A choppy session – now waiting on the German IFO & US Durable Goods Orders.

It was a choppy session today, with swings either way for the US$ but with most of the majors finishing up not too far removed from where they started. The major exceptions to this  were Cable, which headed lower after weak UK CPI data, suggesting the chance of deflation, and the Chf which headed higher against both the dollar and the Euro. Today’s action will come via the German IFO, and then later the US Durable Goods  will be the key focus. Until then there is not much to go on, although the NZ Trade balance is due shortly.

EUR/USD: 1.0923

The Euro received some good support early in the session after the generally better than expected data, where the EU Mfg PMI rose to 51.9 in March (v exp of 51.6), the services PMI rose to 54.3 (v exp of 53.9) and the composite PMI rose to 54.1, hitting the highest level in more than three years. The German manufacturing PMI rose to 52.4 versus expectation of 51.5.

The focus then turned to the US inflation data where the headline CPI rose 0.2% mm 0.0% yy in February, slightly better than expectation of 0.2% mm , -0.1% yy. CPI core rose 1.7% yy, in line with consensus.

The price action was choppy but the Euro took out 1.10 and reached 1.1029, meeting the Fibo resistance at 1.1025 (61.8% of 1.1378/1.0461) before falling sharply back to a low of 1.0889 and then settling back above 1.0900.

Today it will be the turn of the German IFO and then the key US Durable Goods Order to provide the direction (exp +0.4%, Core exp +0.3%) and it will be choppy until then.

Technically, having again failed at the Fibo resistance and with the 4 hour indicators looking to be rolling over, it may be the downside that comes under some pressure today. Should that be the case, then the first support will be at the session low at 1.0890, below which will head towards minor Fibo support at 1.0870, roughly in line with the minor rising trend support, and then towards the 100 HMA at 1.0810. To trade below here today would need a very strong Durable Goods reading, which would buck the recent trend although an improvement is expected, but further supports would arrive at 1.0765 (minor) and then at 1.0740 (200 HMA).

Back above 1.100 (weekly Tenkan) looks unlikely in the short term, although the dailies do remain positive. If seen, the 1.1030/40 area is going to be very strong resistance, but above which there is not too much to stop the Euro heading towards 1.1114 (5 March high) and then to 1.1159 (76.4% of 1.1378/1.0461). Before any of those though, the daily Kijun lies at 1.0955. This will need to be overcome on a daily closing basis if further progress is to be made and we have yet to do so, so is worth keeping an eye on.

Economic data highlights will include:

German IFO, US Durable Goods..

Meta Trader – AxiTrader EUR/USD: 4 Hour

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USD/JPY: 119.70

US$Jpy had a choppy ride following the US data, falling below the base of the channel to a low of 102.22, before climbing strongly back to a session high of 119.98 and then settling exactly where we spent much of yesterday at around 119.60. The low came despite slightly improved US CPI, but a strong US Markit PMI & New Home Sales report helped the dollar to briefly reach the session high of 119.98.

The dailies and weeklies do suggest that lower levels may lie ahead, although the 4 hour charts actually look mildly positive now, so we could see a return to 120.00 as the dollar looks to move back into the channel.

Beyond there would find resistance at 120.13 (daily Kijun), above which, albeit somewhat doubtful at this stage unless the Durable Goods Orders are very strong, would see another choppy run towards 120.60 (minor) and then on towards 121.00.  A topside break of 121.00 would open up 121.50 and the recent high at 122.02. If/when this level can be overcome, the way would open up for a run towards the 15 July 2007 high at 122.42, and in the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time.

To the downside, the weekly Tenkan at 119.40 will provide some support ahead of today’s new minor trend low at 119.22. Under here would see strong support at 119.00 (Fibo support at 119.02 (61.8% of 115.85/122.02) and 118.90 (50% of 117.16/122.02)) below which would open the way for a deeper move towards 118.60 and then towards 118.30 (76.4% of 115.85/122.02.

For the most part, it looks like being another choppy 119.20/120.00, with an initial mild upside bias, but looking rather unexciting.

