EUR/USD/Flows and Orders/FXWW News

EUR/USD: Still plenty of big orders either side of 1.30/1.31

Like I reported yesterday, there is plenty of interest either side of the EUR/USD. The bids were tested yesterday near 1.3000 and I wouldn’t be surprised to see the topside tested today, especially if EUR/JPY tries to break above technical resistance at 131.25.

I took a small loss on my EUR/USD longs as I really have no idea where the next 300 pips are coming from. Any bright ideas out there?

  1. The USD’s reaction to weak retail sales and inventories datapoints suggests to me that there’s limited upside to this pair and that the market is much less short than it was before Bernanke’s speech last week. If his Wednesday testimony has anything that the market perceives as more hawkish than what he said last week — for example, if he mentions tapering which he didn’t last week — I think there’s a good chance we trade back below 1.3000 at least for a time.

    Then again, I have no idea whether the Bernanke that shows up on Wednesday is going to be the taper-hawk May/June version or the dovey-dovey highly accommodative July version.

  2. I think there is a trade in buying EURAUD on dips which arguably we are having now.

    I also think there is a good risk reward in going long gold on a break above USD$1300, but I know you are not a fan of breakout trades.

    I am not convinced in the H&S pattern in the EURJPY with the market’s acceptance of price around 130.50 a harbinger of steadily rising momentum for a break higher.

    Clearly Wednesday’s BB address looms and the market is unlikely to have a significant move prior. The contrarian in me thinks the ground is being set currently for post address USD weakness as it seems plenty are happy to go in long of USD.

  3. Hi James, really strong case for being long physical Gold I think. Rumour mill suggests that whilst PBOC might be seen to be tightening, they will in fact join in with their Fed and BOJ cohorts and flog those RMB printing presses. Queues blocks long when physical Gold goes on sale in China. No shortage of paper there it seems, property prices still rising as well. Interesting developments.

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