EUR/NZD: Nice technical set-up for extended range play
Have a look at the EUR/NZD weeklies (see chart) with a very nice technical set-up with myriads of possibilities.
The most obvious one is that a top is in place near 1.7100 and the target is a minimum 1.6350 (currently 1.6700).
Play the edges of this range over coming weeks and there could be some excellent trading opportunities.
EUR/USD: Look to crosses for main drivers
EUR/GBP, EUR/JPY and even EUR/AUD all look susceptible to downside moves and I prefer to play all of the above from the bearish side given present levels. I'm really not sure about EUR/USD, but if the crosses fall hard then it will also probably fall as well although it's not inconceivable that it stays range bound for an extended period and the cross moves are driven through the 'legs'.
Sorry, not much help to you here, best left alone imho.
Cable technicals: Look for minimum retracement to 1.5365
I'm bullish as you know and I think the down-move to 1.5133 gave bulls an excellent opportunity to gather some cheap ones before the big move higher. But, I've been wrong plenty of times before and maybe we are currently seeing the beginning of a big USD move higher (it's not as if the Fed's printed squizillions of extras, or?).
Even if I am wrong again, we should at least see the cable retrace towards its 38.2% of it's most recent fall (see chart).
Why is the deputy RBA Governor talking the AUD up?
He's not exactly talking it up but it's a bit strange that he is downplaying the Steven's remarks from yesterday, unless of course they were totally misinterpreted?
As FXWW888 opined yesterday, if the RBA had actually cut by 25bps on Tuesday when the AUD/USD was trading at .9220, it's unlikely that it would have fallen by 200 pips. But that's what has happened in the interim given the easing bias and the Stevens remarks.
There is little doubt in my mind that the AUD/USD is now quite oversold and we should now revert to dip-buying mode.
AUD/USD: Minor victory as .9110 reclaimed
Looks like AUD/JPY demand was the main factor in helping the AUD/USD get back above .9110. I'm sure rallies will still run into heavy sellers but any deep dips towards .9000 will meet with profit taking now that the USD has started to lose some of it's short-term luster.
Cable: I'm sincerely hoping that was the base!
The neckline on the 1.5000 double bottom was marginally breached but cable was unable to break below 1.5130 and I'm hoping that an interim base is now in place. I'm still long with an average entry near current levels and I'll keep my stop at 1.5100 for now, as if it goes there again then I'm well and truly wrong.
The EUR/GBP, EUR/USD dynamic is very interesting; the cross came in for some heavy selling yesterday and the .8600 resistance continues to look imperious. On the other hand, Sovereign buyers soaked up the EUR/USD element meaning that all of the pressure was exerted onto the cable. The price action was certainly impressive.
Any chance Mr Carney will say that cable would be better served at 1.75 :)
I'll be back in a few hours, hoping it stays quiet today in Asia.
EUR/USD: Sovereign buyers off-setting selling on the crosses
The market has been building longs in EUR/JPY and EUR/AUD over the past few months and we've seen big moves in both of these pairs. I think what we've seen in the past few sessions has been some aggressive profit taking on these longer term trades. There has been no sign of any major collapse in either pair but remember that the clever traders get out first and avoid the rush!
EUR/USD has slipped toward the lower end of recent ranges, trading just above 1.2920 yesterday, but the regular presence of Sovereign buyers has allowed it to bounce back above 1.3000. If this demand continues, and the crosses still come in for heavy profit taking, then the main pressure will be on USD/JPY, pushing it lower, and on cable and AUD/USD, pushing them higher.
USD/JPY: Going to keep stopping everyone out
The market is very bullish USD/JPY but the market is also quite long USD/JPY! Risk averse sentiment returns on a semi-regular basis and this sends the Yen crosses tumbling at unexpected times, just like we saw with EUR/JPY in early European trade yesterday. I'm leaving USD/JPY alone as I think it will keep stopping out both the bulls and the bears and I'd trade it with a very short-term bias, jumping onto moves just as they look likely to be starting.
A strong view in USD/JPY could be an expensive indulgence in coming weeks!
I'd hazard a guess at a 97/101 range in coming days which suggests that selling rallies from current levels is the preferred strategy.
