EUR/USD
Fundamental Disappointment: Economic data was rather disappointing in the euro zone today. Manufacturing data to the downside was witnessed across the region, with an exception in Italy as the economy's activity rose to a 54.4 reading compared to last month's 49.6. Most disappointing was the reversal seen in monthly German factory orders. Previously rising in the past two months, factory orders dipped 3.7 percent against the consensus decline of 2.7. Although the dip does raise some eyebrows, economists had indicated lower expectations as the prior two months brought considerably positive results.
Taking The Cake: In spite of lower data for the session, traders were spurred by comments released following the central bank rate decision this morning. After opting to leave rates at the current six decade low, policy officials hinted that inflationary pressures are rising incrementally and may warrant some control in the near future.
Technically Speaking: After bouncing off of the formidable support at 1.1900, surrounded by bids, the major currency rocketed higher to hit the intrasession high of 1.2203. As a result, with RSI overextended, a near term retracement looks probable. First tests on the floor look to be the 23.6 percent fib at 1.2132 with a subsequent break leading to a bottomside test of 1.2086 (38.2 percent fib). More than not, however, further consolidation may ensue prior to tomorrow's U.S. employment release.
EUR/CAD
More Fundamentals: With commodity prices on the decline, traders pared back Canadian interest leading to euro strength in the cross. Nonetheless, Canadian data was to the upside on the session. Notably, August building permits were announced to have grown 10.2 percent, a vast improvement over the previous month's drop of 3 percent and far higher than the expected 0.5 percent decline. This record rise was led by a 32 percent increase in plans for commercial and industrial space. Additionally, the Ivey Purchasing Manager's Index was released 10.3 points higher than expected at 67.3, a 13.2 point improvement in purchasing activity over August's figure. This now leads to earlier suggestions of considerable growth prospects in the world's eighth largest economy.
Technically Speaking: In similar fashion to the underlying major, the cross was powered by euro bulls off of considerable support. In this case, the bounce was off of the 1.3850 level with consolidation currently forming near the intrasession high. As a result, with RSI in overextension, a probable retracement looks to occur. The first test would take place at 1.4273, the 23.6 percent fib with subsequent penetration leading to a bloc at 1.4192 (38.2 percent fib).
EUR/AUD
Woe To Commodities: With commodities on the downturn, barring exceptions in higher gold prices, traders pared back another bloc counterpart in the underlying major Aussie. As a result, with no subsequent economic releases for the region, the currency saw some slight buying between the 0.7590/95 region before softening towards end of day. Further offers reside at the 0.7610 price level with gamma traders in play, keeping the currency pair in a tight range after the morning's slide.
Technically Speaking: Bouncing off of the major support at 1.5595, the EURAUD currency cross rocketed higher over the past two sessions, with an even more pronounced move on the day. However, much like the other the subsequent euro based pairs, a retracement looks probable ahead of fundamental factors tomorrow. Subsequently with oscillators overextended, the first floor looks to be 1.5965, the 23.6 percent fib, with a more formidable floor at prior consolidation of 1.5894.
Richard Lee is a Currency Strategist at FXCM.
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