Stocks rise; Yen, Chf dips as Crimea tension eases. Focus turning to the FOMC.

Aud, Nzd higher as Russian tensions ease – for now. RBA Minutes coming up today.


Risk associated currencies are slightly better bid in the absence of any escalation of affairs in Crimea. Safe haven currencies – Yen, Chf – are a bit easier, leaving the US$ rather mixed. Equities liked it and Gold has seen what seems to be quite an important reversal. While the status quo holds, the markets will begin to focus on Wednesday’s FOMC decision and Janet Yellen’s outlook  on the US economy. Today sees the EZ/German ZEW, UC CPI.

EUR/USD: 1.3922

A slightly more positive view towards the situation in the Crimea has seen most risk assets regain some of their recent losses as the markets await Russia’s next move and the consequent response from EU and US.

The Euro is slightly higher after a generally choppy session but remains below 1.3950, with the market  beginning to focus on the upcoming FOMC meeting (Wednesday) and subsequent press conference from Janet Yellen.

On the data front, the EU CPI was revised lower to 0.7% yy (Feb) while core CPI was unchanged at 1.0% yy, – while in the US, – the NY Empire State manufacturing index rose less than expected to 5.6 (Mar) but the Industrial production rose 0.6% , better than the expected 0.1%.

Today’s economic focus will be on the German ZEW Index and then later on the US CPI (exp 1.2% yy).

Technically there is not a great deal of change and it is possible that we will have another similar day today, ahead of the FOMC, unless there is any dramatic change in Crimea.

The longer term indicators are positive, although the dailies are in danger of becoming overbought, while the 4 hourlies are showing some bearish divergence, making for a rather confused picture, but if 1.3950, and last week’s high of 1.3966 can be overcome, then we can expect a more severe test of 1.4000 where barrier related selling can be expected to protect it. Good size stops are reported at 1.3970.

If/when the Euro finds the legs to head above 1.4000, there is not a lot to stop it heading on to the next major Fibo resistance at 1.4240 (76.4% of 1.4940/1.2041) which was also the Oct 2011 high, although I don’t really see what is likely to make this happen ahead of Wednesday, and suspect that instead, we could be in for another day of consolidating below 1.4000. If the Euro does continue to climb, expect increased rhetoric from the ECB to talk it lower once again. They will be getting increasingly unhappy if the Euro continues to climb against the other majors.

If the Dollar can find some legs of its own, then we could see a turn back to the session lows at around 1.3880, where the 100 HMA held it up today, and which now lies at 1.3890. Below there Friday’s low at 1.3847 (1.3850: 23.6% of 1.3475/1.3966, 200 HMA) and 1.3830 will see bids (daily tankan; 1.3835). Back under 1.3800, 1.3780 (38.2% of 1.3475/1.3966), 1.3760 (daily kijun) and then 1.3720 (50% pivot of 1.3475/1.3966) will see buyers ahead of 1.3700, which currently looks out of reach.

Look for another day of the same sort of price action, today using 1.3875/1.3975 as a guide.

Economic data highlights will include:

Trade Balance, ZEW Survey Economic Sentiment, Current Situation (Mar), US CPI (YoY) (Feb), Building Permits (MoM) (Feb), Housing Starts (MoM) (Feb)

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EUR/USD: 4 hour

USD/JPY: 101.70

The dollar is a bit higher today as risk aversion receded slightly, diminishing the need to use the yen as a safe haven while the market waits to see what the next move will be from both Russia and the West.

Today has been stuck in a range between last Fridays high at 101.85, and supported at the recent low, now possibly a double bottom, at 101.20.

We are currently stuck roughly in the middle of this range, and could end up doing much the same today although the 4 hour charts do look positive for another test of the topside, possibly for a look at 102.00. Above there, 102.17 (38.2% of 103.75/101.20/100 HMA), 102.30 (100 DMA) and then 102.40 (daily tenkan/kijun) will all see sellers.

A return to the downside, which will happen if there is any escalation in the current Crimea situation, saw strong corporate bids today from Tokyo and will likely do so again. Below there though, would take the dollar back below 101.00 for a test of  the 4th Feb low of 100.75 and the 50% pivot of 95.78/105.43 at 100.65, below which would head to the rising trend support/200DMA at 100.25.

As before, I would be surprised to see 100.00 taken out in the next few days unless the Russian situation escalates dramatically, but if wrong, stops would probably drive it to 99.47 (61.8% of 95.78/105.43).

Use 101.20/102.15 as a guide today.

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USD/JPY: 4 hour

GBP/USD: 1.6635

There is not too much to add to Cable today, it being pretty much unchanged from yesterday, in waiting for the main action of the week tomorrow. Wednesday will see the BOE minutes, Unemployment and the UK Budget, which all comes on top of the FOMC decision.

