US$ mixed. Euro, Commodity bloc under pressure. UK CPI, US Retail Sales today.

US$ strength was again the general theme for much of the session, although that ran out of steam somewhat as the day wore on, particularly against the Jpy which took a nosedive at one stage before again recovering. The commodity bloc looks to be in trouble after yesterday steep selloff, although it may be a day of consolidation today for the Aud, while waiting for tomorrow’s local Consumer Confidence (& China GDP, RS, IP) and Thursday’s Jobs data. In the meantime the Aud will today look to the Business Confidence numbers for direction. Today’s main events will be the US Retail Sales, PPI and Business Inventories, while from the UK we get the UK CPI,PPI, RPI. China New Loans will be the main event in Asia.

EUR/USD: 1.0571

The Euro has made a new low of 1.0520 in early New York as the dollar buying spree, seen through Asia and Europe, continued before a decent bounce to 1.0610 as profit taking set in, and then drifting lower once more into the session close.

The general theme of dollar strength looks set to remain intact while dips seem to lend themselves to buying opportunities, although some caution is warranted as we approach strong support in the 1.0450/1.0500 support area.

Today’s main focus will be the US Retail Sales where an improvement to 1.1%mm is expected after last month’s disappointing reading of -0.6%. Elsewhere the EU Industrial Production and US PPI and Business Inventories will be closely watched as will today’s Fed speaker, Kotcherlakota.

The April 20 deadline is looming for Athens to present its revised economic reform plans and will also be under scrutiny and needs to be watched, as any failure to come to terms with the EU could see an acceleration lower in the Euro.

Technically, the shorter term charts suggest that the Euro is going to find bids on any dip towards today’s 1.0520 low. However, the dailies remain negative and a break of this would signal a run to 1.0500 and then towards the previous, 13 Mar, 1.0461 low. Beyond there, support is again rather thin until we meet the March 2003 low at 1.0334.  Under this would likely see another acceleration lower, as there is then very little left to hold it up ahead of the major descending channel base at around 1.0200 (monthly chart below) and then at the Fibo support at 1.0069 (76.4% of 0.8225/1.6037), below which parity will become a magnate.

On the topside, 1.0600/10 will act as minor resistance today ahead of further sellers likely to be seen at 1.0640 (23.6% of 1.1035/1.0520, a break of which would see a squeeze to 1.0680 (100 HMA) and to 1.0715 (38.2%).

Some consolidation and a possible squeeze to slightly higher levels could be on the cards today and a range of 1.0520/1.0620 would not surprise, with any real direction likely to be seen after the US data, but also with an eye on Greece.

Economic data highlights will include:

EU Industrial Production, US Retail Sales, PPI, Business Inventories, Kotcherlakota Speech..

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USD/JPY: 120.11

US$Jpy had a choppy session, reaching a Europe high of 108.83 where it ran out of steam and headed sharply lower, spiking to 119.75 after some comments from Government adviser, Hamada, calling 105 as fair value given purchasing parity. The dollar has since bounced back and once again sits not too far removed from 120.00.

While the dailies indicators remain flat, the shorter term charts suggest that it will be the downside that comes under renewed pressure today. If correct, then below today’s session low (daily Tenkan) would head towards  the steeply rising daily cloud top, now at 119.50 and then to the 100 DMA at 119.15, and as long as we stay above here, buying dips seems to be the plan. The daily cloud base though is at 118.65, rising to 118.90 in the next couple of sessions, a break of which could see the dollar come under further pressure in the days ahead.

On the topside, 120.50 and 120.85 will provide the initial resistances and it seems that this may well cover the coming session although if wrong, the dollar would then head towards the stronger resistance at 121.00. Although unlikely to be seen yet, a topside break of 121.00 would open up the 20 March high at 121.20, the consolidation area at around 121.50 and the 10 March 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.

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GBP/USD: 1.4675

Cable put in another new 5 year low at 1.4565 in early Europe today, before a bounce on the back of a poll showing that the Conservatives are 6 points ahead in the race towards the 7 May Election. The increased support for the SNP  (backing Labour) will ensure that Cable does not become too excited on the topside.

The short term bias is mildly higher, and the direction today, ahead of the US data, will come via the UK CPI (exp 0.0%mm, 1.2%yy). Greece will also be in the background as stories of a possible default and new elections continue to do the rounds, which will weigh on the Euro, and underpin Cable through the cross.

