EUR/USD dipped to 1.3420 during the European morning as ECB President Draghi warned about the slowing economy and the risks being placed on the funding costs of the Eurozone nations at the EU parliament. The negative tone was a surprise with past Trichet comments always having a silver lining. However, with the markets unwilling to take new risk on board the pair snapped back to extend towards the previous days highs but yet again the drive in the market was not there. Improving US ISM Manufacturing PMI data gave the USD back some momentum during the US afternoon to have the Euro closing the day mostly unchanged. The next 24 hours of trading is most likely going to be a range traders paradise with the major players unlikely to start a new trend with US Payrolls at the beginning of the US day. After that is a little harder to pick. Look for support around 1.3380 to stop declines and offers towards 1.3500 to slow rallies ahead of the major number!

Compass Direction

Short-Term   Medium-Term

NEUTRAL         BEARISH

GBP/USD fell sharply during the local morning despite the Manufacturing PMI coming in slightly above expected despite it still being below the neutral 50 number. The move below 1.5670 saw the bulls get squeezed as the pair dipped to 1.5635 but like the actions seen across the markets the bearish momentum could not continue as the major traders sat on the sidelines in a pattern that is normally seen a couple of days below the US Non-Farm Payroll numbers.
The snap back in the price saw the pair reach 1.5745 and after than during the US session the price remained within a tighter range and closing almost at the same level as where it started the London session 1.5682. Range trading looks the only option for traders willing to have a go ahead of the US data as we can’t see a new trend starting on the last day of the week. Selling into the expected offers at 1.5750 with stops above 1.5780 targeting 1.5650. Downside is a little harder to pick as momentum could possibly build on weakness so keep positions small.

Compass Direction

Short-Term    Medium-Term

NEUTRAL    BEARISH

USD/JPYdipped to retest the new 77.50 support during the European session as the risk off tone being seen in the Euro drifted across to the EURJPY and GBPJPY crosses.
However, as the majors turned around in controlled trading the USDJPY pair has recovered to close the stuck between 77.60 and 77.80.
We close the US session with the pair in the middle of the US session range and really looking unlikely to do anything in the foreseeable future. Building offers from Japanese corporate’s between 77.80 and 78.30 should be able to handle anything that the next two sessions can throw at it but with the fast approaching US Non-Farm Payroll numbers we can’t see the markets doing much unless today’s Japanese data throws some spanners in the works.
Capital Spending and Monetary Base, however, are unlikely to cause a major move anyway. SO in the end range traders will be looking to buy dips near 77.55 and sell them or turn at 77.75.

Compass Direction

Short-Term     Medium-Term

NEUTRAL    NEUTRAL

AUD/USD dipped lower during the European morning as the risk tone of the markets decreased as ECB President Draghi spoke to the EU parliament about the possibility of the economy slipping into recession as the funding costs continue to rise for the group of nations. The break below the Asia session low of 1.0185 did see the market take out some weak stops but the mixed tone of the markets and the normal quiet nature a couple of days ahead of Non-Farm Payrolls saw the price only dip to 1.0155 before recovering the losses and settle in for the rest of Europe and the US session at 1.0225. With it being data free Friday for the Australian markets and the pending US data we can’t see any major moves.
Sticking to the overnight ranges looks more than likely with talk that range trading bids have been placed inside the overnight low and offers remain around 1.0250. A break of 1.0250 could lead to a squeeze towards 1.0300 but 1.0280 offers should cap.

Compass Direction

Short-Term    Medium-Term

NEUTRAL    BEARISH

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