Morning Fundamental: ECB’s Constancio Keeps Easing Expectations Alive

The EUR/USD stayed stuck within the range during the Asia session; it wasn’t until the European morning that the market tested the initial support at 1.3050. The support was easily broken as ECB member Constancio kept easing expectations alive. However, like the AUD the price couldn’t continue. Momentum couldn’t get going, with support initially at 1.3030 before weaker than expected U.S. Housing numbers saw a shakeout to 1.3015. An old trend line support had buyers well inside 1.3000. As the Equity and Gold markets recovered, the euro lifted and squeezed out spec shorts, closing the U.S. session at 1.3063, pretty much this week’s opening level. Volatility should increase on the numbers but it's hard to see which way at this stage.

Compass Direction
Short-Term Medium-Term
NEUTRAL BEARISH

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As expected, the AUD/USD was quiet over the past 24 hours; the lack of local and foreign data plus the uncertain state of both the U.S. and European economies has global traders on edge, favoring shorter and sharper moves. First move was for the AUD to bounce towards 1.0300 with offers just above capping. The price pulled back towards the downside of the channel. However, the support around this level was stronger than expected, and without a market highlight was too strong to break. Later in the U.S. session, the price broke the support to a low of 1.0238. The lack of follow through and a bid Equity and Gold markets saw the AUD price recover to yesterday's opening level of 1.0271. CB Leading Index starts the data for Australia, but the main focus will be on the Chinese HSBC Flash Manufacturing PMI. Expectations for a slight decrease to 51.4 are expected. The number has been stable of late but will today be the day?
Compass Direction
Short-Term Medium-Term
NEUTRAL BEARISH
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