Noisy markets set to continue
One thing I can say for sure is that there are some very large positions in the leveraged world with speculators, large and small, having big plays in the Yen, Swiss and the Aussie in particular. Equity markets have also been on a mad rush higher over the last few months and they are likely to provide the biggest source of volatility, as many FX positions will be determined by what happens in the stock and debt markets.
Yesterday we were talking about USD strength and today we are focussed on USD weakness, which is typical of noisy, consolidative markets. I’m not reading too much into any of these moves just yet; the EUR/USD is in a 1.28/1.30 holding range, the AUD still looks soft against virtually all of the other majors, and the USD/JPY is also stuck in a 100/104 consolidation range. USD/CHF is the one worry to me with a possible topping formation in the making; if it breaks lower then that could have implications for JPY weakness and USD bullish sentiment.
I’m still long of USD/CHF but will exit if the market breaks and holds below .9600. I’m still looking to buy any decent-sized dips in EUR/AUD and I’ll play the USD/JPY range with a bearish bias.