USD/CHF: If this is a proper break then .9590/00 resistance should hold
Nice topping formation on this pair and for this to be verified, the breakdown level near .9600 must hold retracements.
If it does, USD bears can jump in with a tight stop for a good risk-reward possibility.
AUD/USD: Short-term resistance levels looming
There is some short-term resistance looming at .9695/.9705. Next resistance above there is now at .9775.
USD/CHF still sitting on a knife edge heading into European trade
Support levels at .9600 are still holding impressively but that might change once the big Swiss players come in and have a look at their books. There is obviously some solid buying interest as this level has held now on a number of occasions.
Big levels nearby in CHF pairs
- USD/CHF: Possible topping formation here and a break below .9590 could trigger some more long liquidation (me included).
- EUR/CHF: Bids reported at 1.2420/25 with trailing stops below 1.2400.
AUD/JPY jumps sharply in early Tokyo
I could say that it was my previous post which caused some big players to consider booking profits :) but we will put that one down to coincidence. Moderate technical resistance at 98.00 but this market is short so watch out for more short-covering rallies.
Market anticipating large end-of-month flows tomorrow
Most of this turnover is likely to happen early in tomorrow's NY session, when institutional asset managers rebalance after big moves this month. The market gossip has been that USD/JPY and AUD/USD will be the big movers, with selling expected to be heavy in both. No doubt that's why AUD/JPY has been heavy this week with speculators getting short in anticipation of these flows. If they don't eventuate, it could be a nasty sell-rumour-buy-fact play!
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.
USD/CHF: Remember what I said this morning about the topping formation!
Have a look at the chart in the members section which shows a potential topping formation. The pair was trading at .9765 at the time and I certainly didn't expect such a massive shake-out down to the neckline at .9600.
Bulls like myself should watch this formation closely and consider exiting and reassessing if indeed it breaks below .9600 and holds any subsequent tests.
AUD/USD: Tough to trade at moment; safest trade is to buy really big dips
I really have no idea whether to buy or sell at current levels near .9570; the overall AUD trend remains bearish on most of the crosses but AUD/USD has fallen 10 big figures in a little over a month and will soon come up for air. Many of those who were bullish at 1.04 are now going short, a sure sign that a base is nigh!
I think the safest play is to keep powder very dry and look to buy any big exhaustive dips in expectation of a retracement towards .98 cents.
AUD/JPY: Fast approaching important support at 96.90
This level formed a low in early April and again earlier this week and should be respected. Might be worth a quickie if support holds with a stop tight below of course.
EUR/CHF: Hedge funds looking to increase long bets en-route to 1.35
I had a long chat today with a big hedge fund and they are of the same opinion as me, that we will soon see a sharp weakening in the CHF. He's not 100% sure what will drive the big asset managers to start hedging or selling their Swiss assets, but he thinks the time is coming very soon. He says that many other like hedge funds are thinking the same way and are preferring to play the strategy through EUR/CHF rather than USD/CHF.
Prime brokers were reporting bids in EUR/CHF starting at 1.2500/10 so maybe they are starting to chase this one higher?
Focus will now turn to EUR/USD and Cable
The market has broken AUD/USD support and the lack of any strong bounce is a sign of the markets intentions. I'd expect the European market to now focus on EUR/USD and perhaps a push lower towards important support at 1.2745?
AUD/USD: Stops going off near .9570 but Sovereign buyers reported nearby
Unsurprisingly there were plenty of stop-loss orders below .9580 which have now been triggered. There are Sovereign bids reported just below here towards .9550 so I'm not expecting any major capitulation.
Good two-way business is reported on the interbank platforms, with bids of around AUD 100 million seen in AUD/JPY near 97.90 but heavy stops also being triggered in AUD/USD below .9570.
AUD/JPY: Bulls and bears both remain hopeful
- Important daily support at 96.90 was confirmed, giving bulls hope that the medium-term up-trend can regain control.
- The short-term bear trend is also in control and the trend-line comes in now just above 100.00.
- Should be plenty of volatility in this pair so be patient and wait until prices reach extremes of this range (currently right in the middle).
USD/CHF main mover as bulls try to regain control
The two big risk-on dollar trades had big days yesterday with USD/JPY rising during the Asian session and USD/CHF rising sharply in overnight trade after strong US economic data. Both of these pairs are trading near resistance levels at 102.50 and .9800 respectively and whilst I'm still long and bullish on USD/CHF, I think it's quite possible that we see some more extended range trading before any big moves emerge.
AUD/USD will again open near important daily support at .9580 and EUR/USD looks certain to test important technical support at 1.2745 sometime over the coming days. Cable is also back near the important psychological level at 1.5000 and is starting to look heavy again.
Good luck today.
Yen crosses still moving higher; AUD/JPY leading the way
I think today's action in the FX market will turn out to be a pure Yen-crosses move. Firstly we've seen USD/JPY recover by 150 pips from overnight lows and later I'd expect the EUR/USD and cable to recover any lost ground.
AUD/USD is showing the way after breaking above its short-term bearish trendline and I would buy any intraday dips now back towards .9650 looking for a retest of .9750.