US$ under pressure again ahead of tomorrow's FOMC. Aud$ higher ahead of RBA Stevens' speech.

The Euro is firm and the US$ again under pressure, after some signs that Greece wants to be more accommodative in their negotiating stance in order to avoid the chance of a default/EU exit. Cable and the Aud were particularly strong performers but most currencies finished near their session highs against the dollar. Metals also had a strong day, assisted by the solid bounce in the Iron Ore price over the last few sessions, doing the Aud no harm at all. The market may now settle down ahead of Wednesday’s FOMC Meeting, but the recent soft data does not indicate any need for the Fed to hurry to act on rates, and a dovish outcome would well see the US$ under further pressure. The RBA Governor Glen Stevens is about to speak at the AFR Banking & Wealth Summit, and the Aud will take its direction from what he has to say. Later on the focus will be on the UK Provisional Q1 GDP, and then from the US, the Case Schiller House Price Index, Consumer Confidence and the Richmond Fed Mfg Index.

EUR/USD: 1.0886

After looking heavy through Europe as a result of the ongoing concerns of a Greek default, the Euro turned around sharply when stories began to circulate that the Greek Government had reshuffled the team involved in the negotiation with the international creditors, with the role of the finance minister, Varoufakis, being reduced after being criticized by EU officials last week. His role will be taken by the Foreign Minister, Euclid Tsakalotos.

Having looked heavy, in dipping to a low of 1.0818, the rebound has been sharp, with the Euro briefly taking out the Fibo resistance at 1.0911 (76.4% of 1.1034 /1.0461) in making a new trend high of 1.0925. If this level can be regained, as the dailies suggest is likely, then the next targets will see the Euro head on towards 1.0954 (7 Apr high) and then to the 1.1034 pivot, above which would put any thoughts of an immediate return to the downtrend on hold. A dovish outlook from the Fed on Wednesday could well be the catalyst to put the dollar under further pressure and send the Euro higher.

On the downside, minor support lies at 1.0850, ahead of the stronger Fibo support at 1.0830 (23.6% of 1.0520/10.925) and the session low of 1.0818. Below 1.0800, which currently looks a bit unlikely would head towards the 38.2% Fibo level at 1.0772 and the 50% pivot of the rally, at 1.0720.

The choppy conditions are not making it easy to be a swing trader right now, so short term positions, looking to take quick profits are the order of the day. Look for 1.0825/1.0925 as a guide today.

Economic data highlights will include:

Case Schiller House Price Index, Consumer Confidence, Richmond Fed Mfg Index.

Meta Trader – AxiTrader    EUR/USD: 4 Hour

USD/JPY: 119.05

US$Jpy has again held on to the daily cloud base support and has turned a little higher from the 118.76 low to reach a high of 119.42 before once again settling near 109.00.

The 4 hour and the daily indicators are both flat and further choppy trade looks likely, probably centred close to current levels as the focus turns towards the major event of the week tomorrow; the BOJ Meeting. No change in policy is expected although it does appear that tensions are growing between the Government and the BOJ. The PM’s adviser Yamamoto yesterday said that the BOJ is being too optimistic about any economic recovery, adding he’s “worried that the BoJ’s attitude is wavering” and that the BOJ should “show that it will do whatever it takes to get the economy out of deflation in attitude and in deeds”.

Back below 119.00, the initial support level to watch is once again at the daily cloud base at 118.90 (on a daily close basis) and then at the session low at 118.75. A break of this would then open the path for a run towards last Monday’s low at 118.52 below which, the next  support levels to watch, are at the 26 March low (118.32), the Fibo support at 118.20 (61.8% of 115.85/122.02) and at 118.00, but below which there is not too much to provide support until 117.30 (76.4%).

The topside is going to find resistance at 119.40/50 and then at Friday’s high of 119.65, and for now, 120.00 looks to be a stretch too far. If wrong, a sustained break of 120.00, would open the way for a rally towards 120.35 (daily cloud top), 120.85 (13 Apr high) and 121.00. As we said before, 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.

Economic data highlights will include:

Japan Retail Trade.

Meta Trader – AxiTrader   USD/JPY: 4 Hour

GBP/USD: 1.5229

Cable spent the European morning sliding down to 1.5106 before a strong bounce, after news of a re-jigging of the Greek negotiation team, sent it to new trend highs of 1.5260.

In doing so, it has taken out several important resistance levels by making a sustained break above the long term channel, the Fibo level (23.6% of 1.7191/1.4565) at 1.5180 and also above the 100 DMA (1.5195).