Meta Trader – AxiTrader USD/JPY: 4 Hour

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GBP/USD: 1.4846

Sterling was sold off today on weaker consumer inflation data, where the CPI rose 0.3% mm 0.0% yy in February, slightly below expectation of 0.1% yy, hinting that the UK might be heading towards deflation. Core CPI also slowed more than expected to 1.2% yy. The RPI slowed to 1.0% yy. There is no UK data today and any action will be driven from offshore.

Technically Cable is currently rather messy and I would not be looking for too much of anything directional. It looks like being one for the day traders.

The support levels to watch would be at the 200 HMA, close by at 1.4830 and then at minor Fibo levels at 1.4805 and at 1.4758, below which would revisit the recent lows at 1.4713 and at 1.4633. Overall Cable is sitting right in the middle of the channel, the parameters of which are currently at 1.4490/1.5320 and this looks likely to easily contain the action for some time to come.

On the topside, the first resistance will be at the 100 HMA at 1.4875 and then at 1.4900. Above here looks unlikely in the short term, although the dailies remain supportive, so back above 1.,4900 would hint at a return towards the 1.4980/85 area that has recently proved problematic for Cable. Above here though would take a look at 1.5000, above which would trigger stops and could see a run on towards Fibo resistance at 1.5090 (50% pivot of 1.5551/1.4633) and to last week’s spike top at 1.5165.

For now, look for 1.48/1.49 to cover it. Further out, the uncertainty relating to the 6 May UK Election will also weigh on the pound if the polls forecasting  a hung parliament prove to be correct.

Meta Trader – AxiTrader    GBP/USD: 4 Hour

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USD/CHF: 0.9589

US$Chf has headed south again today finishing near to the session low of 0.0.9535 and has meant a big move lower in EurChf, which has fallen from 1.0580 to a low of 1.0420. With regards to the dollar, the indicators still look rather negative and suggest that we could head back towards the Fibo support at 0.9436 (38.2% of 0.8332/1.0122) and the 200 DMA at 0.9410.

The topside will see sellers at last seeks spike low at 0.9623 and then at 0.9700 and again at 0.9750 and 0.9800.

Economic data highlights will include:

SNB Quarterly Bulletin.

Meta Trader – AxiTrader    USD/CHF: 4 Hour

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AUD/USD: 0.7875

The Aud had a generally bullish feel to it for much of the session, which eventually saw a run to above 0.7900/10, taking out stops in NY in heading on to a spike high of 0.7937 before reversing quickly back to where it had earlier spent much of the session, sitting at 0.7875.

There is no local data due today.The RBA releases its FSR, albeit that little impact on AUD is expected.

Nearby support lies at 0.7860, a break of which would see the Aud head towards yesterday’s spike low seen after the Chinese Mfg PMI, at 0.7835. Beyond this, with the 4 hour indicators looking as though they want to roll over and head lower, we could be in for a run towards 0.7800 and then to 0.7775 although this may be a stretch too far today.

The topside will again find sellers at 0.7900 and above, at the session high at 0.7935. I don’t think we revisit this today, but if wrong, would open up the chance for a bigger squeeze, with the potential to revisit the Fibo resistance at 0.8010 (61.8% of 0.8294/0.7559) and the pivot level at 0.8025.

Look for 0.7830/0.7900 to cover it for the bulk of the session.

Economic data highlights will include:

Financial Stability Review.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

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NZD/USD: 0.7656

The Kiwi made a spike high at 0.7696 (in celebrating the cricket result?), before heading lower to 0.7611 and then settling, with not too much damage done  at just above 0.7650.

Traders will now turn their attention to the NZ Feb trade balance (exp +$392 mio mm, -$1.82 bio yy). A better than expected result should keep the Kiwi underpinned and the recent rally intact, for a sterner test of 0.7700, beyond which  would see progress towards  the descending trend resistance at 0.7770, although this is still some way off and would need another aggressive selloff in the US$, possibly after today’s Durable Goods Orders.

The support levels are pretty much unchanged and will see bids once again at the 100 DMA (0.7630) and then at 0.7600/10 and at 0.7560 (23.6% of 0.7175/0.7671).

It will be choppy but overall I still prefer to sell into strength at 0.7700/10 with a SL above 0.7730.

Economic data highlights will include:

NZ Trade Balance .

Meta Trader – AxiTrader    NZD/USD: 4 Hour