AUD staying very weak across the board; look to crosses for intraday hints
- AUD/NZD looks to have begun its next leg lower after breaking below 1.1735; next target 1.1500. This pair is very unlikely to fall in a straight line so look to trade 1.1500/1.1750 in coming sessions.
- AUD/USD has closed back below .9100 and Australian importers were noted sellers when this level broke yesterday afternoon. I'd expect to see sideways-weakness in coming sessions.
- EUR/AUD is knocking on 1.4400 weekly resistance again, and this despite some heavy selling by macro funds earlier in the week.
- AUD/JPY has also reversed recent gains and we need to watch important support at 89.50.
The US is on holiday later today and they will probably turn it into a long weekend so I'm expecting a few quieter days in the FX market.
It's hard to guess what the trading ranges will be in the AUD/USD so I prefer to watch the crosses for hints as to intraday moves.
AUD/NZD: Having a peek below 1.1725
No sign of any big sell-off just yet but all of the fun-and-games is in the crosses so best we keep an eye on this pair and a number of others. Just to repeat, stops are rumoured to be quite large in this pair very close to current levels near 1.1725.
Cable longs looking bit healthier
Nice bounce in the cable brought on by EUR/GBP flows and strong PMI data. It should be toppy now 1.5230/40 but we can expect any dips now to 1.5150/70 to attract profit takers as well.
I'm still long and keeping a close watch on price action for any clues that I should be increasing my position at these 'cheap' levels.
EUR crosses getting hammered amid big flows in early European trade
EUR/JPY and EUR/GBP are leading the way today, following on from big EUR/AUD sales yesterday which came from the same macro funds. I'm afraid I don't know what is exactly behind this selling but interestingly it seems to be mostly in the crosses rather than in EUR/USD itself.
I'm guessing that they are bailing out of existing long positions rather than establishing new ones, as we know for certain that most of the big macros were very long EUR/JPY.
Levels to watch for in early European trade
- EUR/USD: Sovereign buyers have been expected below 1.2970, but no confirmation yet.
- USD/JPY: Next batch of sell orders at 101.25.
- AUD/NZD: Watch for stops below 1.1725.
- EUR/JPY: Next technical resistance at 131.30.
AUD/USD: Importers forced to sell on break below .9100
Whilst much of the selling has undoubtedly been speculator-driven, one of the local banks just contacted me (after reading what I wrote earlier) and are reporting that Australian importers have been forced to chase the market lower and have been selling in size on the break below .9100. Was the break below 91 cents the straw that broke the camel's back?
By the way, here's a link to the SMH reporting of Steven's earlier comments.
AUD/NZD: Worth watching closely as next big AUD sell-off could be initiated from this cross
The AUD/USD is totally friendless at the moment and is trading at trend lows near .9080. The AUD is still quite far away from important levels against the JPY and the EUR but AUD/NZD should be watched closely as we are trading near recent trend lows at 1.1740 and there is talk of heavy stops below the market. I've been hearing the same reports for a few days now so worth listening to I think.
USD/JPY: Quiet consolidation a bullish sign
Asia has been quiet in USD/JPY over the last few sessions and we've seen the same again today, consolidating in tight ranges above 100.50. I'd consider this to be a bullish sign and suggests that the bulls are quietly comfortable.
Sell orders reported near 101.25 is the next topside target and prior resistance at 100.00 now become support.
AUD/USD: Looking oversold again and most recent selling is speculator driven
Compared to the rest of the globe, the fundamental picture in Australia is relatively sound. We've seen the currency undergo a sharp re-alignment in recent months driven by asset repatriation, but the more recent moves are speculator driven (the same guys who were long at 1.05!).
I'm not being dragged into the eternal AUD bear story, which I think is a load of cobblers, and once the charts stabilise we dip-buyers will get another chance. Have a look at the weeklies (see chart) which suggest that we could see levels towards .88/.89 and I think I'm best saving my ammunition for that dip.
AUD/USD: Looks like RBA want to take advantage of current momentum
The RBA is one of the more savvy central banks, keeping a close eye and ear on market movements and sentiment and using this to their benefit. I think they realise that if they can talk their currency down, just like other central banks have been doing for years, then they'd be silly to pass up on the opportunity.
AUD/USD briefly traded below .9100 and we should also keep a close eye on AUD/NZD, with stop-loss sell orders reportedly sizeable below 1.1725.