By closing above these levels the way now appears open for a move to higher ground, which could be seen later today if the Q1 GDP figure comes in above expectations (0.5%qq 2.6%yy). As before though, although the charts do point to the chance of higher levels, I remain reluctant to trade Cable from the long side ahead of the UK election on 7 May.

If we do move higher, the levels to watch, above the 1.5260 session high, are at 1.5269 (5 March high) and then at 1.5315 (76.4% of 1.5551/1.4565). Above this would move back into the messy 1.54/1.55 area and maybe to the trend high at 1.5551, although this does appear some way off yet.

The downside will now find bids at 1.5190/1.5200 and then at 1.5165 (minor), below which would head back to the session low at 1.5106. A break of the rising trend support, now at 1.5090 would trigger stops and bring an acceleration lower towards the 100 HMA (1.5065) and then at 1.5000 (200 HMA), but which looks unlikely to be revisited for a while.

Economic data highlights will include:

UK Provisional Q1 GDP.

Meta Trader – AxiTrader    GBP/USD: 4 Hour

USD/CHF: 0.9550

US$Chf once again tested the support in the  0.9490/00 area, where the 200 DMA (0.9485) again propped the dollar up, before a bounce which has taken the dollar back towards the session highs of 0.9583, currently at 0.9560.

There is no change in the outlook, where, on the downside, another decline would retest 0.0.9490/9500 and the 200 DMA at 0.9485, which may again hold the dollar up, but below which would head towards the 3 April low at 0.9453. Below here would see an acceleration towards 0.9400 and to the 20 Feb low at 0.9370, although this is some way off yet.

A turn higher, above today’s peak will find offers at 0.9590 (100 DMA) a break of which would open the way for a return to the 0.9600/0.9700 band, but seems unlikely in the short term.

Meta Trader – AxiTrader    USD/CHF: 4 Hour

AUD/USD: 0.7852

The Aud has taken advantage of the weaker US$ (and the stronger Iron Ore price) and has broken above the 0.7840 resistance in reaching a high, so far, of 0.7871, before settling the US session back at 0.7850.

The charts suggest that we could yet see higher levels in the Aud, and the bounce in the Iron Ore price, now back close to $58.70 p.t. would seem to underpin that view. The RBA Governor Glen Stevens won’t be happy with the state of affairs and will be talking at the AFR Banking & Wealth Summit at 8.30 AET. He may well follow up his comments of last week and talk the Aud lower. If he says nothing about the currency, the market could well do the reverse and may produce a quick spike higher to take out 0.7870, above which would head to descending trend resistance at 0.7880 and then on to 0.7900 and to the previous trend high at 0.7937. Above there would suggest a sustained run at 0.8000, and to avoid this, it appears that the market is going to need to believe that the RBA will cut on 6 May. Alternatively, the US$ correction, combined with a dovish FOMC outlook on Wednesday, could make the AudUsd carry trade an attractive proposition as we approach the Northern hemisphere summer months making 0.8000+ a reality.

The downside will find support today at 0.7840, and then below 0.7800, at the session low at 0.7790. Unless Glen Johnson is very assertive on the currency outlook, in another attempt to push the Aud lower, then below here seems unlikely today. If wrong, look for a return to the 100/200 HMAs at 0.7770/80 below which further support would then arrive at 0.7750 (38.2% of 0.7552/0.7871) and 0.7710.

Wait for GS, but unless there are any surprises from him, buying dips appears to be the short term plan.

Economic data highlights will include:

RBA Glen Stevens Speech.

Meta Trader – AxiTrader    AUD/USD: 4 Hour

NZD/USD: 0.7642

The Kiwi has managed to stage a recovery on the back of the US$ weakness today, climbing from 0.7580 to 0.7665.

The charts are mixed, although the 4 hourlies do currently suggest that buying dips is the short term plan, possibly for a move back towards 0.7700 and even to the recent highs at 0.7740.

The downside will find bids today, right here at 0.7640 (200 HMA), and then at 0.7615 (100 HMA). Below this would retest 0.7600 and the session low at 0.7580, although this seems unlikely in the short term.

The focus will now begin to turn towards Thursday’s RBNZ interest rate decision, which follows on from last week’s comments from the RBNZ assistant Governor McDermott, who took on a slightly more dovish tone and certainly had the desired effect on the Kiwi, sending it 150bp lower ahead of the current bounce. His comments implied that if there was a leaning bias for the OCR between now and the end of the year, it is more likely to be down than up, although at this stage there appears little chance of any move in either direction. Until then, ahead of the twin event-risk of the FOMC/RBNZ Meetings (early Thursday- Asia), a choppy 0.7600/0.7700 range would not really surprise.

Meta Trader – AxiTrader    NZD/USD: 4 Hour