USD strengthens overnight on weak Japanese and Australian Data
Today will tell whether USD strengthening is set to continue for the short term, as several important US economic numbers are on tap today. ECBâ€™s Trichet also to speak in late European trading.
MAJOR HEADLINES – PREVIOUS SESSION
AUD/USD broke support overnight and headed lower on sorry retail sales data.
JPY also looking weak as data – this time household spending, employment, and industrial production – continues to surprise to the downside.
THEMES TO WATCH – UPCOMING SESSION
Sharp upturn in US interest rates yesterday may continue to put a floor under the USD as long as there are no dramatic dissapointments in the US figures.
US GDP number today at 13:30 likely to show that US growth continues to outpace that of Europe and Japan1.3230 and 1.33000 areas in EUR/USD are key as trade triggers. The market may be volatile on the data releases and Trichetâ€™s speech in the early US/late European part of the session.
Trading Note: We may follow a break lower through 1.3230 in EUR/USD or a break higher through 1.3300, but it will be difficult to trade until US numbers are out of the way
EUR/USD was rangebound overnight and touched both sides of the range (1.3300 area resistance and 1.3230 area support). Those two levels are key – and with the big data risk today, we may have to wait until the other side of the data to determine which side wonâ€™t hold. We favor the downside for the short term, with a retreat back to the 1.3100 to 1.3070 area possible on a break lower.
GBP/USD has established a new range between 1.8850 and 1.8960 - a break of either level could see continued movement in the direction of the break. The downside is preferred, with a possible follow through to the 1.8775 area or even 1.8700 before support is found.
USD/JPY made a brief attempt toward the 102.20 area lows, but was pulled higher overnight by the bad US data. The correction could continue to 103.75 resistance and possibly even to 104.30 before meeting resistance.
EUR/JPY continued higher still, but has not yet punctured the key 137.00 area. One can still argue for a return to the 135.50 area if 137.00 resistance holds, but the technicals for this pair have been miserably uncertain for some time.
The action has been choppy, but USD/CAD continues to correct higher as expected. The correction could continue higher toward 1.2080 and possibly even 1.2160. The downside swing level now comes in around 1.1820, if this upside scenario proves wrong.
USD/CHF has chopped back and forth in a well-organized triangle-like formation. The key swing levels are 1.1480 and 1.1370, with action likely to continue in the direction of the break.
AUD/USD continued lower on the negative Australian retail sales data and has so far stopped at 0.7750 support. If the USD continues its strength, AUD/USD may continue lower toward 0.7660. The 0.7800 area is resistance.
NZD/USD churned lower and could fall to 0.7050 area support if the 0.7120 area is cleanly taken out.