Time to be short USD

  • USD/JPY is the lead pair here. Prices had already risen by over 30% from 76.00 and yet the market was trying to buy dips towards 100! Once again the market has gotten itself bullish at the top and I expect more downside pain here.
  • USD/CHF: Following the USD/JPY lead and the Swiss Franc has been spared the mass exodus of asset managers that has befallen the AUD etc.
  • Cable: Bullish technical set-up and the GBP is heavily oversold on a long-term basis against many other majors. I’d expect cable to find a medium term base now near 1.52 and start eyeing moves towards 1.60 at least.
  • The EUR might struggle on some of the crosses like EUR/JPY once heavy long-liquidation emerges, but overall is headed higher I feel (although with less momentum that the cable for instance). I’d suggest a 1.2900/50 base that should hold even if the cross selling accelerates and the target is somewhere around 1.37ish.
  • AUD/USD is getting smashed with some massive flows in the crosses. I still think somewhere around 92 cents is achievable but that dip will be a long term buying opportunity as the USD has little going for it.
  1. You’re analysis and information has been excellent in recent days Sean. I had a small long at 99.10 UJ, seeing that support at 98.80., Stopped out at 99.70 when support broke and quickly reversed with a Nikkei short on a 50 point trailing stop, Best trade to date in part thanks to your overview.

  2. Always need to be careful Jasper but the market is caught with large positions all heavily skewed one way, long USD/JPY. Of course there is some topside risk but its more heavily weighted to downside imho so I’m quite comfortable to be short USD/JPY heading into NFP.
    But I’m a spot trader, that could change in an instant 🙂

    1. Thanks Sean. How about cable? I exited GBPUSD long at 1.56 (didn’t expect to squeeze another 80 pips!) and is debating whether to add it back. With the vertical rise we have in the past 24 hours, I feel it could easily retrace to 1.55 if NFP delivers a positive surprise to subdued expectations.

  3. Sean, when the market is caught with large positions heavily skewed one way, and if the risk is heavy to the downside, why are those large positions not simply closed in the same way I would close a trade I didn’t like? Is it a liquidity issue?

  4. Good morning Sean,

    The dnt you mentioned is always in my mind, the last serious test was on 30 Apr at 97.005, do you think it can hold this time?

    Is it a possible target at 95.79 if it eventually breakthrough?

  5. Yes Tony, all about liquidity. I’ve heard of some big flows, one guy trying to buy EUR15 billion against the AUD, another guy trying to exit a 10billion USD/JPY position! It takes weeks sometimes to trade out of these. Normally the big banks work these orders, sell a chunk, buy some back, then sell on rallies

  6. Good morning Sean,

    The dnt you mentioned is always in my mind, the last serious test is on 30 April at 97.005, do you think it is going to hold this time after over a month?

    It is a possible target at 95.79 if it eventually breakthrough 97 level?

  7. Hi Jason, I did mention in recent days that I believe that this structure has already rolled off on June 1st and was no longer in play overnight? I’m not 100% sure but will try and find out but certainly I heard no reports of Panda activity

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