US$ remains choppy ahead of ECB (Thur) and US Jobs data (Fri). Australian GDP coming up.

It has been a choppy session with some early US$ weakness being followed up with its return to favour later in the session, but with the end result being largely neutral as the market bides its time ahead of tomorrow’s ECB meeting and Friday’s US jobs data/NFP. The Aud was the main mover yesterday, on the back of the RBA decision, and will again be in focus today, on the release of the local Q4 GDP figure. Elsewhere, the main drivers will be the global services PMI’s, the EU Retail Sales, US ADP Employment, US Markit Composite PMI and the ISM Non-Mfg PMI.

EUR/USD: 1.1181

It has been a scrappy session today, with the Euro chopping around on either side of 1.1200, in recovering from a new, minor trend low of 1.1254 to reach a late NY high of 1.1216, before settling back just below 1.12.

There is a mix of secondary data today, but overall I suspect that it could be similar sort of session as traders prefer to largely stand aside ahead of tomorrow’s ECB meeting and then Friday’s US jobs data.

Technically there is little new to add although the Euro again put in a marginal new low today at 1.1254, touching the base of the minor descending channel that is currently dominating trade. Further action, close to the important Fibo support (1.1209: 61.8% of 0.8225/1.6037) would not really surprise, and as we said over the last few sessions this level could continue to act as a magnate, possibly until the NFP on Friday.

Eventually though I think we are going to head lower, at which point the Euro is likely to revisit the trend low, seen on Jan 26, at 1.1097. Below this there is little 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, 1.1205/15 is again going to act as a pivot by the look of it, with further bounces likely to run into sellers at minor Fibo resistance levels of the current decline, at 1.1240 and at 1.11295. I would be surprised to see it above the 1.1270 area today, but if wrong, then further resistance would be seen at the 200 HMA at 1.1290. Beyond there would see the Euro return to trade within the previous 1.13/1.14 consolidation area with sellers likely to line up ahead of the top of the channel, currently at 1.1375.  Above 1.1400 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.

The short term momentum indicators do point to the chance of a topside squeeze, but I doubt that it will prove significant today, and would look for 1.1150/1.1250 to largely cover the session.

Economic data highlights will include:

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

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USD/JPY: 119.62

The dollar made a vain attempt to break through the top end of the triangle, in reaching 120.25, but ran into sellers and has since traded with a soft tone, in line with lower US bond yields, falling to a session low of 119.38 before finding any balance.

The charts are rather mixed now and a day of 119.00/120.00 would not really surprise, but with the 4 hour charts showing a slightly negative bias.

If the dollar does head lower, the first support will be close by, at the 119.38 session low and then backed up by further bids at the daily Tenkan( 119.27), the  200 HMA at 119.20 and then at 119.00. I doubt that we head too much below here today as we await Friday’s US jobs data, but if wrong, further bids would arrive at last Thursday’s low at 118.62 low, where the daily Kijun and the base of the rising channel will again prop the dollar up. Below that lies the  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.

On the topside, 120.00 will again see good sellers ahead of the session high and strong resistance at 120.25. Although doubtful today, a break to the topside would take the dollar on towards the 12 Feb high at 120.46, beyond which, it would then head onto, and probably beyond, 121.00. If/when we do see such a move, 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.

Economic data highlights will include:

Japan Services PMI.

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GBP/USD: 1.5368

Sterling has had a choppy 1.5344/96 range today, finishing up more or less exactly where it started, and there is little new to add. It could be a similar sort of session ahead, with only the UK services PMI to provide direction and with market participants more focused on tomorrow’s BOE Meeting, but at which no change is expected.

As with yesterday, with the daily indicators now having rolled over and looking to be pointing lower, I think that selling into rallies back above 1.5400 remains the plan, with a SL placed above the top of the descending channel, now seen at 1.5490 or preferably above the 100 DMA at 1.555. Above 1.5400, the immediate point of resistance to watch will be at 1.5425, where the 100/200 HMA’s are crossing to point lower.

If Cable does head lower from here, then below today’s low  the next point to watch is close by at 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 head towards 1.5285 (weekly Tenkan) but I think that this may be a few sessions away yet.

Economic data highlights will include:

UK Services PMI.

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USD/CHF: 0.9608

The dollar has today regained 0.9600 in reaching 0.9617, after moving away from the combination of the 100 DMA and the Fibo level at around 0.9540, which will now act as strong support.

Further gains towards 0.9700/50 now look possible, while below 0.9540, the downside looks supported in the 0.9450/0.9500 area, although I don’t think we see it there today.

Meta Trader – AxiTrader     USD/CHF: Daily

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AUD/USD: 0.7827

After the spike higher yesterday, on the news that the RBA had left rates unchanged, the Aud has run into decent sellers ahead of 0.7850, which is likely to remain the case today, at least until the release of the domestic GDP data. This is expected to come in at a slightly softer 0.5% qq, 2.5%yy, largely reflecting the ongoing downturn in the mining sector, and should this be the case it is hard to see the Aud making further significant gains. Also due for release today are both the local and then the HSBC China Services Indices.

If the data is generally better than expected, then 0.7850 is going to see a more serious workout and the 4 hour charts are hinting at this being a possibility. A topside break would then head on towards Aud up to 0.7880 and possibly even towards 0.7900, but if seen I would be a seller, with a SL placed above last week’s 0.7912 high, which comes in roughly in line with the sideways channel that appears to be forming, as per the chart. Note also that the Aud is also approaching the top of the major descending channel, at approximately the same 0.7900 level. If we do break above here, and take out the 0.7915/22 level (0.7922: 23.6% of 0.8910/0.7625) then the Aud could potentially head a fair bit higher, so will be worth keeping an eye on.

On the downside, if the data is soft, then 0.7800 will again come under pressure, beyond which, the Aud could then head back to 0.7770 and possibly to the strong support at 0.7750/40. I would be doubtful of heading below here for a while now, but if wrong, 0.7720/25 will be the next support ahead of 0.7700. A break of this level would then head towards the channel support at 0.7680 and on to the 12 Feb low of 0.7643 and the trend low at 0.7625. Eventually I suspect we will reach the RBA’s stated target of 0.7500, and from a technical point of view we could head a lot lower, although that would be a long term move.

In the short term the bias seems to be mildly higher, but 0.7900/20 is going to be a tough nut to crack.

Economic data highlights will include:

AIG Performance of Services index, GDP, HSBC Services PMI.

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NZD/USD: 0.7554

The Kiwi has had a largely positive session, riding higher on the back the firmer Aud, in reaching a high of 0.7572 after once again holding on to the support at 0.7500.

The high was seen after the Global Dairy Trade price Index showed a 1.1% rise, but gave up those gains immediately when the milk price Index fell by 1% , leaving the Kiwi currently  sitting at 0.7550.

With no local data due today, the Kiwi will take its cue from the Aud data, but technically the picture is largely unchanged from previously.

The nearby support lies at the 100/200 HMA’s at 0.7540 and at 0.7525 below which 0.7500 should prove pretty solid if we see it down there, this being where the rising trend support now also lies. A break of 0.7500 would head towards minor support at around 0.7470 and then to the Fibo support at 0.7445 (38.2% of 0.7175/0.7610) although this looks some way off. A break of this though would then head towards the next target the 13 Feb low at 0.7410 and then 0.7400.

On the topside, sellers will reappear towards 0.7575, beyond which we could see another run towards 0.7600 if the Kiwi gets dragged along by a potentially firmer Aud after today’s GDP release. Beyond here would head 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.  If so, I would still prefer to sell into the strength.

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