EUR/JPY dispatches another technical resistance level
This very strong trend continues to power ahead and weekly trendline resistance near 106.20 has just been breached. Those EUR/USD stops I mentioned earlier above 1.2885 might soon start coming into view if the EUR/JPY buying continues?
EUR/USD: Still some sizeable stops around
I would not be at all surprised to see these stops targeted before the long weekend begins. The first level to watch is 1.2885, with sizeable stops above there. Although if the market doesn't move in the first few hours of European trade then we can probably give up for the week.
Quick overview of Asian FX market
- Fairly quiet in Asia ahead of long weekend in the US:
- Nikkei +1%, Hang Seng +0.6%; Gold $1731/oz:
- HSBC China flash PMI improves 0.9 of a point to 50.4, showing mild expansion in the manufacturing sector:
- EUR/USD targeted and triggered trailing stops above 1.2850 and has been quiet since then:
- EUR/JPY stalled at weekly trendline resistance near 106.20 and retraced:
- AUD popped up 15 pips after the China PMI data but has also retraced:
- Only topic of note was positional adjustment ahead of the US Thanksgiving holiday.
JPY crosses giving up some gains on pre-holiday profit-taking
EUR/JPY is still drifting lower after stalling at the trend-line resistance and AUD/JPY has also fallen back from post-PMI session highs. Turnover is fairly light and dealers say that profit-takers make up the primary part of selling interest in the Yen crosses this morning.
AUD up 15 pips after improved China PMI
The HSBC flash China PMI rose by almost 1 point to 50.4, indicating renewed expansion in the manufacturing sector. The AUD has rallied by 15 pips to be sitting just below 1.0400.
EUR/JPY: Pulls back off weekly trend-line
The weekly trend line which I mentioned earlier ("first main level to watch today is in EUR/JPY around 106.20, which is the weekly trend-line, 138 through 123") seems to have withstood the first challenge and the cross has pulled back from there.
Just like we are seeing EUR shorts bailing out before the long weekend, don't be surprised if JPY shorts also start booking some profits?
Market still overall short of EUR
It's very logical to be short and bearish of the EUR given the situation in Greece and Spain but these shorts can easily get squeezed when markets are thin and liquidity worsens. That's what's happening at the moment and patient bears might get some good entry levels on exhaustive stop-loss spikes.
Trailing stops triggered in EUR/USD
The EUR is higher across the board over the last hour with trailing stops in thin markets getting the blame. Much of North American markets will be closed for a long weekend and this is adding to illiquid conditions.
USD/JPY session outlook: Might pause for breath again near 83.20
USD/JPY traded in a tight 40 pip range between 79.20/60 before the current explosive bull move got underway and it's had one period of consolidation since then, a 40 pip range between 81.00/40. If history repeats itself, which it often does, then we can expect another period of consolidation to occur near 83.00. This would make sense as there is some secondary trendline resistance near 83.20 (85.55 through 84.15) which should slow momentum down. Stochastic indicators are heavily overbought, another signal favouring some periods of consolidation.
The day ahead in the FX market, Thursday November 22nd
- Could be fairly quiet today ahead of the US Thanksgiving holiday:
- Yen weakness continues to accelerate with EUR/JPY 100 pips higher after breaking important technical resistance:
- Economic calendar is again fairly bare for the Asian session with only the HSBC flash PMI for China to generate interest:
- The EUR has recovered all of its losses from yesterday with EUR/JPY buying the main driver:
- The AUD remains stuck in neutral, with reserve manager bids supporting but market happy to sell rallies ahead of an expected rate cut:
- First main level to watch today is in EUR/JPY around 106.20, which is the weekly trend-line, 138 through 123.
USD/JPY: If you like contrarian trade ideas
A friend of mine who's a very technical, very long-term trader thinks this USD/JPY move is basically fuelled by false expectations and that it will start to run out of steam quite soon probably around 83.00ish. He then expects to see fresh new lows below 75.00 before a possible medium-term base can begin to form.
I do love a good contrarian trade but I'm not sure about this particular idea just yet.
Have a great rest-of-day and I'll catch you tomorrow.
EUR/JPY looks to have well and truly broken higher now
This Yen weakness is impossible to staunch it would seem and the latest in a long line of really strong technical levels has been broken; the 61.8% retracement of a 5-wave downmove. I would not try selling EUR/USD unless it gets very overbought as there will be plenty of EUR demand coming from this particular cross.
Cable pops after BOE minutes
Looks like I'm not going to get set at 1.5870 after all as cable turns bullish after the BOE minutes and is now challenging hourly highs near 1.5930.
Merkel sees possible Greek deal
Latest Greek-debt headlines across DJ are giving the EUR a mild lift.
The German PM sees possible deal on debt-buyback and interest rate cut.
EUR/JPY still needs to comprehensively break above technical resistance
There was a marginal break above 104.80 today but this resistance still needs to be comprehensively broken, otherwise the bullish momentum will start to ease. I'd suggest that with USD/JPY still maintaining a strong bid tone, selling EUR/USD when the cross nears 104.80 is a logical play.
Spanish 10-year yields edge lower
The EUR might get a slight bullish bump from the bond markets. I still think the sell-off off the back of the EZ FinMin headlines will be undone before too long.
USD/JPY steadily rising
No point in getting in the way of this bull rally and I'm kicking myself that I didn't have a stop/reverse policy on that silly short position :( There isn't much technical resistance anywhere soon so I guess I'll have to sit this nice move out.