USD/JPY back above 95.00
Overnight highs at 95.10 have been breached and USD/JPY is threatening to take off again, especially if we start getting technical closes above a previous weekly high. The main reason we didn't see any huge moves last night after 95.00 broke was because so much wood had to be chopped to break through a big barrier option, that the market had to take a breather.
JPY crosses: Light profit taking after big overnight moves
It is Friday after all, and some Japanese traders will have woken up to a pleasant surprise after a big move lower in the Yen overnight. I guess it's no surprise then to see some modest profit taking in early Tokyo.
Levels to watch in USD/JPY are previous highs at 94.50 and weekly highs at 95.00.
AUD/JPY: Sneaking back towards 97.60
News reports that North Korea is threatening a pre-emptive nuclear attack aren't helping the Yen's cause and it continues to slide lower.
AUD/JPY is trading near overnight highs at 97.60 and just above previous daily highs at 97.50.
Cross plays starting to dominate USD strength
We had a phase a few weeks back when the EUR was all dominant on the crosses and EUR/USD rallied to 1.37, whilst AUD/USD went to 1.05. Then we had a phase of consolidation and USD strength, where the EUR/USD fell to 1.3000, the Aussie almost touched 1.0100 and cable was harshly treated.
It's a bit early to call just yet, but the overnight move in EUR/JPY does suggest that we may now revert to a market dominated by cross moves, where the EUR and AUD will out-perform the USD but most of the big moves will be in the crosses like EUR/JPY, EUR/GBP and EUR/CHF.
EUR/JPY: Bull trend back in control again
My feeble attempt to pick an interim top didn't last very long but thankfully the position was small. The bull trend looks to be back in total control with USD/JPY making new highs and the EUR rallying post ECB. Buying dips back towards 122.50 now looking like the logical play.
EUR crosses firm once again in European trade
My targeted resistance level at 122.50/70 in EUR/JPY has been easily breached so I will not be adding to my existing shorts. EUR/GBP is also galloping higher towards recent highs above .8700 and just like yesterday, the European market seems keen to buy the single currency.
Catch you tomorrow++
EUR/JPY: Time to try the short trade again
Short at 122.40 and will add to position if an hourly high can form below 122.70. Stops above 123.10 to begin with.
Cable: If you feeling brave...
Feels a bit oversold to me and I might try that dangerous game of picking a bottom, if prices stall again around 1.4970. I'm only trading in very small though, trying to get a feel for the market.
Quick overview of Asian FX market trade
- Australian January trade deficit A$1.06 billion, a record low. The A$ has risen slightly!
- BOJ kept rates and policy unchanged as expected, preferring to wait for new Governor next month perhaps.
- Algos and bank dealers combined to trigger cable stops sub-1.4980 in thin early-Asian markets.
- Otherwise a complete snore-fest with the majors hardly trading for the last few hours.
AUD/USD: Risk-reward favours selling intraday rallies.
The earlier dip in AUD/USD after the record trade deficit didn't last very long and the Aussie once again lived up to its 'teflon' moniker. Nevertheless, yesterday's tops at 1.0300 are likely to be difficult to overcome and with hedge funds still reportedly looking to sell, surely selling rallies is the logical play? Logic, the Aussie and the FX market all in one sentence is probably stretching it a bit.
Risk-reward would suggest selling at 1.0265 with exit orders at 1.0305 oco 1.0165.
BOJ: Kuroda nomination likely to lead to increase in Yen selling (again)
We all know its going to happen, that Kuroda San will be nominated and probably accepted as the next BOJ governor. This will mean that market expectations regarding easing measures, at his first meeting at the helm in early April, will go through the roof. This will lead to more short-term speculative Yen selling. Exactly how much USD/JPY rises by on the announcement will tell us a lot about the state of bullish momentum in the market.
GBP/USD: Cynical stop-loss hunt in thin markets
There isn't much liquidity at this time of the morning in cable and interbank dealers took advantage of this to trigger stops below 1.4980. Algos have also been busy as they smelt some blood in the air. FX trading isn't always a Gentleman's sport!
GBP/AUD: Diverging Central Bank expectations keep the pressure on
The problem with experience is that we have seen pairs like GBP/AUD at much higher levels (twice as high as currently) and yet we are faced with little option but to be bearish based on central bank activity The BOE is easing policy and may indeed start fine-tuning later today with another GBP25 billion stimulus, whilst the RBA is sending signals that it's rate-cutting cycle may be coming to an end. This is of course sending the GBP in one direction and the AUD in the other.
In 2002 we were trading close to 3.0000 and now we are looking to re-test historic lows near 1.4585. I just can't get bearish at these levels. I'd rather wait and see if support levels hold and then jump on for a contrarian play.
EUR/JPY: Still looking to sell 122.50 rally
I've been very patient with this pair after getting lucky at the beginning of last week. I still think we will see at test lower to 117.25 and I'm looking to sell a failure at 122.50 with a tightish stop above 123.20.
EUR edging higher against the CHF and the JPY
EUR/CHF has been interesting over the last week or so in that it's been grinding slowly higher and not giving bulls any chance on pullbacks. It's often difficult to get on board a slowly moving train so at some stage I'm hoping that we get an explosive move higher (I'm still long).
EUR/JPY is also edging higher but I still fancy trying to pick a top near 122.50 for a 500 pip dip. Let's see how it trades if it gets there.