It was a volatile session today but finished with the commodity bloc and equities again taking the biggest hit. The Aud & Kiwi are at new trend lows, and the US equity market looks increasingly as though it has made a medium/long term top. The dollar saw some early losses although these have been mostly regained, while the Euro chopped around but went nowhere but it may feel some downside pressure if today’s German IFO is another weak reading. Elsewhere the main interest will be in the NZ Trade data and in the Fonterra Milk results. Later on sees US housing data.
EUR/USD: 1.2845
The EurUsd is pretty much unchanged at the end of today’s NY session, having earlier squeezed up to 1.2900 after ignoring the softer manufacturing/services EU PMI’s, before turning lower once again as a cautious tone set in on the news of the US air strikes in Syria.
The market will now turn its focus to today’s German IFO release (Business Climate: exp 105.7), with a soft reading likely see the Euro head lower for another attempt on 1.2800. There are large 1.2850 expiries today which may keep the Euro on a tight range but if 1.2800 is taken out before then, we could begin to head lower towards the 1.2750 target.
For the coming session, minor support will be seen at 1.2840 and then again at 1.2810. If we do break 1.2800 we could then be in for a run towards the target area of 1.2780 (61.8% of 1.2041/1.3995) which comes just ahead of the major rising trend support from July 2001 at 1.2760 and the 9 July 2013 low at 1.2754. The daily charts are reaching oversold levels and so the downside momentum should begin to slow here, but I don’t think it is going to turn around much and once the charts have had the time to unwind, which may take a few days, I suspect that we are in for a run towards the November 2012 low at 1.2660 and then 1.2500 (76.4%of 1.2041/1.3995). Below here we then look likely to ratchet our way lower towards the 22 July low at 1.2041.
On the topside, sellers will again be seen at 1.2865 (100 HMA) and then at the strong resistance at 1.2900 (200 HMA/descending trend line). A break would trigger stops and could take the Euro higher, towards 1.2950 and possibly to 1.3000, although I don’t really see it happening.
I suspect we are in for another 1.28/1.29 range but still prefer to play it from the short side looking for an eventual break of 1.2800
Economic data highlights will include:
German IFO (Business Climate/Expectations), US New Home sales.
Meta Trader – AxiTraderEUR/USD: 4 Hour
USD/JPY: 108.90
The dollar fell to 108.25 on the news of the US bombing of Syria, briefly reigniting the Yen safe-haven trade, but there were plenty of willing buyers and the dollar is finishing the NY session back near session highs at 108.90.
There is little change to the medium term technical outlook and playing it from the long side remains the way to go.
A break of 109.00 would suggest a move back to Monday’s session high of 109.18 although I would doubt that we are going to take out Friday’s 109.45 high ahead of the US data on Thursday/Friday.
If/when 109.50 is overcome then the next realistic target is at 110.65 (August 2008 high), above which would head on to 112.50 (76.4% Fibo level of 124.13/75.56). A break of this would suggest that the dollar is on its way to the July 2007 high at 123.65 although we have a lot of work to do before then.
The downside will see bids today at 108.75 (100 HMA) and then again a 108.50 and 108.25. I doubt we are heading down here really, but if wrong we could see further losses towards 108.00, where the 200 HMA would provide decent support..
Meta Trader – AxiTraderUSD/JPY:4 Hour
GBP/USD: 1.6388
Cable had a choppy session, dropping from 1.6380 to 1.6303 before a sharp bounce to the session high at 1.6415 and then heading lower once again, but finishing the NY session back near 1.6400.
As with yesterday’s outlook, Cable looks set to remain choppy, but once again, possibly with a slightly higher bias. A move back above 1.6415 would suggest a run up to 1.6435 and possibly to 1.6480, although I think that for today 1.6500 and last week’s 1.6524 high are out of reach.
On the downside, look for bids to arrive at the 100 HMA at 1.6355 and then at the 200 HMA at the session low/200 HMA at 1.6303. I doubt that we are heading below here today, but back below the weekly close at 1.6290 would see a return towards 1.6240 and possibly to 1.6162 (16 Sept low)..
Look for 1.6350/1.6420 to cover it today.
Meta Trader – AxiTraderGBP/USD: 4 Hour
USD/CHF: 0.9397
There is nothing to add on US$Chf today as it currently sits unchanged from yesterday, having recovered from a quick dip to 0.9352.
Minor support will again be seen at 0.9385 (100 HMA), 0.9365 (200 HMA) and at 0.9350, below which would suggest a test of Friday’s low at 0.9333 and under this, 0.9300.
The topside is still struggling to overcome the major Fibo resistance at 0.9400 (61.8% of 0.9838/0.8698) , which may continue to slow progress, and we need to break above today’s 0.9420 and last week’s 0.9432 tops in order to make a run for the next target the 6 Sept 2013 high at 0.9455. Above that, there is little to stop the dollar heading to 0.9570 (76.4% Fibo level of 0.9838/0.8698), albeit not today.
Look for more choppy trade either side of 0.9400 again today..
Meta Trader – AxiTraderUSD/CHF:4 Hour
AUD/USD: 0.8840
The Aud saw Europe make a run up to a session high of 0.8926, on the back of the improved China data yesterday, but that was as good as it got, and soft commodity/equity prices saw the Aud turn down again in NY, where it is finishing the session just above the 0.8830 low.
The Aud still looks to be in dire straits and is now in the process of breaking away from the major Fibo support at (76.4% of 0.8660/0.9505) 0.8860, which will now act as the immediate resistance.
The dailies are becoming oversold, but show no sign of halting the slide, where, below 0.8830, the next support will be seen at 0.8800 and at the 1.618 Fibo extension of the head/shoulder target at 0.8790. Eventually it looks as though we are going to want to retest the January low at 0.8660 but that will take a while.
On the topside, back above 0.8860 will find sellers at the steep descending trend resistance at 0.8890, beyond which would see another run to 0.8930, albeit that it looks doubtful to be seen today.
The 4 hour charts are showing some bullish divergence, so I suspect that for the coming session, buying dips at or below the session low (0.8830) and looking to unload them or to get short at around 0.8875 may be the plan. Medium term plan remains trade from the short side and to sell rallies.
Economic data highlights will include:
CB Leading Indicator, Financial Stability Review.
Meta Trader – AxiTraderAUD/USD:4 Hour
NZD/USD: 0.8050
The Kiwi made it up to 0.8146 on the back of the decent China data where the 200 HMA capped it, before turning sharply lower as the commodity currency bloc began to feel the heat from soft commodity and equity prices.
Further downside pressure could lie ahead today as the markets waits on Fonterra’s annual results announcement. Some analysts expect that this may include a downgraded forecast for the milk payout figure which, if correct, we can expect an early test of 0.8000 and lower. The NZ Trade Balance is also due in the next half hour (exp +1.22yy, -1.27mm) so keep an eye out for that.
Right now we are at 0.8050, sitting right on the 4 Feb low, but the short term indicators do not look supportive for the Kiwi. If the data is as soft as some seem to expect, then 0.8000 will come under fire, below which would see a run to the Fibo support at 0.7985 (76.4% of 0.7670-0.8839) and then the channel base at 0.7970
The topside will find sellers at 0.8075 and at 0.8095, both minor. Above here the 100/200 HMA’s at 0.8120 and at 0.8140 will provide resistance although I don’t think we are going to see it up here today.
Trading from the short side, looking for a test of 0.8000 and lower, looks to be the plan.
Economic data highlights will include:
NZ Trade Balance.
Meta Trader – AxiTraderNZD/USD:4 Hour
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