Welcome to the start of a new week, hope all of you had a great weekend.
Lets Start With our Favorite Commdollar AUD/USD.
As I said on my previous Reports that The AUD/USD is still in an uptrend, slowly but surely.
Friday saw AUD/USD trading sideways for most of the day, but it might change soon with The RBA announcing Their Monetary Policy Tomorrow at 00:30 GMT ( 11:30 AEST ). More Tightening in the future is what we would probably hear from that statement.
But if you are trading this i would be careful, as The Australian Home loans data will be released at the same time as the RBA Monetary Policy Statement. Home Loans m/m is expected to drop from 4% to -0.9%. usually this data is not that crucial but with the recent housing problems in USA and UK, trader would probably take this data into consideration.
Overall in the Long run AUD is still to the upside but Its Probable that we might see a drop tomorrow, depending on the outome of home loans data.
Looking at the charts for AUD/USD there a two very obvious and strong resistance, AUD/USD would need to clear these two Resistances by This week to maintain The move up, otherwise market is likely to stall and trade Sideways.
Fibonacci retracements drawn from the 7th September High to 18th December low, Shows that the 61.8% Level and 50% Level has contained the AUD/USD from moving Up. I would Be extremely cautious around the 0.8974 Level as it has been tested 12 times since the fall from 0.9400.
Resistance Levels
0.8974 — 50% Fib Retracement 7/11/2007 – 18/12/2007 Fall.
0.9074 — 61.8% Fib Retracement 7/11/2007 – 18/12/2007 Fall.
0.9398 — 7/11/2007 high.
Support Levels
0.8875 — 38.2%
0.8751 — 23.6%
0.8705 — 200MA
EUR/USD Outlook
Euro is also trapped in a range bound market, G7 Meeting was held this weekend and ECB‘s Trichet has Taking a Neutral Stance on the current outlook for EZ Interest Rate Policy, Stimulus Package is also not necessary for Europe.
I always question myself recently with the problems in US and UK, is Trichet acting tough? or Euro Zone is TOUGH! Economically Europe is not in a bad shape, It is slowing and The risk of Growth slowdown in 2008 is there.but all these are current views collected from data.
Personally this really seems like what the Fed says a couple of months back and look at them now… Slashing Rates like it’s closing time at the fish market.
Two Economic Data from Europe on Monday the French and Italian Industrial Production, and both of them are forecast to be better than December.
French IP is forecast to come in at 0.7% compared to -1.5% on December.
Italian IP 0.5% from -0.9%.
So fundamentally EURO might be heading up on Monday.
Technically speaking Daily Chart shows a range bound Market although Euro seems to be making Higher swing lows. You could look at my previous posts on Eur/Usd the daily Chart is still valid. I’ll Be Doing EUR/USD on the H4 Today as i do want to make some points on why the probability of EUR/USD moving up is there on Monday.
*First Up, Stochastic are moving out of the oversold level.
*Secondly, EUR/USD has been making higher lows for the past 5 candles, which is always a good sign of a move up.
*Thirdly, Candle has closed above the 23.6% Fib Retracement from the fall last Thursday.
A close above the 23.6% Fib Level Usually means that 61.8% fib is a probable target.
A likely Scenario for EUR/USD is to test the 23.6% Fib Level During the Asian Session and then a rally to (Minimum) 61.8% Level @1.4569, during news release at 07:45 GMT(French IP) and 09:00 GMT (Italian IP). Good News Expectation coupled with a The comments by ECB’s Trichet during the G7 Meeting will Most Probably Push EUR/USD up in the short term.
But If 50% Fib @1.4544 proves to be a tough contender and Euro failed to break above it. then we would probably see a correction to the downside as the Hourly is a little bit overbought.
Resistance Levels
1.4544 — 50% Fib Retracement (R1 Daily is also around this area @1.4553)
1.4569 — 61.8% Fib Retracement (R2 Daily is also around this area @1.4597)
1.4649 — R3 Daily (100%fib Retracement is also there)
Support Levels
1.4601 — Daily Pivot
1.4457 — S1 Daily
1.4405 — S2 Daily
