The markets started off with a hiss and a roar today as economic data combined with low liquidity lead to some strange volatility scenarios, especially in the equity markets.
Despite all of that the talk of today was the EURUSD which saw some strong volatility on the back of low liquidity and the recent data out of Germany. Current IFO business climate data has come in strong at 108.3 (107.6 exp) which shows that many German business owners believe that the recent troubels with Greece seem well and truly over for the most part - despite the recent resignation from Tspiras in Greece.
Looking at the charts 1.1388 is looking very strong in the long term as support, and I would expect this to hold up strongly in the short term. For many analysts looking at the charts they would expect to see higher highs, but I feel constrained about further movements for the time being as economic data and US dollar strength is likely to battle it out over the EURUSD.
The Australian dollar keeps feeling the heat as china weakens and commodity prices drop further on the charts. One of the key things coming through is the likelihood that Australia's economy will likely suffer more so than anyone has actually expected. After the recent movements it looks like Australia is contained within a tight band, but after the Monday madness we can see that it looks likely we will see a push to strong support at 0.7029 on the charts. Any push back up is likely to be defeated by strong resistance at 0.7250. I will also be watching the talk by RBA governor Stevens this coming Wednesday where markets are expecting he will talk up the threat of China on the Australian economy and it's likely he could possibly send the AUDUSD tumbling.
The USDJPY has been a massive highlight for traders as of late, and for myself included I have been watching this one closely. After yesterdays massive drop on the charts I am now looking to be somewhat bullish in this pair, which seems counter intuitive. Certainly I still feel there is a lot of value out there for the USD, and the USDJPY is one to show it, despite the recent knee-jerk reactions we have seen. Resistance levels at 120.559 are looking very soft and I would expect to see large swings upwards take president on the charts here given the recent bullish behaviour in the past and Abenomics willing to push the Yen lower.
Lastly the NZDUSD is looking to jump back up the charts, but resistance is looking very strong at 0.6506 on the charts and I would not be surprised to see it defeated here, given the recent drop in commodities and also the recent lows for milk prices. With the recent push up lacking any teeth a drop to support at 0.6252 is looking extremely tempting for the markets and we may just see it sooner rather than later.
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