Yen gains in otherwise rangebound market. Oil, Equities lower, pressuring commodity bloc.

The dollar remained mostly rangebound again today ahead of the FOMC, with the exception of the Yen which made gains on most fronts on the back of safe haven buying because  of  a selloff in oil and stocks, in increasingly illiquid conditions. Gold and Silver took a hit in late US trade, both falling quite sharply. Today sees a fair bit of action, starting in Australia with the RBA Minutes/Debelle speech. Later we get the global Mfg PMI’s starting with China (HSBC). The UK sees the CPI, as well as Mark Carney who will be speaking, delivering the Financial Stability report. From Germany comes the ZEW Economic Sentiment Survey while from the US we get the Building Permits/Housing Starts.

EUR/USD: 1.2440

The Euro has had a choppy but fairly directionless session as those traders that are still involved, ahead of next week’s holiday, wait for the FOMC decision/statement due in around 48 hours time. In the meantime, today sees the flash PMI’s and the German ZEW Investor Confidence Survey and until the FOMC it looks like being a session pretty much confine to current levels.

Technically, the Euro remains capped by the descending trend resistance now close by at 1.2470, a break of which would most likely head back to Friday’s 1.2490.   A break of 1.2500 would  trigger stops to potentially take the Euro on towards the 26 Nov high at 1.2531, above which, the first major Fibo resistance is not seen until we reach 1.2590 (23.6% of 1.3699/1.2246), with the greater Fibo level not seen until 1.2656 (23.6% of 1.3993/1.2246).

On the downside, the 100 HMA now sits at 1.2420 which has supported the Euro above the session low of 1.2416.  Below this, a break of 1.2400 would then look to test the 200 HMA at 1.2375. I would not expect to get anywhere close until the FOMC decision, and it would take a fairly upbeat Janet Yellen to see the US$ continue higher to test 1.2300, beneath which, the Euro would find buyers ahead of the recent trend low at 1.2246, which in turn lies just ahead of the next major level at 1.2225 (200 Month MA) and will act as strong support.

If/when the 200 MMA is taken out, the Euro would then head towards  the major rising trend support (joining the 2005, 2010, 2012 lows) at around 1.2140, and then to 1.2100 which is the 50% pivot of the rally from the Euro Oct 2000 low to the July 2008 high and again, should also provide decent support. Under that, which would see the long term head/shoulder neckline being broken, we have the July 2012 low at 1.2041 and the June 2010 low 1.1876, which both come ahead of 1.1743, where the Euro was initially pegged to the dollar in January 1999.

Don’t look for too much today ahead of the FOMC, unless the EU Mfg PMI’s and/or the ZEW are extremely weak, but bear in mind that liquidity is becoming thin and we could see the odd exaggerated spike in either direction.

Also, keep an eye out for the US housing data, which traders will be looking to for a hint of what the Fed might do. A strong number, following on from the recent strong US Jobs data, will raise expectations of a more hawkish outlook form Janet Yellen.

Economic data highlights will include:

EZ Flash Mfg/Composite/Services PMI’s, EU Trade Balance, EU/German ZEW Survey, US Building Permits, Mfg Flash PMI.

Meta Trader – AxiTrader   EUR/USD: 4 Hour

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USD/JPY: 117.64

US$Jpy was choppy but the Yen has ultimately made some decent gains again towards the latter half of the session, with the dollar finishing just above the lows of 117.55.

The Yen was driven higher by safe haven demand following another fall in the US equity markets, which were in turn under pressure from another slide in the oil price. Covering of stale Yen shorts in liquid conditions ahead of next week’s holiday has now pushed the dollar back towards recent lows and technically it looks as though the dollar may have further downside potential, for a test of last week’s 117.43 low and then to the 27 Nov low at 117.23.

Beyond there would then target the major rising trend support, currently at around 117.15, which if seen may present buying opportunity, but with a tight stop placed just under 117.00. If 117.00 were to give way, which the daily momentum indicators suggest is a possibility there is not too much to hold the dollar up until 116.20 (minor) and then 115.50 (38.2% of 105.18/121.84).

If the dollar recovers after a more hawkish FOMC, then look for a return to 118.00 and above, where the initial hurdle will be a minor Fibo level at 118.45 and then the descending trend resistance at 118.70. Above here would head back to the recent tops at around 119.00/10 and possibly beyond towards the 200 HMA currently at 119.50.

All up, the choppy conditions look set to continue, currently with a mild downside bias, but as I have said before, in the longer term I still expect the dollar to eventually recover and to head back above 120.00 to the recent trend high at 121.84. Beyond there would continue towards the 15 July 2007 high at 122.42. In the longer term, the target of 124.13 (17 June 2007 high) will then appear on the horizon, but will take time, given the resistance levels sitting in between..

Meta Trader – AxiTrader   USD/JPY: 4 Hour

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GBP/USD: 1.5651

Cable has had another choppy day, which has included a sharp selloff from around 1.5740 all the way down to 1.5600, apparently on the back of a story that tomorrows UK Bank stress tests are not going to deliver the required results, although that was not confirmed and Cable has since bounced to 1.5650.  Also not helping Cable is the lower oil price, which is delaying expectations of any potential UK rate hike. We may learn more today, when BOE Governor, Mark Carney, will be speaking to the Treasury Market Committee, giving the UK Financial Stability report which may cause some volatility, so worth keeping an eye on.

