Markets remain fairly steady in post-Easter trade. Ukraine still the focus

Aud, Nzd rangebound ahead of Australian CPI, RBNZ meeting; Wednesday, Thursday respectively.

Thin trade dominates and most currencies are reasonably stable to start the week. The Ukraine situation has traders on their toes, after some pro-Moscow separatist gunmen took over a building, but has otherwise seen little new news to push markets one way or the other today. It looks as though it could be a reasonably steady start to the week, although there will be bits and pieces of data out over the next few days to provide direction. Today the focus will be on the EU Consumer Confidence, US Existing Home Sales and Richmond Fed Mfg Index.

EUR/USD: 1.3795

In the absence of any major market moving news, the currency markets have been reasonably stable today in thin holiday conditions, but with one eye on the developments in the Ukraine, which do not appear to be improving.

The Euro had earlier attempted a squeeze up to 1.3823 but is finishing the US session near its lows, with the technical indicators beginning to suggest that it could be the downside that comes under further pressure in the days ahead.

The daily cloud top at 1.3800 is under pressure, and the US close below this (currently at 1.3795) may see a push to test stop-losses placed below 1.3780. If this gives way – and both the 1 and 4 hour indicators suggest that it might be a possibility – there will be minor bids at 1.3760 (61.8% of 1.3672/1.3905) and 1.3730 (76.4%).  Rising trend support also lies near here and should provide reasonable support, below which the 100 DMA/daily cloud base both lie at 1.3720. A break of 1.3700 could bring a deeper decline, and apart from some minor Fibo levels, there is not too much to hold the Euro up ahead of the 200 DMA at 1.3568. This is some way off though I think.

A return to the topside will see sellers at the day’s highs at around 1.3825, above which would see offers at 1.3850/60 and then more at last week’s peak at 1.3900.

I would not be looking for too much today, although rallies appear to be a sell opportunity, with the chance of seeing 1.3700 later in the week.

Use 1.3760/1.3815 as a guide.

Economic data highlights will include:

EU Construction Output, Consumer Confidence, US Existing Home Sales, Richmond Fed Mfg Index.

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EUR/USD: 4 hour

USD/JPY: 102.60

The dollar is ratcheting slowly higher, underpinned by the firm tone in the equity markets, and assisted by Yen weakness after Japan posted a record trade deficit in the fiscal year ended in March. Tensions in Ukraine limited the losses due to the safe-haven status of the Yen.

102.00/103.00 looks likely to cover it for now, with 102.70 providing the initial resistance (50% pivot of 104.12/101.31/Daily Tenkan), ahead of more solid offers at 102.92 (100 DMA), 103.00 (61.8%) and 103.05 (daily cloud top). Above this would see an acceleration to 103.45 (76.4% of 104.12/101.31), albeit probably not today.

The downside will find bids at the 100 HMA at 102.30 and then at the 200 HMA/Daily Tenkan at 102.00. I don’t see it below here in the next day or so, but if wrong, look for an eventual return to solid support at 101.20/30.

The daily cloud parameters are currently 102.47/103.03 and I suspect this could cover it today.

Economic data highlights will include:

Japan Leading Economic Index

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USD/JPY: 4 hour

GBP/USD: 1.6795

Cable is tracking sideways, close to 1.6800, but below last week’s 5 year high at 1.6842.

The short term indicators are fairly flat and suggest that more of the same can be expected today, – and possibly till the BOE minutes, tomorrow. Although the short term indicators are relatively flat, the dailies still look positive and if 1.6850 does get taken out, then we can expect a run towards 1.6876 (Nov 2009 high) beyond which there is not too much to stop it progressing to 1.7000.

On the downside, minor support lies at 1.6765/80 which could hold it today. Below there could head down to 1.6730, below which would probably see 1.6700. I cannot really see it happening yet, although if Cable ever gets below 1.6660 area, where rising trend support lies, we could see a deeper correction, possibly towards 1.6540 where the 100 DMA will provide the first major support.

Further tension in the Ukraine should be supportive of Sterling against the Euro which appears likely to head below 0.8200, possibly towards the Feb low at around 0.8157.

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GBP/USD: Daily

USD/CHF: 0.8850

The dollar is slowly heading higher in choppy trade and looks as though it could see further, minor gains towards resistance at 0.8870 and possibly to the 100 DMA at 0.8915 although I don’t think we are likely to see it up here today.

The downside sees some support at 0.8835, below which 0.8815 and 0.8800 should see bids.

Use 0.8835/70 as a guide today, with a bias towards buying dips for a run up towards 0.8900/20 over the next couple of days.

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USD/CHF: 1 hour

AUD/USD: 0.9327

The Aud continues to chop sideways, either side of 0.9330, having bounced off an Easter Monday low at 0.9312, when it was under some pressure from a weaker Chinese equity market.

As long as 0.9300 holds though, the Aud looks okay to me, and the correction from last week’s 0.9460 high is, I suspect a reasonably healthy move, allowing it to build the legs for the next run higher. Ahead of that, minor downtrend resistance could cap it today at around 0.9350. A break would suggest a run to the 200 HMA at around 0.9370. I don’t see it back above here today, but if wrong look for a cap at 0.9400.

On the downside, below 0.9300 will see bids ahead of strong uptrend support at around 0.9270. I would not want to see it below here as stops would most likely see a decline towards 0.9200.

I think we are in for a day of 0.9300/50 in the absence of any major data as the market waits for tomorrows Q1 CPI (3.2% yy exp vs 2.7% prev (trimmed mean exp @2.9% yy – previous 2.6%)).  The expected number is a strong one and if correct could see new bids arrive to support the Aud as any thoughts of an RBA rate cut disappear over the horizon. On the other hand, a soft number will see the pressure build on the downside, in which case, keep an eye on 0.9270

Economic data highlights will include:

CB Leading Indicator

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AUD/USD: 4 hour

NZD/USD: 8560

The Kiwi, having broken the medium term rising trend support, remains heavy despite a brief uptick to 0.8600 at the Monday open in very thin Easter Monday trade yesterday.

The indicators are looking a bit heavy and it could be that we are in for a test of 0.8515 ad possibly 0.8500, although ahead of Thursday’s RBNZ meeting, at which there is an expectation of another hike (from 2.75% > 3%), I don’t really see the downside potential as being too great. If wrong look fro a run towards 0.8480.

On the topside, 0.8600 looks likely to cap it again today, and I am not sure we are likely to see it. If wrong, look for a squeeze towards 0.8630.

The bias remains a bit lower and I think 0.8520/80 could cover the range today.

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NZD/USD: 4 Hour