US$ making further gains on the Fed outlook following FOMC Minutes. China data in focus today.

The dollar took another swing to the upside today, in a continued reaction to the hawkish comments from Federal Reserve officials suggesting that a June interest-rate increase could still be a possibility.  Equities were positive, while the metals were under a little pressure due to the firm dollar. Today is relatively thin on the data front, with little to provide direction from either the EU or the US, although a couple of Fed board members are due to speak (Lacker/ Kotcherlakota). Before then the main event will be the China CPI, PPI which may cause some movement in the Aud, NZD

EUR/USD: 1.0658

After chopping around for much of the session the dollar took off in NY as confidence grows following the more hawkish than expected FOMC Minutes that the Fed will be raising rates later in the year. Several Fed board members have made comments that has the market hoping for the initial rate hike sooner rather than later. A couple of Fed directors will be speaking later n the day, so traders will be hanging on to whatever they have to say for further guidance.

Several important levels of support have given way, and the Euro has fallen sharply before pulling up just ahead of the Fibo support at 1.0600 (76.4% of 1.0461/1.1052), although we are not too far away from it, having so far seen a low of 1.0637. A break of 1.0600 will see some support at 1.0579 (18 mar low), but below that there is not too much to hold it until 1.0500 and the trend low of 1.0461.

The hourlies are now becoming oversold so the downside momentum may slow a little, although any rallies do seem to present selling opportunities. The topside will meet minor resistance at 1.0685 and then at 1.0700 and we should hold below the previous low at 1.0712 now if the downtrend towards parity (eventually) is under way.

There is little of economic consequence out today, so it may be a quiet end to the week but the bias remains to the downside in the days ahead, with any direction likely to come from the Fed speeches.

Keep a close eye on Greece, where time is running out to reach a new finance package, allowing Greece to pay public sector workers. The Euro will be under increasing pressure if this is not settled by next week.

Economic data highlights will include:

Fed speeches: Lacker/ Kotcherlakota.

Meta Trader – AxiTrader   EUR/USD: 4 Hour

USD/JPY: 120.57

The dollar has broken above the resistance at 120.50 and has made it up to 120.73 and, given the positive momentum seen in the 1 and 4 hour charts, looks as though it could be headed towards 121.00, and higher, towards the 20 March high at 121.20.

Although unlikely to be seen yet, a topside break of this would open up 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.

On the downside, 120.50 will now act as minor support below which would see another choppy decline back towards 120.15 (daily Kijun) and to 120.00. The 200 HMA now sits at 119.75 which will again provide support, below which the daily Tenkan is now at 119.65. It looks unlikely to head below here for a while, but if wrong look for a run towards the 100 DMA lies at 119.15 and the daily cloud top at 118.90. As long as we stay above here, buying dips seems to be the plan.

Meta Trader – AxiTrader    USD/JPY: 4 Hour

GBP/USD: 1.4711

Cable gave into the broad dollar strength and broke sharply below the rising trend support at 1.4800 in heading to a low of 1.4685 before a slight bounce at the end of the day to finish at 1.4700.

The BOE left rates on hold, as expected and the move lower came about because of the general dollar strength, but not helped by increasing concerns over the outcome of the result of the UK election, where a hung parliament looks to be a likely outcome and will continue to weigh on Cable over the next few weeks.

Today’s low has bought about a minor double bottom with the 19 March low, which will act as interim support but below which, Cable would head towards the trend low at 1.4633 (18 Mar). Below 1.4600 is a bit of a black hole for Cable and aside from minor support at 1.4550, there is not too much to hold it up until the base of the long term channel at 1.4350.

The topside would see a run back towards minor trend resistance at 1.4740 and then possibly to 1.4800. I don’t think we are headed above here today, but further strength would head back into the choppy consolidation area where the 200 HMA lies at 1.4840 and would provide minor resistance.

Economic data highlights will include:

M: Industrial Production, Manufacturing Production, GDP Estimate.

Meta Trader – AxiTrader     GBP/USD: 4 Hour

USD/CHF: 0.9774

US$Chf has broken cleanly higher above the various resistance levels taking out the previous high at 0.9755 and has headed on to a peak of 0.9788 (50% pivot of 1.0127/0.9454).

The hourlies are overbought and may need to unwind a little before the rally resumes, but the 4 hour charts point higher so a run towards 0.9800 and the descending trend resistance at 0.9855 could be in store (0.9868 : 61.8% of 1.0127/0.9454).

On the downside 0.9755 will now be minor support, below which would head towards 0.9680 and possibly to 0.9650.

Buying dips still seems to be the plan and trading the dollar from the long side.

Economic data highlights will include:

M: Unemployment.

Meta Trader – AxiTrader    USD/CHF: 4 Hour

AUD/USD: 0.7691

The Aud drove to a high of 0.7337 in Europe/US trade where it ran into the daily Kijun/weekly Tenkan, which proved too high a hurdle to overcome and it has since turned lower to consolidate just below 0.7700.

Today’s major event will be the China CPI (exp 1.3% yy, -0.6%mm) and PPI (exp-4.8% yy).

Technically the Aud continues to make a series of short term, higher highs and higher lows. While this continues to be the case the downside seems somewhat limited, but eventually I suspect the support is going to give way for the longer term downtrend to resume. The Iron Ore price decline will eventually flow through to the Aud I suspect and the RBA will not be happy with the level of the Aud, which is making some decent gains on the crosses as well, with EurAud and GbpAud in particular, both sharply lower over the last couple of days.

For now, minor support lies at 0.7650 and then at 0.7630, below which would suggest a run towards 0.7600. I doubt we are heading below 0.7600 today, unless the Chinese data surprises to the downside, but further out the points to watch would be at 0.7559 (11 Mar low) and at 0.7532 (2 April low). Below here, the RBA’s line in the sand at 0.7500 will provide stronger support but a break of which would open up the way to 0.7414 (Oct 2010 low). Beneath this there is a bit of a black hole until the very strong support at around 0.7200, where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773//1.1082 and 0.7180: 76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and even 0.6000!), but this is going to be some way off yet.

Back above 0.7600 would open up the way for a return to 0.7335 where once again the daily Kijun/weekly Tenkan will act as hurdle but above which would head to 0.7760 and then on to 0.7800, where, as previously,  I would be tempted to sell it.

Economic data highlights will include:

M: Home Loans, China CPI, PPI, New Loans.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

NZD/USD: 0.7564

The Kiwi made it to 0.7606 today before giving up on the topside and reversing to a low of 0.7535.

Currently at 0.7560, there is little net change, and the points to watch remain the same as yesterday. With the indicators all fairly flat, there is little to provide any idea in either direction although the NZ House Price Index and then later on, the China data may cause some movement.

On the downside, below today’s low would head to the rising trend support/200 HMA at  0.7515/20, a break of which would open up yesterday’s spike low at 0.7485, below which, the points to watch are now at 0.7450 (minor) and then last week’s lows at 0.7390. I doubt that we head down there today, but if wrong, below 0.7390 there is little to support the Kiwi until 0.7270.

On the topside minor sellers will arrive at 0.7585 and at 0.7600/05 (100 DMA 0.7595). The indicators do not suggest that we are going much above here today, but if wrong, further offers will arrive at 0.7630 (3 April – post NFP high) and 0.7665 (26 Mar high).

Selling into strength remains the favoured strategy.

Economic data highlights will include:

M: REINZ House Price Index.

Meta Trader – AxiTrader    NZD/USD: 4 Hour