Today’s range has been 1.6605/65 and something similar could again prevail today, although below 1.6600, which is not so far away, will find decent buyers at 1.6585 and then again at last week’s 1.6567 low, ahead of the rising trend support at 1.6530.

On the topside, above today’s top would see sellers at 1.6700 and then at last week’s high at 1.6740 although this currently looks some way off.

As with yesterday, in the short term, the 100 HMA is now at 1.6627 and the 200 HMA is at 1.6668 and it would not really surprise to see Cable bounce around once more pretty much within those parameters again today. A major escalation in the Ukraine/Russia situation though would quickly see a move to the downside for a stronger test of the 1.6585 support.

In the meantime use 1.6600/1.6675 as a guide, but watch out for what BOE Governor Carney has to say later in the day.

Economic data highlights will include:

BOE’s Governor Carney speech

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GBP/USD: 4 hour

USD/CHF: 0.8730

The dollar has held on to the levels, pretty much unchanged from yesterday, with Eur/Chf having climbed a little (1.2155) given the slight easing in East/West tensions and diminishing the need for the safe haven Chf.

As before, the dollar, having managed to hold on to the support at 0.8700, there is some chance that this may prove a bit of a base and the short term charts do look as though they are trying to build some positive momentum to head a bit higher. I don’t think it is going to be that significant, and it could be that 0.8760/70 caps it once again (100 HMA now at 0.8745, 200 HMA 0.8775). If wrong, a further bounce would take us towards 0.8800 (23.6% of 0.9156/0.8698) above which the way would open up for a test of the recent pivot at 0.8850, but which looks some way off.

On the downside, below 0.8700 would head towards 0.8650, with the minor channel base, now at around 0.8660, providing interim support. Under 0.8630 (major channel base – red line) there is not much to stop it heading to the Oct 2011 low at 0.8565. That does not look in trouble for the time being, but if when we get there, be very flexible. If we reach 0.8630 in the next day or so, I would be squaring up short dollar positions on the first attempt to break it, as we could be in for a bit of a bounce given that the daily indicators are becoming increasingly oversold. However if/when it does give way, it could be a rather sharp move towards 0.8565.

For today, look for another day of trade near 0.8700, using 0.8680/0.8770 as a guide.

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USD/CHF: 4 hour

AUD/USD: 0.9085

The Aud had a healthier session today, helped along early in the day by the announcement from WBC that they see no further rate cuts in 2014 and given further impetus from the absence of any escalation of tensions in Crimea, which has allowed most risk related assets to recover.

Today’s highlight will be the RBA minutes which are likely to tell us little new, leaving the main focus  on Russia and then on Wednesdays FOMC meeting.

The 4 hour chart look positive, and thus dips today would appear to find good support at around 0.9040/50 below which 0.9025 should also see bids. I would doubt that we are headed much below here today, although if wrong, 0.9000 should find bids ahead of 0.8980.

The topside has topped out today ahead of 0.9100, at 0.9097. If we can find the legs to get back above 0.9100, it could get interesting, especially if the recent 0.9133 high can be overcome.

As I said previously, we should not completely discount the possibility of a reverse head/shoulders formation, which would have the potential to head up towards a target of around 0.9450. There is plenty of work to do before then, and it may never eventuate, but is worth keeping an eye on, given that the dailies are also possibly showing the earliest hint of turning higher.

In the meantime, today, use 0.9040/0.9125 as a guide.

Economic data highlights will include:

RBA Meeting’s Minutes:

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AUD/USD: 4 hour

NZD/USD: 0.8565

The Kiwi is a bit higher today, in generally steady trade, but it remains well underpinned by the prospect of further rate hikes to come and we have the Current Account and GDP data due later this week which are expected to confirm further strong growth.

Above today’s 0.8582 peak, the Kiwi would head to 0.8600, and possibly beyond, although in the near term I think that this will be toppish. If wrong, the next resistance is at around 0.8640 but in the longer term back above last week’s 0.8605 high would target the 7 Apr 2013 high at 0.8675. Above this there is not a lot to stop it heading to the 2011 high at 0.8842, although that is yet a long way away.

The 4 hour indicators are indecisive, but today bids should arrive at the session low at 0.8525 (100 HMA) ahead of 0.8500. Below there would see a run towards 0.8470 (23.6% of ) and then to the rising trend support, now at 0.8445. Given the outlook for further rate hikes, a dip to these levels, should we see one, would appear to be decent medium term buy opportunities. If wrong, a break would take the Kiwi back towards 0.8395 (38.2% of 0.8050/0.8605).

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NZD/USD: 4 Hour