ECB Draghi's dovish comments dragged E$ lower overnight touching a low of 1.28828. E$ lost ground as ECB chief signalled that negative interest rate may be tolerated. This is an important development and it can have lasting effect on the E$ and its crosses. Looking at the top chart, its clear that the major trendline (black) has been broken and it is highly likely that the neckline region (1.2800/50) will be tested today though I may not get overly bearish there. Market focus is on the US Non-farm Employment Change data this evening (8:30pm, Sin/HK). Heard last night that sovereign bids were seen around 1.288ish, coupled with profit taking provided near term support. Looking at the 2nd chart, it is apparent that EURAUD could start to consolidate with a downward bias which may also indicate a USD correction. Therefore, I do see a short term recovery in A$ and N$, which could provide E$ with some support (can be quite a tricky situation).
Asia order book:
Stop loss: 1.3050-55, 1.3070-80 and 1.3100/10
Limit: 1.3040/50 and 1.3070-80
Primary trend: Bullish (Under review)
Intermediate trend: Bearish for 1.24
Minor trend: Mildly bearish for 1.2800/50
Technically, intraday to daily indicators are in o/s territory. Intraday to daily and weekly momentum indicators are all pointing to lower E$. I expect a trading range between 1.2800/30 to 1.2950. Can't get overly bearish when nearer 1.2800 and remember its Friday. Stay nimble and learn to take profit, never wrong!
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| E$ Daily chart - Trendline supports |
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| E$ (Black) & EURAUD Daily chart - Breakdown in correlation but for how long? |
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