US$ firms as market bets on a 2015 Q2 rate rise. German Unemployment, US GDP today.

Despite the Fed decision to leave rates on hold for a “considerable time”, the FOMC’s move to end QE  has seen  a decent rally in the dollar, with most counterpart currencies sitting at or near session lows. It looks as though the dollar could see further gains and it will  be today’s German Unemployment and US GDP that will be the key drivers of whether or not this comes about. The NZD has been particularly hard hit after the RBNZ left rates on hold but dropped any reference to further policy tightening, and once again lamented the current level of the Kiwi.

EUR/USD: 1.2636

The dollar has jumped higher following the FOMC statement, where despite rates staying on hold for a “considerable time”,  the Fed have officially ended their QE programme and were more upbeat about the economy, particularly with regard to employment , which now has the market pricing in a rate hike for Q1/Q2 2015.

Ahead of the German Unemployment and the US GDP, which will be today’s focus, the Euro is back at 1.2645 (61.8% of 1.2501/1.2885), having been up to a session high of 1.2770, and is currently sitting on minor rising trend support. With the shorter term indicators turning lower, a break of this support would see it back at Friday’s 1.2634 low , the  Thursday session low 1.2613 and then at 1.2600. Further  bids will then be seen at 1.2590 (76.4%) and at the minor low at the minor 7 Oct low at 1.2580. Once that gives way, there is little to stop the Euro heading back to 1.2500 but it will need some strong US/weak EU data today to head towards this in the near term.

On the topside, sellers will now be seen at the 100/200 HMA’s  at 1.2700/15. I don’t really see the Euro back above here in the short term , but further sellers would arrive at 1.2750 and then at 1.2770.

Overall, the choppy sideways trade, within 1.26/1.27 looks likely to resume but, with a mild downside bias. In the longer term buying dips in the dollar remains the main theme.

The DXY (86.00)  has seen a bullish outside day and having broken above the recent minor downtrend resistance, now looks as though we could see further medium term gains towards the 86.74 trend high.

Economic data highlights will include:

German Unemployment, EU Consumer Confidence, Business Climate, Services Sentiment, German Provisional CPI US GDP, Personal Consumption Expenditure, Jobless Claims..

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EUR/USD: 4 Hour

DXY : Daily

USD/JPY: 108.89

The dollar has jumped higher following the FOMC, so far falling just short of 109.00, meeting the Fibo retracement level of 108.93 (76.4% of 110.08/105.18).

With the short term indicators now pointing higher we may see a run above 109.00, and eventually back to 110.00 although ahead of Friday’s BOJ meeting it could be that the market wants to chop around current levels in order  to digest today’s gains. No major policy changes are expected at Friday’s meeting.

The downside will now see bids at 108.50, and I would be doubtful of heading below here today, although if wrong we could head back to 108.20.

As before, trading from the long side remains the preferred strategy..

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USD/JPY: 4 Hour

GBP/USD: 1.6010

Cable is sharply lower, back at 1.6000 following the FOMC.

The short term indicators point lower and a break of last weeks 1.5994 low would see it head back towards the 16 Oct low at 1.5936, and eventually, via 1.5900, back to the trend low at 1.5873.

The topside looks capped at 1.6050 and if seen, would  suggest a decent sell opportunity. I don’t really see it getting up to that level and would use 1.6030/1.5950  as a guide for the coming session while the market digests the FOMC statement.

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GBP/USD: 4 Hour

USD/CHF: 0.9544

The dollar held the minor rising trend support and has headed sharply higher, to reach 0.9540.

Further near term gains now look possible, with the first target being last weeks 0.9558 high (61.82% of 0.9686/0.9360). Beyond there would head on to 0.9600 and then to the trend high at 0.9686 although this may be a step too far today.

Good support should now arrive at 0.9500/10, which if seen would be a buy opportunity .Below this, the rising trend support is at 0.9460, but a break of which would trigger stops and is where I would also be leaving a stop on any long position.

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USD/CHF: 4 Hour

AUD/USD: 0.8793

The Aud squeezed up to 0.8910 before falling hard to finish the US session at 0.8780, and looking heavy after US yields soared, diminishing the carry trade that has recently favoured the Aud.

Now back below the 200 HMA at 0.8800, I think it unlikely that we are headed back to much above here today, with the 100 HMA at 0.8815 providing further resistance.

The 1 and 4 hour indicators are now turning lower and support will arrive at rising trend support, currently at 0.8740. A break of this would have further bearish implications for a move back towards 0.8715 and then 0.8700. I don’t really see it below here today, but if wrong look for a run towards  0.8680 and eventually to the 0.8641 trend low.

Economic data highlights will include:

HIA New Home Sales.

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AUD/USD: 4 Hour

NZD/USD: 0.7800

The Kiwi, having perfectly met the Fibo resistance at 0.7977 (76.4% of 0.8035/0.7794) has since collapsed, to currently sit just above the session lows of 0.7775, seen following the combination of the FOMC and the RBNZ decision to leave rates on hold. The RBNZ dropped any reference to further tightening and also suggested that it expects further significant falls in the Kiwi, with the current level being unsustainable.  With that in mind further losses look possible, with not too much on the downside to hinder it from reaching the trend low at 0.7707.

On the topside rallies towards 0.7820 appear likely to cap it today and if seen would appear to be a decent sell opportunity. Above here could squeeze back to the 100 HMA at 0.7885 although I don’t really see it. Selling rallies, with a SL above 0.7900 appears to be the medium term plan.

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NZD/USD: 4 Hour