My view again: This will primarily turn out to be a USD/JPY move
Based on present fundamentals and historic levels, EUR/JPY at 140 is too high in my opinion, as indeed is AUD/JPY at 110+, purely on basis of historic levels. On the other hand, from a very long term perspective, seeing USD/JPY back at 110/115 is not a stretch of the imagination at all.
In other words, I think at some stage very soon there will be excellent bearish trading opportunities in EUR/USD or AUD/USD: EUR/JPY at 130 and USD/JPY at 110 would mean EUR/USD back below 120; whilst AUD/JPY at 105 and USD/JPY at 110 would imply AUD/USD trading back near 95 cents. This is what I expect to happen over coming months.
My preferred way to play this strong USD trade is through USD/CHF and I'm hoping to get the timing right to build a long position for a move to 1.10.
EUR/AUD: Strong technical support at 1.2350
I'm still running a long position in this pair and will exit if it starts trading consistently below 1.2320. The technical support near 1.2350 is quite strong (I've posted the charts in the members section) and if this is tested and holds, I will add to the position.
Yen: Best to go with the flow
USD/JPY is stalling ahead of heavy barrier protection at 100.00 but nobody really knows what lies above there so the safest bet is to go with the flow and stay short of JPY.
EUR/JPY is consolidating above 130.00 and has plenty of scope technically for a move to 134.00. AUD/JPY has broken above weekly resistance at 104.50 and also has scope until trend highs from 2008 at 107.75.
I'd suggest waiting until 100.00 breaks and then making a play, either buying the break or waiting for some pull-back opportunities. As always, best to wait and see how the market reacts first.
AUD/USD: Looks set to test daily highs at 1.0625
The AUD is being driven higher by AUD/JPY buying, which intensified overnight after the break above weekly resistance at 104.50. Very strong NZD demand is also influencing the AUD.
Today's first risk event will be the jobs data, with the unemployment rate expected to be steady at 5.4%. The AUD will also be heavily influenced by whatever happens at 100.00 in USD/JPY.
AUD/USD has consolidated above 1.0500 and its next target is daily highs at 1.0625. I'm still in the sell-rally club in line with the strengthening USD but getting the timing right is proving very tricky. Best to wait on the sidelines for some 'silly' developments.
EUR/USD: Technical resistance holding 1.3115/35
The levels we looked at yesterday, a 38.2% retracement and the 100-day SMA, have provided a decent level of resistance and should be respected. Short-term support levels start at 1.3030/40 and there will be trailing stops below there. I prefer the sell-rally strategy at current levels as I think we may be in for some 1.2850/1.3150 consolidation.
EUR/JPY establishing a foothold above 130.00
Finally a bit of movement in the FX market with EUR/JPY trying to establish a foothold above 130.00. There's not much in the way of technical resistance nearby so I'm not sure what can stop the juggernaut.
This could also be the trigger to launch a new USD/JPY attack on 100.00.
Lack of volatility, lack of feeling
I'm still running some small strategic positions in USD/CHF and EUR/AUD but I'm finding it hard to find any sort of a feel for the intraday moves. Best to sit it out until the rhythm continues.
Order boards
- AUD/USD: Offers at 1.0520/25 and bids near 1.0465 should ensure range trading ahead.
- USD/JPY: Offers at regular intervals above 99.50 through 100.00; bids 98.50.
- EUR/USD: Solid bids 1.3020 through 1.2990 from Sovereign names.
- USD/CAD: Solid bids starting at 1.0100 through 1.0050.
For those who missed the Asian open comments...
Nothing has changed in the meantime so here's the link to my opening comments on FX Street. (By the way, please remind me if I forget again :) ).
Getting close to a move higher for USD
- EUR/USD is nearing a technical resistance level near 1.3115/30.
- AUD/USD is also nearing the top of its trading channel near 1.0575.
- NZD/USD is trading at weekly highs near .8525.
- Cable is stalling below its 55-day MA and has a 38.2% retracement at 1.5410.
- USD/JPY is of course still on its rampant bull trend.
Yen crosses: Strong bounce back shows strength of trend
There was a rush of profit-taking in pairs like AUD/JPY and EUR/JPY in late-Asia early-Europe yesterday but the fact that most of these losses have now been undone shows just how strong the bull trend is.
AUD/JPY is targeting weekly highs near 104.50 and EUR/JPY has marginally breached 130.00 and will not encounter any significant resistance until 134.50.
I see no point in fighting this runaway train and best strategy is to wait for excessive dips or rallies for trading opportunities.
AUD/USD: Targeting 1.0575 trend channel highs
- The break above 1.0500 has changed the short-term picture to mildly bullish.
- Look to buy intraday dips for 1.0575 test; support levels are at 1.0350.
- Very strong NZD/USD demand and AUD/NZD profit taking near 1.2300 are also supporting AUD/USD.
- Chinese trade data today.
EUR/USD: Decent technical resistance 1.3115/30
- The 38.2% retracement of the fall from 1.3710 to 1.2745 comes in at 1.3115.
- The 100-day SMA is near 1.3130.
Cable: 1.5250 confirmed as vital pivot
It's funny how the same levels keep cropping up again and again. This level was weekly support, daily resistance and now hourly support again. Overall downtrend is still dominant so rallies are selling opportunities overall.
EUR/USD: Dealers aiming at stops below 1.2990
No word on whether the bids from yesterday are still there around 1.2965 or not. Dealers report quite a few stops below 1.2990 which is obviously what early Europe is aiming at.
EUR/JPY: Missed my chance for quick contrarian trade
Always much easier in hindsight of course, but EUR/JPY simply smelt wrong near 130.00 earlier today and there was an easy 100 pips there for the taking with a tight 35/40 pip stop. Ah well, let's be on the look-out for the next freebie.
JPY starting to feel a bit overstretched
Now I'll be the first to admit that I've thought this on many occasions and been wrong but USD/JPY certainly has a slightly tired feel to it. EUR/JPY is also approaching a big number at 130.00 and perhaps that combined with 100.00 in USD/JPY might be enough to encourage some profit taking?
I'm still going to wait until Europe opens and will sell another failure at 99.65 in USD/JPY (which would effectively give me a CHF/JPY position).