GBP/JPY technicals: Looks more like a wedge than a top
The 2-hour chart seems to be forming a wedge (see members) between 141.25 and 144.00. This is normally a continuation pattern rather than a topping pattern. Many in the market have turned bearish on this pair but the technical outlook is not confirming this at the moment.
USD/JPY: Short-term technicals favour shorts at current levels
Once again you can follow the short-term technicals in the members section or on Twitter (Sean_Lee_forex). I think the current set-up favours shorts with a stop above 89.90 or preferably 90.25, looking for 87.80.
EUR/USD intraday: Slight preference for selling rallies
There is a possible double top on the short-term charts (see members) at 1.3400 and this has its neckline at 1.3255. With EUR/JPY currently experiencing some profit taking ahead of the big BOJ risk event tomorrow, and with EUR/CHF having had its first major reversal on Friday, I'm tending towards a sell-rally strategy intraday in EUR/USD.
Look to sell near 1.3370 with a stop above 1.3410 and a target at 1.3270. Certainly makes sense for the bears from a risk-reward perspective.
USD/CHF: Buy dips for test of 1.00 in coming weeks
This pair could be the big mover in coming weeks if the USD can catch a bid tone. EUR/CHF seems destined for further gains and many are presuming that most of the gains will come via a higher EUR/USD, but what if the EUR/USD stays range-bound between 1.30/1.36 and the cross breaks above 1.30? Then we will have USD/CHF trading above parity again, and this is the scenario I favour.
I'm looking to get more aggressively long on any dip towards .9250.
AUD: Not the most interesting currency to trade at the moment
AUD/NZD might be worth some consideration, perhaps looking for a buying opportunity near 1.2450, but otherwise I'm having difficulty in finding any value trades with the AUD. Against the USD, it looks to be stuck in a holding range between 1.0450/1.0600. Most reports suggest that real money and Sovereign buyers will keep it tracking higher but, sorry, I just can't get bullish at 1.0500! I'll wait until the bulls are exhausted (even if it takes months!) and then look for selling opportunities.
USD/JPY: No point in chasing intraday swings
It's Monday and the market is trying to find it's feet for the week. I don't see any point in chasing early moves but I do think that selling intraday rallies is now way to go for rest of today.
JPY crosses: pre-BOJ profit taking
Recent interbank reports showed that most of the big Yen short positions are in Asia, mainly Japan. No surprise then to see some profit taking ahead of the BOJ.
EUR/JPY: Looking to trade a volatile 118/122 range
We cannot complain about the lack of opportunities in this pair and I suspect that the next 30 hours or so are likely to bring more volatility. The market is long already, so any sharp rallies will attract profit takers whilst expectations of an Abe-BOJ pact are increasing, which should attract dip buyers back into this pair.
I don't fancy taking any positional view here, rather wait for the sharp moves and hope for 150/200 pip swings.
EUR/CHF: Looking to re-load on dips
After selling near 1.2500 I am now looking for dip-buying opportunities to re-instate my long position. Volatility will remain high and I have a feeling that many traders missed the boat on this pair and ended up buying on the 1.24 or even 1.25 handle and their risk tolerance may be tested in coming days. The sharp fall from Friday's 1.2565 highs stopped initially at the 38.2% Fibo level near 1.2385 (see short-term techs in members section). There will be stops placed below there for sure and could lead to a deeper retracement. Patience required and be prepared to trade sharp swings.
Cable: Still very tricky to trade; bearish but at lower end of range
The single main driver in cable is EUR/GBP flows, no doubt about that. Longer term structural short positions are being liquidated and this could take the cross up towards .8500 pretty quickly. With this backdrop, it will be very hard for the cable to rally but a quick look at the medium term charts (in members section) shows that we are at the lower end of the range in a broadly range-bound market. It could be that any further EUR/GBP gains come mainly from a higher EUR rather than a lower GBP?
I'd prefer to be short cable but the risk-reward below 1.5900 is not conducive to a short position imho. I prefer to wait for any rallies back towards 1.6050.
EUR slightly lower in early interbank trade: BOJ big event this week
EUR/USD is slightly lower than its closing level from Friday, currently trading near 1.3310, with the USD getting a modest boost from reported progress in debt-limit extension talks. Cable is starting to attract the attention of traders and it is trading towards the bottom end of its trading channel near 1.5850. A clean break below here could have a major impact on sentiment. EUR/CHF and EUR/JPY will remain highly volatile and the pressure remains bullish in both pairs, despite regular retracements.
The big event this week is the BOJ meeting, and weekend press reports suggest that the new Government is having some success in convincing the BOJ to issue a joint statement on an inflation target. The sticking point would seem to be the time-scale, whether the inflation target of 2% is a medium-term or long-term goal.
EUR staying well bid against the CHF and the JPY
I'm not sure how far EUR/CHF can go whilst we are having this panic move out of stale safe-haven trades. It's always the way in the markets, it takes a few years to build up these positions and then everyone tries to get out of a very narrow door. EUR/JPY has already done a lot of work from below 100 and I wouldn't expect much further 'panic buying' there but who knows with EUR/CHF, it could be 1.35+ before it really stops? If you hear mention of a Dutch Prime Broker on the offer, then that probably means that the SNB is selling some of the squillions it bought at 1.20. It also bought squillions at 1.50+ so the average will be above 1.30.
Have a great weekend and I'll catch you on Monday morning.
Simply too hot to trade in Sydney
We are officially having Sydney's hottest ever day, with the mercury touching 46 degrees Celcius in the city. It's way too hot to do anything, even with the help of hard working air conditioning.
FX market chugging along with EUR/CHF once again the stand-out mover, having touched 1.2565 a little earlier. This pair could go for another 10 big figures whilst all the stale 'safe-haven' positions are being unwound.
AUD drifting lower again in fairly subdued trade
Firstly we saw the NZD fall after a low CPI number, then the CHF fell as EUR/CHF triggered some barriers and now the AUD is drifting lower as the market digests the Chinese economic data.
Cable support is still holding but it does look heavy and EUR/CHF should trade around 1.2500 for the remaining of the session as option players do their thing.
AUD pops up 20 pips on slightly better than expected China GDP
The headline number came in at 7.9%, slightly better than expected.
AUD/USD is back above 1.0550 and cable support at 1.5960 held, and its back at 1.5980.
USD/CHF: Next technical resistance at .9380
There is a daily high at .9380 from early December which might slow down the bullish momentum but after the break above 1.2500 in EUR/CHF, buying any sort of dip in USD/CHF is the obvious play.
EUR/CHF cuts straight through 1.2500
When this pair moves during Asian trade then you know something big is underway. The flight out of 'safe-haven' Swiss bonds is accelerating and the exit door is narrow. Barriers at 1.2500 have been taken out but there are some large expiries at this level so we may see prices hang around until later tonight.