Political tensions keep "risk" assets on the defensive. US CPI today.

Aud, Kiwi both soft as “risk-off” sentiment takes hold. Stevens / Debelle speeches coming up.

It was a rather quiet day on all fronts, with the general theme being one of risk avoidance as traders look to political manoeuvres for guidance and it would appear that we are in for more of the same today. Risk events will come from RBA speeches from both Stevens and Debelle, after which there is little to go on until the release of the US CPI later in the day. Another quiet one looks likely.

EUR/USD: 1.3524

With the Euro closing at around 1.3525 for the fourth successive day, there is really very little to add except to hope that the US CPI, due later in the coming session provides us with some action.

We did get a brief run up, in Asia, to 1.3548 but that was quickly snuffed out and we are back where we started. There are apparently some leveraged bids sitting in the 1.3500/10 area, so this may once again be a difficult area to break down through, particularly given the IMM data released on Friday, indicating that speculative net EUR/USD short positions are at their highest level in a year.

The technical levels remain unchanged.

On the topside, sellers are still placed above 1.3550, with more to be seen at 1.3570 and 1.3585, ahead of 1.3600. Given the ongoing negative look of the daily indicators, I don’t really see it back above 1.3600 today, but if wrong, and the Euro does head higher over the next couple of days, offers in the 1.3640/50 area remain solid, where the minor Fibo resistance at 1.3646 (61.8% of 1.3700/1.3562) would provide strong resistance. A break of this level would see the Euro head on to 1.3665 (76.4%/ daily cloud base/200 DMA) but now looks a long way off. Further out, the Euro would find sellers at 1.3700, a break which would see a run up towards 1.3730(100 DMA), which should be solid resistance although a break of this level would head on towards 1.3803 (61.8%).

On the downside, 1.3500 is again looking fairly solid support ahead of the important level at 1.3476 (24 Feb low). A break of this would hint at an acceleration lower, and there is then not too much support to be seen ahead of 1.3415 (200 WMA). Below this, 1.3370 (50% pivot % of 1.2754/1.3995) and eventually 1.3300 (100 WMA) and 1.3294 (7 Nov ’13 low) would come into view.

Wait for the US CPI. Should it come in line with expectations, then we are probably in for more of the same but some economists are calling for the number to come in above the expected 2.1%yy / 0.2%mm figure, in which case the dollar might actually give the 1.3475 area a nudge.

Economic data highlights will include:

US CPI, Existing Home sales, House Price Index, Richmond Fed Activity Index.

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EUR/USD: 4 Hour

USD/JPY: 101.37

UsdJpy made the Euro look comparatively exciting today as it traded within a 20 point range, albeit that it is currently at the top end of it and looks as though it wants to test the offers within the 101.45-50 area. (daily Tenkan: 1.1.41)

I don’t think we are going anywhere too far though, as above 101.50, further sellers will be seen at around Thursday’s peak at 101.68, with more at 101.75 (daily Kijun), and the 200 DMA /daily cloud base at 101.95. Beyond 102.00, which looks a little unlikely for a while, 102.10 (100 DMA) will provide some resistance, above which could see a run up to the recent high at 102.35.

On the downside, 101.00/10 is going to continue to be strong support and I would be surprised to see it broken today but if we do head lower we would see a return to further support at the 9 May low at 100.80. If this were to give way, then look for a run towards 100.60 (50% pivot of 95.78/105.43), below which we could be in for a sharp run towards 100.00 and 99.47 (61.8%). Large stops are supposed to lie below 100.70, which if taken out could accelerate the run towards 100.00 and possibly lower.

The US CPI may provide some volatility today, especially if it surprises to the topside, but beyond that we may need to wait for Friday’s release of the Japanese Trade and CPI for some action.

Use 101.10/50 as a guide once more.

Economic data highlights will include:

Leading/Coincident Index

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USD/JPY: 4 Hour

GBP/USD: 1.7074

Cable traded a bit lower at around the London fix but has since recovered to the middle of the day’s range in a relatively quiet day’s trade.

The charts are somewhat messy, but the dailies still suggest that we may be in for lower levels ahead, and below today’s 1.7056 base, we may see a run back to Friday’s low at 1.7034. Below this, look for a fall, back towards 1.7000 (38.2% of 1.6992/1.7192) and then to the rising trend support at around 1.6960, a break of which would trigger plenty of stops and would look for a run down, potentially towards the 100 DMA, currently at 1.6825.

