Euro hovers below recent high against dollar, sterling and swissy as markets await the meeting between EU finance ministers in Brussels on expanding the current debt crisis handling programs. ECB Trichet urged to improve the crisis handling fund in both quantity and quality over the weekend.
Regarding quantity, Trichet should be talking about the amount of up to EUR 440b government guarantees. Regarding quality, Trichet clarified that means the fund should be as flexible as possible. Luxembourg Prime Minister Jean-Claude Juncker, the chairman, and European Union Economic and Monetary Commissioner Olli Rehn will brief the press later in the day after the meeting.
Meanwhile, there are also talk in the markets that most of Euro shorts were cleared after last week's strong rebound, triggered by successful auctions in Portugal and Spain, as well as the inflation comments from Trichet. Technically, we'll still require Euro to take out key near term resistance levels before confirming reversal of trend. That includes 1.3496 in EUR/USD, 0.8646 in EUR/GBP and 1.2950 in EUR/CHF.
Elsewhere, Aussie is soft today as Asian equities are generally lower in response to the reserve ratio hike from China announced late last week. In addition, Australia is still troubled by the record floods as it's now starting to affect Victoria state, in addition to Queensland. AUD/USD is heading back to 0.98 level and it will take some positive news to send it back above parity.
On the data front, UK rightmove house price rose 0.3% mom, 0.4% yoy in January. Japan households confidence dropped slightly to 40.1 in December. Other focus today include Bundesbank monthly report, Canada international securities transactions and Fed Plosser's speech.
GBP/AUD's recent strong rebound pushed the cross through the medium term falling channel as well as 55 days EMA. THat suggests that whole decline from 1.8141 has completed with five waves down to 1.5137 and formed a medium term bottom there. Stronger rebound is now expected to 1.6422 resistance and above. Though, we'd expect strong resistance at 61.8% retracement of 1.8140 to 1.5137 at 1.6993, which is close to 55 weeks EMA (now at 1.6958) to limit upside and bring another test on 1.5137 low.
EUR/CHF Daily Outlook
Daily Pivots: (S1) 1.2845; (P) 1.2899; (R1) 1.2949; More
EUR/CHF's fall from 1.2950 extended further lower today and intraday bias remains neutral. As noted before, rebound from 1.2401 should be correcting whole decline from 1.3833. Another rise could still be seen as long as 1.2724 support holds. Sustained trading above 38.2% retracement of 1.3833 to 1.2401 at 1.2948 will target 61.8% retracement at 1.3286. Though, break of 1.2724 will indicate that such rebound is finished and should flip bias back to the downside for 1.2401 low instead.
In the bigger picture, whole down trend from 1.6287 (2007 high) is still in progress and in any case, medium term outlook will remain bearish as long as 1.3833 resistance holds. The current down trend would likely continue through 1.2 psychological level towards 100% projection of 1.5138 to 1.2765 from 1.3833 at 1.1460, which is close to long term projection level at 1.1516.