Releases from Australia:
                                      Forecast    Actual
April Trade Balance  AUD    -1.70bn   -957mn

Coal and gold exports provided Australia with a large decrease in their trade deficit while a 10% drop in capital goods imports also contributed. The drop in capital goods was caused by a large drop in civil aircraft together with machinery and industrial equipment.

The Aussie remained under pressure this morning having backed off from overnight highs at 0.9628 but until the 0.9519 support gives way we still cannot rule out one final high. However, the overwhelming technical evidence suggests a major high is due around this time and by far the greater risk is on the downside.

The following economic releases are due today:

April
German Factory Orders     (MoM)    +0.4%
German Factory Orders      (YoY)    +6.4%

May
U.S. Initial Jobless Claims (31st)      370K
U.S. Continuing Claims     (24th) 

The ECB & BOE are due to announce their rate decisions

The stronger Dollar bullish argument does seem to be following through. Cable broke down below 1.9695 and is edging lower again this morning as is the Euro but at this point I think we still need to be cautious as I’m rather reluctant to call a direct stronger rally right now. Cable really has a messy structure though it’s difficult to argue with the bearishness but the problem I have with it is that even the bearish projections don’t seem bearish enough…

Looking at the Euro there does seem to be a good argument for a short term base around 1.5361 and we can use this as a marker. Hourly momentum is quite bearish while the 4-hour momentum does have potential to form a bullish divergence. However, I am also aware that the Swissie did enough to complete a triangle at yesterday’s 1.0360 level and if that’s the case the next move should be back up to 1.0623 once again. A clean break above 1.0489 Swissie and below the 1.5361 Euro support will provide the confirmation of direct extension. If that is seen then watch out for a test of the 1.5255-83 Euro area while a more distant target is at 1.5082.

Dollar-Yen, in spite of breaking my support is back on its way higher and while I cannot be sure on the short-term wave structure I can only repeat the 106.82-00 target which is crucial in the medium term. Along with this we should be aware of the 161.18-25 support in Euro-Yen.

And to complete the set, the Aussie has been as erratic as could be imagined. It’s still balanced between a larger reversal lower and one final test higher. Below 0.9519 would be pushing the bearish case. The Canada reached my longer target without much of a correction at all. However, I feel now that the 1.0190 area should force a slightly larger pullback before it can complete the move towards the 1.0325 corrective peak.

Note important support and resistance areas:

          USDJPY        EURUSD       USDCHF        GBPUSD
Res:  106.82-00    1.5531-76    1.0585-23    1.9636-65
Res:  105.86-20    1.5460-82    1.0460-89    1.9530-50

Spt:   105.10-30    1.5361-83    1.0390-30    1.9478-98
Spt:   104.20-50    1.5255-83    1.0296-20    1.9390-20

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