Euro Breaks Higher, Australian Rate Announcement

Written by Anthony Darvall

U.S. Dollar Trading (USD) stocks surged as global investor sentiment continued to improve and major tech levels were broken on the topside. July's ISM manufacturing figures came in better than expected at 55.2 vs. 54 forecast. The downside Dollar pressure continued with Bernanke hinting the US will be keeping rates lows for a significant period. In US stocks, DJIA +208 points closing at 10674, S&P +26 points closing at 1125 and NASDAQ +40 points closing at 2295. Looking ahead, June Pending Home Sales forecast at 0.6% vs. -30% previously.

The Euro (EUR) broke higher after range trading last week the market push above 1.3100 and quickly ran up to 1.3200. July PMI Manufacturing improved to 56.7 vs. 56.5. The market has turned cautiously bullish on the EUR/USD with 1.33 the short term target. EUR/USD traded with a low of 1.3054 and a high of 1.3197 before closing at 1.3170. Looking ahead, June EU PPI is forecast at 0.4% vs. 0.4% m/m previously.

The Japanese Yen (JPY) was under pressure from the 'risk on' market but was relatively unchanged against the USD/JPY as the market failed to push above Y87. GBP/JPY led the market higher above Y137. Finance Minister Noda repeated his comments he is watching FX movements closely. Overall the USDJPY traded with a low of 86.30 and a high of 86.91 before closing the day around 86.55 in the New York session.

The Sterling (GBP) gains accelerated as the shorts capitulated pushing above 1.5900 for the first time since February and the market is now targeting 1.6000 in the short term. July Manufacturing PMI remained strong at 57.3 vs. 57 forecast. Overall the GBP/USD traded with a low of 1.5699 and a high of 1.5910 before closing the day at 1.5880 in the New York session.

The Australian Dollar (AUD) pushed higher but was capped at 0.9140 as the market awaits key risk events on Tuesday. The AUD/JPY traded above Y79 and is poised to test Y80 if the market sentiment continues to improve. Overall the AUD/USD traded with a low of 0.9073 and a high of 0.9148 before closing the US session at 0.9130. Looking ahead, RBA Rate Decision forecast to remain at 4.5% and June Retail Sales forecast at 0.3% vs. 0.2% previously.

Oil & Gold (XAU) the rally failed above $1190 as traders used the better levels to get out of stale longs. Overall trading with a low of USD$1174 and high of USD $1191 before ending the New York session at USD$1184 an ounce. Crude busted above $80 a barrel and quickly traded to $81. WTI Oil Closed +$2.00 at $81.10 a barrel.

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.27091.29521.31751.34161.3692
USD/JPY84.8385.8786.5588.1289.16
GBP/USD1.54001.55521.58901.60691.6276
AUD/USD0.87380.88960.91300.92730.9389
XAU/USD1146.001157118112041218.00
OIL/USD78.0080.0081.2082.5085.00

Euro - 1.3175

Initial support at 1.2952 (July 27 low) followed by 1.2709 (July 15 low). Initial resistance is now located at 1.3416 (April 27 high) followed by 1.3692 (April 12 high)

Yen - 86.55

Initial support is located at 85.87 (Nov 30 low) followed by 84.83 (Nov 29 2009 low). Initial resistance is now at 88.12 (July 28 high) followed by 89.16 (July 12 high).

Pound - 1.5890

Initial support at 1.5552 (July 30 low) followed by 1.5400 (July 26 low). Initial resistance is now at 1.6069 (Feb 3 high) followed by 1.6276 (Jan 28 high).

Australian Dollar - 0.9130

Initial support at 0.8896 (July 23 high) followed by the 0.8738 (July 22 high). Initial resistance is now at 0. 9273 (May 4 low) followed by 0.9389 (April 12 high).

Gold - 1181

Initial support at 1157 (July 5 low) followed by 1147 (Apr 27 low). Initial resistance is now at 1204 (July 23 high) followed by 1218 (July 13 high).

Oil - 81.20

Initial support at 80.0 (Intraday Support) followed by 79.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 85.00 (Intraday Resistance).