USD/JPY: Loss taken on short position, time to look for intraday swings
The patient and alert trader had some very nice chances yesterday to pick up decent intraday swings and with volatility still high, I am better off looking for these kinds of opportunities than trying to pick exact directions. The market is long and bullish but there seems to be enough demand to continue to fuel the up-move. On the other hand, there will be plenty of sharp pull-backs given the overbought state of the market. So, like yesterday, sell any silly intraday spikes looking for a quick 100 pip dip or buy any big dips in line with the dominant bull trend.
I cut my short position last night for a significant 170 pip loss, albeit on a very small core position. No major damage done except to my ego.
Good luck today and TGIF.
NZD/USD: Bouncing off long-term support at .7680
The NZD/USD did trade marginally below prior weekly lows at .7680 but has now bounced after the sharp sell-off in USD/JPY.
Contrarian bulls can consider buying another intraday dip towards .7680 with tight stops, looking for levels near .7825- a nice R/R possibility.
Currency wars -Korea will manage Won to move in line with Yen #FXWWchatroom
The race to the bottom just got even more crowded with Reuters reporting that the Korean vice-finance minister said in parliament that they will manage the KRW to move in line with the weakening Yen.
USD/JPY has been crushed almost 100 pips lower from earlier spike highs at 115.40.
EUR/USD: Options rolling off plus the ECB later today
It will be a busy day for the EUR/USD today ahead of the ECB decision and statement. Most of the big option expiries which we mentioned earlier this week kept the pair stuck within 70/80 pips of the main expiry level at 1.2500. Most of the bigger options have now rolled off, allowing plenty of scope for intraday movements.
The speculative market is short and bearish on the EUR and they are hoping for another dovish ECB statement. The benchmark rate will stay at 0.05% and the deposit rate at -0.2%, but it's the policy statement which the market will be eyeing with keen interest.
A dovish statement might convince some of the big reserve managers to dump on the EUR whereas a more neutral commentary will likely lead to short covering, especially on the crosses.
USD/JPY: Showing no sign of easing whatsoever
The vertical uptrend in USD/JPY is showing no signs of wanting to consolidate and fresh highs are being made with ease. Many good commentators saw this coming (not me I'm afraid :( ) and levels near 118 look feasible before we get totally overstretched.
I continue to chase this market higher with my small short position; my intraday trading has been decent but this has only had the effect of keeping my losses in check, not reducing them :(
For now, I'm looking to cover on any dips towards 113.00 and will try fading any 'silly' intraday spikes but only for a quick 70/80 pips.
AUD/USD: Next stop .8050
Congrats to the AUD/USD bears who have cracked a big technical support level at .8645 and will now look to cement their position of strength with a weekly close below this level. Bearish momentum is very strong on all time frames and the next big support level is not until .8050.
There will be intraday trailing stops now above .8650 but they should remain safe unless we get an unexpected announcement. On a more medium-term perspective, I'd suggest .8050/.8850 type range from now until Christmas.
USD/JPY: Short-term toppy near 113.80
I'm hearing a few snippets from around the market regarding downside stops in USD/JPY and in GBP/JPY in particular. We may see Europe have a go at these later on, as Asia certainly doesn't seem to have any momentum.
I'm still running a small short position in USD/JPY but after some modest day-trading efforts yesterday, I've at least managed to improve it by 40 pips. I'm still 150 pips out of the money but am hopeful of exiting this trade at better levels, hopefully around 112.50. If I can get out there I will take my loss and be grateful it isn't bigger.
More aggressive USD/JPY bears can try shorting at current levels near 113.60 with tight stops above 113.85 looking for 112.80 perhaps?
AUD and NZD sitting on big levels ahead of major risk events
- NZD/USD: Weekly technical support at .7680;
- AUD/USD: Sitting presently near .8675 which is where the Sovereign buyers were last time around, with major technical support at .8645 just below;
- ABS labour force statement at 11:30 Sydney time;
- AUD/NZD: Major resistance at 1.1300;
- RBA rate decision and statement at 2:30 pm Sydney time.
