin to turn increasingly towards the UK elections on 7 May and the political soundbites that will go with it.

Technically, Cable has finished between the 100/200 HMA’s (1.5430/60) and right on the daily Tenkan and this area could remain a pivot early in the week.

On the downside, a sustained break below 1.5400 would see bids the Friday low at 1.5383 below which there is not a whole lot to hold it up ahead of the Fibo support at 1.5336 (38.2% of 1.4987/1.5551) and which is backed up by the 23 Feb. low of 1.5331 and the 17 Feb low at 1.5315. Below 1.5300 would find further bids at 1.5285 (weekly Tenkan) but I think that this may be a few sessions away yet.

If Cable does find the legs to take it above Friday’s 1.5458 high, above the daily cloud top, then we could see another approach on 1.5500 and the descending channel resistance, now at 1.5530, which should be strong. Beyond there would revisit last week’s high of 1.5551 and the 100 DMA at 1.5565, but which I don’t think we are likely to see over the next few days at least.

The indicators are mixed and give little assistance at present, but I prefer to look for levels to sell Cable in anticipation of further dollar strength ahead.  I suspect that those looking to be long Cable are better off playing it through the cross right now.

Economic data highlights will include:

M: UK Mfg PMI, Mortgage Approvals

T: Construction PMI

W: UK Services PMI

T: BOE Interest Rate Decision, APP Facility

F:.

Meta Trader – AxiTrader    GBP/USD: 4 Hour

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USD/CHF: 0.9538

US$Chf had a choppy day on Friday, falling hard to a low of 0.9450 before recovering to a high of 0.9546 and then settling at 0.9530.

As before, I would leave this pair alone right now and concentrate on the EurUsd. For those who like to be involved, a topside break  the 100 DMA at 0.9540 would see a move towards 0.9600 and possibly a fair bit higher and buying dips does remain the theme. Below Friday’s low would be a concern though and could mean a decline towards the 20 Feb low at 0.9370.

Economic data highlights will include:

M: SVE PMI

T: GDP

W:

T:

F: Unemployment, CPI.

Meta Trader – AxiTrader     USD/CHF: 4 Hour

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AUD/USD: 0.7808

The Aud chopped around rather aimlessly on Friday but finished on a relatively positive note, above 0.7800 after having recovered from the 0.7777 session low to reach a high of 0.7833. The surprise weekend Chinese rate cut, which combined with yesterday’s slightly stronger than expected manufacturing PMI (49.9 vs expected 49.7) saw the Aud make an early blip up to 0.7850 this morning, although it is now back at 0.7815 as future Chinese growth prospects and the possibility of an RBA rate cut weigh on the downside.

This week is going to be busy, starting with plenty of data today but with the real focus on tomorrow’s RBA meeting and then on the GDP figure, due Thursday.

The market seems to be coming increasingly of the view that the RBA will cut rates and could also lean towards an easing bias, in which case the Aud is holding up remarkably well, although this is probably due, in part, to the latest CFTC figures which show Aud shorts to be at the greatest level since January 2014.

Technically, the short term indicators are mixed and give little hint either way although the dailies still actually have a positive bias as they unwind their oversold condition.

Today sees the AIG Performance of Mfg index, TD Inflation and HIA New Home Sales, and while the Aud will take some direction from these, the HSBC China Mfg data will most likely be the main driver. Back below 0.7800 would suggest that it could be headed to the base of the short term channel now at Friday’s low at 0.7777 a break of which 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 previous 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 and the trend low at 0.7625.

The topside is going to find sellers at 0.7830/35  and then at this mornings brief, early interbank high at around 0.7850. I don’t really see the Aud much above here today unless the upcoming data is surprisingly strong, which being the case, could take the Aud up to 0.7880 and possibly even towards 0.7900. If seen I would be a seller, with a SL placed above last week’s 0.7912 high.

If the RBA do not cut tomorrow, then given the short positioning of the market, we could get a nasty short squeeze after the announcement. I think any strength would prove temporary as it would merely delay the likelihood of the next cut, which could then come in April.

Economic data highlights will include:

M: AIG Performance of Mfg index, TD Inflation, HIA New Home Sales, China HSBC Mfg PMI, RBA Commodity Index

T: Building Permits, Current Account, RBA IR Decision,

W: AIG Performance of Services index, GDP, HSBC Services PMI

T: Retail Sales, Trade Balance

F: AIG Performance of Construction Index.

Meta Trader – AxiTrader     AUD/USD: 4 Hour

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NZD/USD: 0.7560

The Kiwi had a positive session on Friday as it clawed back some of the lost ground following last Thursday’s sell off and finished the week towards the top end of Friday’s 0.7514/70 range. early interbank trade has seen the kiwi briefly back at 0.7600 this morning following the weekend Chinese news although it is currently back at around 0.7560.

Further consolidation above 0.7500 looks likely for now, with external factors likely to largely dictate direction this week in the absence of any local data, barring the Global Dairy trade figure, due Wednesday..

Above 0.7575 could see a another run towards 0.7600 and possibly to last week 0.7613 high where the Fibo resistance at 0.7616 (61.8% of 0.7175/0.7890) should again prove a tough nut to crack.

