EUR/USD closes gap as Cyprus deal hits headlines
EUR/USD has now closed last Monday's opening gap from 1.3050 as news that a Cyprus deal has been reached hits the headlines.
I've re-instated some of my EUR/JPY shorts near 123.60.
Cable still maintaining its bid tone but technical resistance looms
No sign of any big sell orders near 1.5250 (although its quite normal for orders to be cancelled over the weekend) and cable still looks quite strong as short-covering of GBP short positions continues across the board.
The previous weekly low in the cable at 1.5250 is an obvious resistance level and above that is the 38.2% retracement of the big fall from 1.6340 to 1.4830, which comes in at 1.5410.
Given the current divergence between UK and US economic prospects, selling this rally makes a lot of sense to me in terms of medium term positioning. .
AUD: Short-term market building long positions
The hourly chart in AUD/USD looks quite constructive, being short EUR/AUD seems like a sensible play given the uncertainty in Cyprus, and AUD/JPY is also showing few signs of a weakening trend. In other words, there seem to be plenty of reasons for being long the AUD and weekend reports from the interbank market suggest that the market is building longs quite quickly.
As I'm always the contrarian, I fancy trying to pick an intraday top near 1.0475 (which is where the big hedge funds were selling a few weeks back) looking for a pullback towards 1.0375.
JPY: Comments from South Korean FinMin will have an impact
- The new South Korean FinMin has raised concerns about expansionist Japanese policies weakening the Yen whilst the KRW is strengthening.
- He foreshadowed the possible introduction of monetary policy initiatives to stimulate growth (which will of course also be intended to weaken the KRW).
EUR/JPY: Struggled to bounce all day
I'm feeling quite comfortable with my short positions (famous last words) and I've put in a silly bid at 120.20, hoping to catch a spike lower before the weekend. I don't like carrying too much risk over the weekend as silly things can happen, so one way or another I will definitely reduce before the market closes for the weekend.
Unless something startling happens in the next hour or so, I'm done for this week. Hopefully the new site will be up and running next week but IT time and Irish time seem to run along similar lines, its always a rough indication not a deadline :(
Thanks for you company and humour through the week, that big retirement trade is surely only a few sessions away :)
EUR/USD: Bids reported at 1.2870
No surprise there, that was after all the previous technical support and the market was unable to sustain the break below. I'm looking at 1.2870 as the pivotal short-term level and a close below there later tonight will have the bears firmly in charge. On the other hand, if the bulls can defend it, then we could see some sharp short-covering. Much will depend on the flows emanating from the big asset managers.
Cable: Favour a bearish bias at these levels
EUR/GBP is getting closer to decent support levels near .8450 and cable itself is edging towards reportedly strong sell orders at 1.5225/50. We are still in a strong down-trend and 1.5250 is also very close to the previous weekly lows, giving it extra strength as a resistance point.
I'd look to play a 1.5160/1.5240 range in early Europe with a bearish bias.
EUR/JPY back near 122.00 as Cyprus mission to Russia comes up empty
I know I'm talking my position a lot but the Yen crosses feel really heavy to me and ripe for a sharp downmove. Let's see what the big Europeans traders think.
Yet again, nothing happens during Asian trade
Absolutely nothing at all happening during Asian FX trade. Go do those important chores and come back when Europe gets going.
USD/JPY: Still healthy demand from options players and Japanese corporates
Some of the bigger hedge funds have been busy selling rallies but the dip-buyers are also active, led by options players and Japanese corporates. Whilst an interim top might be trying to form, the longer-term trend remains bullish and there will be plenty of market participants who will gladly buy any big dips.
None of the bigger banks are expecting any huge moves in USD/JPY, if and when something happens its likely to be of an orderly nature, given the present state of order books.
Cable: Flow guy still thinks it will be toppy above 1.5225
If you've been following his information in recent weeks, you will be aware that he's been ridiculously accurate particularly when it comes to the GBP. He continues to have strong views on both cable and EUR/GBP:
- Cable will struggle to break above 1.5225/50 unless something major changes.
- EUR/GBP will range trade broadly between .8450/.8650.
He's been consistently saying the same thing all week so who am I to doubt him.
If he's right, and I'm right on EUR/JPY, then I should be looking to sell GBP/JPY rallies for a move back to 138.00!
EUR/JPY: Reports emerging on where the large trailing stops are placed
Prime broker reports suggest that many of the really big EUR/JPY long positions are getting a bit nervous and large trailing stops are noted, starting just below 121.50 and getting heavier below 121.00.
As I said earlier, the 55-day MA should also be worth watching as its been an excellent support point in recent months (currently at 122.10).
AUD/USD: Play edges of 1.0370/1.0475 range
Trailing stops were triggered in the AUD/USD overnight through 1.0420 as asset managers sold EUR/AUD in size. The short term charts look constructive and favour a dip-buying bias back to 1.0400 or preferably to 1.0370. Recent daily highs at 1.0475 provide the resistance levels.
If risk-aversion picks up in the wake of more Cypriot uncertainty, then the AUD/USD will come under more selling pressure so bulls still need to be careful about picking the correct entry level and bears will not be too worried about selling into sizeable rallies.
EUR/JPY: Keep an eye on the 55-day MA
It has provided an excellent support point since mid-November and is currently sitting just below 122.00 (see chart in members).
EUR/JPY continues its yo-yo week
- From 124.50 on Friday last, to 121.50, to 124.00, to 122.00, to 124.50 and back to 122.30. EUR/JPY has closed its gap and is feeling very bearish indeed.
- EUR crosses are generally heavy with GBP, AUD and NZD all making decent gains.
- NZD/USD looks technically strong with a basing formation now on the short-term charts.
- AUD/NZD might be about to turn lower with the AUD/USD still lacking overall momentum and trading sideways.
- Cable triggered trailing stops above 1.5200 but ran into heavy offers just above. Looks like a range trade proposition for coming sessions.
- USD/JPY is vulnerable to more downside corrections I think, with big hedge funds still booking profits on any rallies deep onto the 95 handle. This supply will eventually take its toll imho.
Cable: Large expiries at 1.5100 today
This will act like a magnet as prices tend towards the strike price if the amount is big enough.