While the overall trend for cable looks lower, some consolidation and slightly higher levels may be in store today.

Currently at 1.4675, the initial resistance will be seen at 1.4700 (1.4705: 23.6% of 1.5165/1.4565) above which, would encounter further offers at 1.4720 (38.2% of 1.4972/1.4586) and the 100 HMA at 1.4750. Beyond here seems tricky for now, but further strength would head back towards 1.4800 where the 200 HMA currently sits and would provide a cap.

On the downside, decent bids look likely today as we head back to 1.4600, which looks likely to hold it in the coming session. If wrong, a break lower would see a return to 1.4585 (minor) and then to the day’s low at 1.4565. Below this would see a run towards the June 2010 low at 1.4549 and then to the May 10 low at 1.4403. Below here would see a capitulation towards the 76.4% Fibo support of the rally from 1.3502/1.7091 at 1.4375 (monthly chart below) and then to the base of the 2009/2010 fall from the 1.7041 high to the low, seen at 1.4229 in May 2010..

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USD/CHF: 0.9770

Having made a new trend high of 0.9862, the dollar has reversed quite sharply after failing to overcome the Fibo resistance at 0.9868 (61.8% of 1.0127/0.9454), to sit at 0.9775 and seems to be in the process of breaking below trend support, and which may herald a bit of a dip in the fortunes of the dollar generally over the next session or two.

Below today’s’ 0.9758 low, support is seen at the 100 HMA at 0.9730 (100 HMA) and at 0.9715 (38.2% of 0.9454/0.9862). Further dips could carry the dollar to 0.9700 and then to the 200 HMA, currently at 0.9655.

The upside will see sellers at 0.9800 and then at 0.9835 ahead of the 0.9862 session/trend high. Beyond here and the Fibo resistance will run into further sellers at 0.9880(descending trend resistance) but beyond which would accelerate towards 0.9900 and higher, towards 0.9964 (76.4% of 1.0127/0.9454). Not today I don’t think..

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AUD/USD: 0.7587

The Aud was side-swiped by the Chinese data yesterday and also was not helped by the increasing speculation over the future price of Iron Ore. The selling followed through into Europe, where a low of 0.7552 was seen before a recovery of sorts, towards 0.7600, assisted by the slide in US$Jpy, and some choppy trade has since ensued.

Today’s action will come via the NAB Business Conditions/Confidence, and while the hourly charts are recovering from having become oversold, the overall trend remains lower and points to a retest eventually of 0.7550, below which would see a retest of 0.7532 (2 April low). Below here, the RBA’s line in the sand at 0.7500 will provide stronger support but a break of which would open up the way to 0.7414 (Oct 2010 low). Beneath this there is a bit of a black hole until the very strong support at around 0.7200, where two important Fibo levels are lining up (0.7210: 61.8% of 0.4773//1.1082 and 0.7180: 76.4% of 0.6006/1.1082). I suspect that eventually 0.7000 will appear on the horizon (and even 0.6000!), but this is going to be some way off yet.

To the topside, 0.7600 will see the initial sellers ahead of 0.7615, 0.7622 (38.2% of 0.7737/0.7552) and 0.7637 (200 HMA). I doubt that we see this today, but if wrong look for a further squeeze towards 0.7650 and 0.7665 (100 HMA).

Selling rallies remains the theme, although ahead of tomorrow’s China GDP, Retail Sales data and Thursday’s Jobs numbers, the action may be tempered somewhat.

Economic data highlights will include:

NAB Business Conditions/Confidence.

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NZD/USD: 0.7457

Along with the Aud, the Kiwi took a hit after the release of yesterday’s China data, and after a high of 0.7537, has seen a low of 0.7421 before a minor bounce to currently sit at 0.7450.

Back below today’s low, the 1 April low at 0.7390 will come into view although I doubt that we head there today. If wrong, below 0.7390 there is minor support at 0.7372 (19 March low) and at 0.7326 (18 March low) and at the Fibo support at 0.7307 (76.4% of 0.7175/0.7696), a break of which would head back to the important base at 0.7270. Below here the Kiwi is headed back to 0.7175 (11 Mar low) and then to 0.7000. The big question is whether it will it get there before the Aud does?!

On the topside, 0.7485 will provide decent selling interest ahead of 0.7500. Above here looks doubtful, but further progress would head towards the 100/200 HMA’s, which are meeting at 0.7530.

Selling rallies remains the theme

Economic data highlights will include:

NZIER Business Confidence.

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