The initial support will be at 0.7530 (100/200 HMA) ahead of 0.7515 and 0.7500. A break of 0.7500 could see an acceleration lower towards the rising trend support at 0.7460 and then to the Fibo support at 0.7445 (38.2% of 0.7175/0.7610) beneath which, the next target will be the 13 Feb low at 0.7410 and then 0.7400.

Below 0.7400, which currently looks a little unlikely, for a while, would move back to minor Fibo supports 0.7375 and 0.7325 (50/61.8% of 0.7175/0.7573). I don’t really see it down here for some time, but if wrong, further bids would arrive at the 12 Feb session low at 0.7313 and then again at 0.7300.

Further out, below 0.7300 would see a run towards minor supports at 0.7250 and 0.7225, and then further out we could then be in for another test of 0.7200 and the trend low of 0.7185. Below this there is little support to be seen until the spike low at 0.7115 (17 Mar 2011) and even further out, I think we are eventually headed towards 0.6962 (38.2% of 0.3900/0.8842) and possibly to the 200 Month MA at 0.6538. Don’t get excited; this is still a long way off.

Economic data highlights will include:

M: Terms of Trade

T:

W GDT Index:

T:

F:.

Meta Trader – AxiTrader    NZD/USD: 4 Hour

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EURGBP: 0.7250

The cross continued to head strongly  lower last week, making new 8 year lows in reaching 0.7243 and settling right on the very strong support at the major Fibo level at 0.7250 (61.8% of 0.5680/0.9802). Given the oversold nature of the daily charts I would imagine that this support might hold for a while and could even elicit a bounce towards 0.7300/50, although the daily indicators are showing no sign of any bounce at this stage. If the cross does head immediately lower, as indicated by the monthly chart, then the next level to watch is at the base of the major channel at 0.7140. While I suspect that this will eventually be seen, I think some consolidation and a possible short squeeze may be in order, but would be selling into any rally above 0.7300, with a SL placed above the 100 Month MA at 0.7360. Keep an eye out for today’s EU and UK manufacturing PMI’ s. If the recent trend of the UK numbers being comparatively strong when compared to the EU figures continues, then the cross won’t have time to consolidate and will likely head directly lower.

Meta Trader – AxiTrader       EURGBP: Monthly

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GBPAUD: 1.9750

GBPAUD: 1.9750 .The cross was choppy last week, sticking roughly to the range that we suspected it might in the previous week’s outlook and closing more or less in the middle of the weeks 1.9590/1.9950 range. While the weekly charts still look positive, the dailies are pointing lower after having become overbought and 1.9550 could again 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, 1.9800/25 will provide minor resistance, ahead of the stronger 1.9950. 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, although it could be that the cross is in the process of building a bullish flag, the top of which is currently at 1.9955. A break of this and the recent 2.0028 high could therefore be the signal for quite a strong rise to a theoretical target of around 2.16 (100% of the run up from 1.83 to 2.00, from 1.9950). This is a long way off and may not come about but is worth keeping an eye on..

Meta Trader – AxiTrader     GBPAUD: 4 Hour

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EURNZD: 1.4800

The cross has finished at all time lows and looks to be headed towards the 61.8% extension Fibo support, as per the weekly chart, at 1.4350.  All the indicators, including the weekly and monthly charts are negative and point to lower levels and so I am looking sell into strength towards 1.4900/50, with a SL placed above 1.5000, although ahead of that, the July 2012 at 1.4965 should act as resistance. It all seems too simple and therefore it probably is, so keep stops in place, tight above 1.5000.Meta Trader – AxiTrader    EURNZD: Weekly

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DXY: 95.26

After chopping around in the familiar range for much of last week, the DXY finished on a strong note, after Thursday’s move higher, to close near the weeks high of 95.36.

While the index looks strong, it is yet to take out the 23 Jan 95.48 high, and until it does, further strength cannot really be confirmed. I suspect that this will eventually happen though, which would suggest that the bull flag formation that we mentioned last week may be unfolding, meaning that the DXY could then head to towards the next major target seen 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 61.8% extension of the rally from 87.62 to 95.48 from 94.05 at 98.90 and then on to the August 2003 high at 99.49. In the longer term, the major target remains at 101.75 (61.8% of 121.02/70.69) although at this point we still need to be a little cautious until we get further confirmation of the next leg higher, which would be seen on a sustained break of 95.48.

If the consolidation continues, on the downside, back below 95.00 would see a decline towards the previous week’s close at 94.35 and possibly to 94.00. Below 94.00 looks increasingly distant, but if the dollar does see a reversal we could see a return to the recent 93.89 low, below which 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 but looks a long way off now.

Buying dips in the index (ie selling EurUsd) still seems to be the plan as I think we are eventually headed towards 100.00 and possibly a great deal higher, with distant targets being at 105.00 (SHS objective) and 109.10,Fibo resistance (76.4% of 120.99/70.63). In the near term though, keep an eye on the 95.48 level and the chance of another dip towards 94.00, but which would be a good buying opportunity.

www.tradingview.com   DXY Daily

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www.tradingview.com      DXY Monthly