As far as Cable is concerned, the end result is that we are still pretty much stuck within the recent 1.5745/1.5600 range, which looks likely to continue given the mixed signals being given by the momentum indicators, at least until today’s UK CPI release and probably until the FOMC..

Technically despite the spike move, there is little change to the medium term picture. The trend resistance at 1.5745 that we mentioned yesterday has held and remains the major obstacle to be overcome. Before then the 200 HMA at 1.5670 and the 100 HMA at 1.5700 will now become minor topside hurdles. If all these were to be taken out, then look for a run towards 1.5762 (1 Dec high) and then possibly to 1.5826 (27 Nov high). Beyond this, which currently looks doubtful, would see a further acceleration towards 1.5927 (23.6% of 1.7191/1.5540).

On the downside, below 1.5600 would see a run towards 1.5582 (1 Dec low) and then to the recent trend low at 1.5562 (8 Dec low). Further out, minor support will arrive at 1.5500 and at 1.5426 (Aug 2103 low), below which the 50% pivot of the whole rally from 1.3502/1.7191 at 1.5350 will be a longer term target.

Economic data highlights will include:

UK CPI, PPI, RPI, Bank Stress test results UK Financial Stability Report/Mark Carney Speech.

Meta Trader – AxiTrader   GBP/USD: 4 Hour

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USD/CHF: 0.9653

US$Chf has made several attempts to break below the rising trend support but has so far failed to continue the downside momentum and is finishing the US session sitting right on it.

More choppy trade will be in store today, with the direction ultimately to be decided by Wednesday’s FOMC decision and in the short term the charts look rather mixed. There is little change to the technical outlook, although the dollar did make a quick spike low to 0.9620, with EurChf making a low of 1.2003, to test the resolve of the SNB, to protect the 1.20 peg. The cross is marginally higher at the NY close (1.2010).

Below the 0.9620 low  would probably see a decline towards the 26 Nov low at 0.9594 and then to the Fibo support seen at 0.9552 (23.6% of 0.8702/0.9817), a break of which would then head towards the Nov 19 low at 0.9529 and then on to 0.9500.

The topside will run into some initial resistance at the 100 HMA, now at 0.9670, a break of which would potentially head on to 0.9700 and then the 200 HMA at 0.0.9715.

Further out I think the dollar strength will return although this could take a while unless the FOMC turns out to be more hawkish than expected, and at that time the targets would be at 0.9775 (minor), 0.9800 and then at the recent trend high at 0.9817.

.Above here would open the way for a run towards 0.9838 (22 May 2013 high), beyond which will see an acceleration towards 0.9971 (22 July 2012 high) and eventually to parity and above. This is going to take a while and I suspect we may be in for better levels to buy dollars in the days ahead.

Meta Trader – AxiTrader   USD/CHF: 4 Hour

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AUD/USD: 0.8219

The Aud remained heavy on Monday, although activity was muted due to the Sydney CBD siege taking place next door to the RBA, but  it has so far managed to hold above the strong support at 0.8200. The MYEFO got lost amidst all the other news and had little overall effect on the price.

Traders will now turn their focus to today’s RBA minutes and a speech from the RBA’s Debelle, where the market will be looking to see whether he maintains the recent mantra of trying to talk the Aud lower. Later on the HSBC Mfg PMI will come into focus, after which the market will most likely settle to wait for tomorrow’s FOMC.

In the meantime, a break of 0.8200 would potentially see an acceleration lower, towards a wave equality target at 0.8145 (AB=CD; from 0.9398 to 0.8642, from 0.8901; see daily chart, below), beneath which there is little to hold the Aud up until the May 2010 lows at 0.8066.

Although I think the Aud is heading (a lot) lwer in the course of time, the short term momentum indicators are warning us not to become overly bearish right now and do show some minor bullish divergence so some near term caution is warranted on the downside.

The topside will see minor resistance at the session high of 0.8267 and then at the 100 HMA at 0.8275. Above here would then look to test the descending trend/200 HMA resistances at 0.8300. A break of this would head on towards 0.8331 (daily Tenkan) and 0.8338 (23.6% of 0.8795/0.8200) and then to last week’s peak at 0.8375, beyond which would take a run towards 0.8400, and which if seen would be a good medium term sell, I suspect.

Economic data highlights will include:

RBA Minutes, HSBC Flash China Mfg PMI.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

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NZD/USD: 0.7737

Although trading in heavy fashion today, the action in the Kiwi was rather limited and contained to either side of the 200 HMA (0.7740), where it currently sits.

From a technical view, there is really no change, and direction today will depend on offshore data (RBA Minutes, HSBC Flash China Mfg PMI) but will probably continue within the recent range and wait until the FOMC for guidance.

The topside will see the initial resistance at the 100 HMA at 0.7760, above which could head back to 0.7780 and possibly to 0.7800.

Above 0.7800, which currently looks a bit unlikely, could once again look for a run towards 0.7850 and then to the recent 0.7870 peak. This would see the descending trend resistance taken out and could trigger stops to take the Kiwi on towards 0.7900/10. I don’t think we get there, but if we do it would again present a decent medium term sell opportunity.

The downside, which may come under pressure if the RBA/Debelle talk the Aud lower, will find bids at 0.7725 and then at 0.7700. A  break of this  would then head to  0.7660 (7 Nov low), with further minor support seen at 0.7635 and then at  the trend low at 0.7606, although I don’t think we are heading there yet.

Expect it to be choppy for much of the day, with an initial mild bias to the downside.

Meta Trader – AxiTrader    NZD/USD: 4 Hour