EUR/USD/Flows and Orders

EUR/USD: Plenty of downside stops now building

Last week we were in stop-loss hunting mode on the topside and I expect the market to continue in the same vein, although the direction might be different over the next few days.   Dealers tell me that most of the natural business (asset managers, corporates) are looking to sell near current levels (1.3080/1.3120) whereas the short-term speculative market is tending towards being long and there are trailing stops building below 1.3000.

If that’s the case then the market will gradually tend lower and test those stops over the next few sessions, in my humble opinion of course.

I’ll be back in a couple of hours when hopefully the Europeans will liven things up.

  1. Hi Sean. I agree, both the 3010 support lvl/3080 resistance lvl look “clean” and those lvls are likely stop hunt targets. I’m looking to sell any rally up to the 3080’s back down to 3020 OR buying a stop hunt below 3010 back to abv 3050. Sentiment is still mixed, but with the uncertainty about a soon bailout request from Madrid, specs likely won’t be aggressive sellers.

  2. sigh,

    seriously, with the intense protectionism around globe, and the fueled currency war, when we could return normal, let market find price?

  3. Regarding EURUSD,

    The market is disoriented and dull. The lack of fundamental news is continuing to reduce volatility in the markets. EURUSD has no momentum, and is stuck, waiting for some development to start its movement again. We will need to wait for Wednesday to see some movement with the PMI publication. The spanish bond yields have started to rebound from 5.3%, which signals that now the market needs action from the spanish government, no more talks! And the further the spanish government waits, the faster risk sentiment in EURUSD will deteriorate. The market might discover that the spanish government had no intention of requesting a bailout in the short term, and was using rhetoric just to guarantee good demand at bond auctions (very bearish). On the USD side, the US tends to rally after presidential debates, which suggests that US session will probably have a bullish bias. We are currently stuck in the range 1.3014 – 1.3075, and this might continue today. Overall, the downside is now more favored in EURUSD but traders should keep an eye on the news wire (or have tight SL) since any official spanish request could put the EURUSD above 1.32 in a matter of hours. Our pivot on the downside remains 1.2990.

  4. These are all technical moves, algo driven in the absence of news / data. The AUD looks like it will fall a lot since the bounce from 1.03 didn’t even make it to the 38 Fibo of the last leg. The UJ will probably have a decent retracement after its gallop to 80. I’m short EU, EJ, AU.

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