 On the topside, 1.7100 is the first hurdle (today’s high 1.7098), above which the 100/200 HMA’s are at around 1.7110. Beyond here, 1.7143 was Thursday’s high and will provide some resistance, although a break of 1.7150 would most likely head back to the 1.7190/1.7200 area, but which will not be easily overcome. If /when it is taken out, then look for an accelerated move towards the next major resistance level, which is not to be seen until 1.7331 (50% pivot of the long term move from 2.1160/1.3547). Beyond that, there is not a great deal to stop Cable heading to the August 2008 high, which is not to be seen until 1.7516. Not today.

There is no UK data out today and another session largely confined to yesterday’s range would not surprise

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GBP/USD: 4 Hour

USD/CHF: 0.8980

Having traded a tight  0.8989/0.8970 range today there is nothing to add.

0.9000 remains difficult to overcome, although I think it will eventually be taken out, for a potential run up towards 0.9035. Above here, 0.9050 is the weekly cloud base and will be strong resistance if/when seen. Above this would break out on the topside of the long term descending channel and would suggest an acceleration up towards 0.9100 and then 0.9130 (23.2% of 0.9838/0.8698).

A return to the downside would find bids, below today’s 0.8970 low, at 0.8960 and then at 0.8945 (200 DMA/weekly Tenkan), below which would hint at a false upside break out of the minor channel, suggesting a decline back towards 0.8925 (weekly Kijun) and then to the recent base at around 0.8900. Under here looks unlikely, but if wrong, look for a potential test of 0.8885, with stronger support at the 100 DMA at 0.8870. While I don’t think we are likely to see it down here for a while, a break of 0.8870 would see the chance of a run back to last week’s low at 0.8855, below which, look for further support at 0.8830/40.

Once again, use 0.8960/0.9000 as a guide

Economic data highlights will include:

Trade Balance

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USD/CHF: 4 Hour

AUD/USD: 0.9376

The Aud is a little heavy today, ahead of speeches by the RBA’s Lebelle and Stevens who could once again take the opportunity to talk the currency lower. This comes ahead of the US CPI, later in the session, which some analysts are suggesting could surprise to the upside and put a bid tone under the US$, and then tomorrow we get the Australian CPI number, which is tipped to be benign and would hint that the RBA are likely to leave rates on hold for the foreseeable future, but with a continued soft bias, which would add downside pressure to the Aud.

Strong offers still sit at around 0.9400, but if we can break above Fridays 0.9410 high, look for a run up towards 0.9425 and then to the 10 July high at 0.9455 and the 10 April high at 0.9460. Beyond this would then head on towards 0.9495(76.4% of 0.9757/0.8660) and last week’s top at 0.9505, a break of which, there would be little to stop the Aud heading towards the 6 June high at 0.9543. Above here, the long term objective from the major head/shoulder reversal is now at 0.9665.

On the downside, below today’s 0.9370 low, 0.9350 will see bids again, below which would head back to Fridays. 0.9335 low.  Under here, look for a run towards 0.9320 (61.8% of 0.9220/0.9505/18 June low) and then 0.9300. Below 0.9300 would see a run towards 0.9275 (76.4%) and as we said before, if the Aud breaks under 0.9250, then the downside could really accelerate, but at this stage is considered unlikely.

The charts are all pretty flat, giving little hint in either direction, and for the time being it maybe that the 100/200 HMA’s, currently at 0.9370/0.9380 continue to act as a bit of a magnate.

Economic data highlights will include:

RBA Debelle Speech, RBA Stevens Speech

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AUD/USD: 4 Hour

NZDUSD: 0.8690

Having traded up to the 0.8720 resistance in Asia yesterday, the Kiwi has since drifted slowly back to where it started, with traders generally avoiding putting on risk related positions.

As with yesterday’s outlook, we need to overcome sellers at 0.8700 in order to to see a return to 0.8720, although once again, above here may be a bit tricky today. If wrong, further gains would head to minor Fibo resistance at 0.8740 and 0.8760, but for the time being 0.8800 looks rather distant.

On the downside, we are currently near the session low of 0.8685, a break of which could see the Kiwi head back to Friday’s low at 0.8648 and the June 17 low at 0.8642. Below this would head to 0.8618 (50% pivot of 0.8401/0.8835) and eventually to 0.8568 (76.4% of 0.8401/0.8835).

A surprise uptick in the US CPI,although not generally expected, would put pressure on the downside for the Kiwi,  and it could be Thursday, when we get the RBNZ Meeting / IR decision before we see any directional move.

In the meantime use 0.8650/0.8700 as a guide today.

NZD/USD: 4 Hour