EUR/JPY weakness starting to intensify
Nice pick-up on the EUR/JPY double top (thanks to Jordan) and it's worked a treat so far. It really is worthwhile to wait patiently for some of these obvious risk-reward trades, even if its only 2 or 3 a week.
The pair topped out at 124.65 and I expect a test of the Pennant base near 122.00 in coming sessions.
EUR/USD stagnating around 1.3275
Its been very quiet in the Asian FX market with nothing of note happening at all.
EUR/USD is stuck just above the 61.8% retracement of the 1.30/1.37 move which is at 1.3260 and the 55-day MA also comes in near the same level, which has also been a good indicator in recent times.
A clean break below here should open the way for a move lower to 1.3060. Short-term traders may jump on for this move but I prefer to be patient and wait for dips to buy, as I think the big EUR cross buying isn't done with yet.
EUR/JPY: Dealers eyeing possible double-top on short-term charts
As you probably well know, I like my topping formations to be perfect and also to be at interim highs, and EUR/JPY currently doesn't fulfil the latter criteria. Nevertheless you can make up your own mind on the matter (chart in members) and the neckline is near present levels at 124.60 (I'd allow maximum slippage of 10 pips through the level).
EUR/JPY intraday moves dependent on what happens at 1.3260 in EUR/USD
I favour a test of the lower end of the EUR/JPY pennant formation which comes in around 122.00. In order for this to happen, either EUR/USD will need to break strong technical and market support at 1.3250/60 or else USD/JPY will need to fall back toward recent support levels at .9225.
At this moment in time, with the USD now looking quite strong, a break lower in EUR/USD looks to be the more likely outcome.
GBP playing catch-up in the race to the bottom
The FOMC surprisingly took a breather from the currency race to the bottom and the GBP has now joined the Yen as the interim leaders. The RBNZ was vociferous yesterday in trying to talk the Kiwi lower and its clear that nobody wants a strong currency.
I expect USD/JPY to consolidate in coming days/weeks between 92/95 whilst some of the other currencies play catch up. Cable is leading the way and the fall below 1.5250 really opens up the downside. The EUR should remain fairly stable against the USD but with short-term sentiment now pro-USD, a break below 1.3260 should open the way for a move to 1.3060. Nevertheless I remain bullish on crosses like EUR/GBP, EUR/CHF and EUR/AUD.
The AUD/USD has now confirmed resistance at 1.0375 and I expect to see a test of 1.0200 in the next few sessions.
Cable: lack of buyers is the main problem
Sounds pretty obvious I know, but the market wants to sell and no-one wants to buy and therefore the dips are quite severe and are generally failing to bounce at all. The BOE minutes was the latest event risk and as always in bear trends, the news was bearish.
Apologies for the intermittent service problems but hopefully we will have the new site and server in place very soon and that should solve lots of issues (as well as creating new ones :) ).
Have a great evening and I'll catch you tomorrow.
AUD/USD: No confirmation that stops are sitting above 1.0375
I presume that there are stops above technical resistance and recent highs at 1.0375 but I have no confirmation of such. One of the local Australian banks who normally has a good handle on what the order boards look like tells me that orders/flows are pretty light apart from AUD/NZD, where some chunky amounts have changed hands.
Hedge funds seen selling USD/JPY in recent trade
Early players in Switzerland have been seen selling the USD/JPY in the past 60 minutes.
EUR/JPY technicals: Again pulls back from upper end of pennant formation
The cross got to a high earlier around 125.90 and I have the upper end of the consolidative pennant formation coming in around 126.10/20. Of course this formation should eventually break higher but we could see another pullback to the lower end near 122.00 first.
NZD the main mover for 2nd successive day
This time it was the RBNZ chief Wheeler who got the Kiwi tumbling. He said that he will intervene when necessary and use the official cash rate as a weapon.
AUD/NZD has roared up to 1.2320 but as I said yesterday (chart in members), there could be an excellent bearish entry level at 1.2390 so that's worth watching.
Big banks analysis of cable becoming increasingly bearish
After reading 3 separate reports this morning from some of the biggest banks in the market, I'm surprised that the cable still has a 1 in front of it. :) Technical, fundamental and market research all seem to be pointing to a much lower rate for this year, with levels below 1.40 now being regularly forecast.
What we also need to remember is that bank analysts are a bit like ratings agencies, they like to be doing and saying something similar to everyone else. You won't find many of these guys making wild predictions and you also won't be finding any of them with a trading limit! In other words, read and forget imho.
EUR still flying on the crosses
Asia has always been eager to buy the EUR, since the EUR/JPY exploded higher a few months back, and the strong ZEW and Spanish debt auction are giving the bulls some reasons to buy again. The EUR/USD pivot at 1.3350 should now provide support and the 'logic' is that one can now buy in preparation for the next bull leg in the crosses.
As I said yesterday, I'd rather be long EUR/USD near present levels but it would be without any huge conviction, more in hope really.
Short-term technicals updated
The potential USD/JPY H&S and the EUR/JPY pennant are still relevant. Please view the charts in the members section.
EUR/GBP: Flow guy says sell at .8660/70
His info has been pretty excellent recently so definitely worth watching this level. This guy has an inside seat in the Prime Brokerage world and sees a lot of the big order flows. He says that we should watch closely what happens around .8665; if it stalls there then there is a good chance that a decent sized sell order is capping the market and we can try a short trade with a tight 20 pip stop. That's my kind of trade idea, cheap and cheerful!
The reason he says to wait and see what happens is because often times the order isn't actually live and has to be confirmed when the market reaches the level in question.
EUR/USD: Most of the big banks seem to be bearish
Of course it depends on which analyst you listen to with banks often giving out two conflicting views, but its the market analysts I tend to listen to. These usually study flows and positioning amongst their clients and apart from Deutsche, who still seem to be overall bullish (and are after all the biggest), the others seem to be generally bearish on EUR/USD.
In my experience, if its 8 against 1, the 1 tends to be right more often than not! I can't explain why but it does seem to work out that way.
The German ZEW survey is out this morning in Frankfurt and that might get the EUR finally moving away from the 1.3350 pivot.
NZD rebounds after Fonterra disputes China milk rumours
Fonterra, the world's biggest exporter of dairy products, denied market rumours that some of its milk products have been banned by Chinese authorities. The NZD has rebounded after this statement.