EUR/USD: Likely to stick around 1.2500 until the ECB on Thursday
Thanks to some of our institutional friends yesterday in the FXWW chatroom, we discovered that there are some very large expiries in EUR/USD at 1.2500 over the next few days. This will most likely keep the pair stuck within 50/70 pips either side until the ECB statement on Thursday.
The speculative market is very short of EUR and very bearish, but if the ECB comes out with a dovish statement then we will probably see big Sovereign reserve managers start to sell EUR in size. This is the stand-off we are having at the moment. If the ECB is neutral, then the speccy shorts will start covering aggressively.
So EUR/USD sideways until Thursday and then sharp movements one way or the other.
EUR/USD: Should find support from option expiries #FXWWchatroom
Huge 1.25's rolling off Monday and Tuesday 5 yards plus on Tuesday. You have to think it wont go to far until they roll off
Just posted in the FXWW chatroom
USD/JPY: Still running small short position
My short USD/JPY trade didn't look great on Friday night and it looks even worse now, well over 100 pips out of the money. Luckily I only took a very small position but adding at current levels near 113 is not really an attractive proposition nor is closing the position after what might have been a typical early-Asian market spike in illiquid Monday markets.
I've been wrong on this pair consistently in recent times so I will try and limit the damage on this latest trade and get out of the Yen-bears way.
Big week of central bank meetings
There were plenty of surprises last week between the Fed and the BOJ, sending USD/JPY screaming higher by nearly 5% on the week. This week we will hear from the ECB, BOE and firstly the RBA, I wonder will they cause as much volatility?
The BOE is likely to be the least contentious with no change in policy and no subsequent statement.
The RBA will leave rates unchanged but may drop the forward guidance referring to a period of steady interest rates. This would be seen by the market as AUD positive.
The ECB will also keep monetary policy unchanged but Draghi has shown a tendency to surprise the market with some of his statements and after the events of last week, I would not be surprised if he said something market-moving this week also.
If this all plays out, then being short EUR/GBP would seem like a logical play for the week ahead.
Month-end flows expected to be overall USD negative #FXWWchatroom
Both Citi and Barclays are predicting that overall month-end flows will be moderately USD bearish with the possible exception of USD/JPY, which Barclays sees as neutral.
From the FXWW chatroom on Reuters Messenger.
USD/JPY: Looking to build medium-term shorts into 50% retracement level at 111.65
The market was certainly taken by surprise by the BOJ's additional easing but a closer look at the fine print may suggest that this is not such a big deal (robbing Peter to pay Paul so to speak).
I will try fading the rally into the medium-term technical resistance level at 111.65 (50% 147.50/75.50). This is a very big level and not to be ignored.
EUR/USD: Selling relief rallies still 'safest' play
There is little sign of the USD up-trend to start easing off and we are again approaching some big optionality levels, 110 in USD/JPY and 1.2500 in EUR/USD. The speculative market is undoubtedly short of EUR/USD, with good reason, so the downtrend is likely to continue with occasional stop-loss driven spikes higher.
Interbank sources report sell orders in EUR/USD near 1.2650/60 and in AUD/USD near .8860/75, so if you're a USD bull then these are the levels to watch for.
And of course it's risk-off Friday, so any excessive positions built up during the week will be reduced today ahead of the weekend.
Good luck and TGIF.
AUD/NZD testing strong chart resistance near 1.1300 after RBNZ
The cross has made a big move over the last few hours and selling into resistance levels near current market at 1.1285 does make good risk-reward sense. The market will pore over the RBNZ language but I doubt that the cross has the momentum to take out these levels without a fight.
As volatility increases pre-FOMC, look for buy-dip opportunities in EUR crosses
It's too much of a gamble in my view to trade USD positions around FOMC time so I prefer to trade the crosses. Anytime the USD sees some major volatility, we will tend to see the crosses move hard and fast and some will obviously outpace others. This will give rise to some excellent opportunities, especially if the pairs in question are basically in range-trading mode anyway.
I also tend to trade with a bias against existing market positions during these periods of volatility. People being people, they will get scared when volatility rises.
Presently, according to my information, EUR/USD is the single biggest position in the market (short of course) so buying dips in EUR crosses makes sense purely on a short-term volatility basis. I will look at some of the individual crosses in more depth as the day progresses.