EUR/USD: Technicals and Sovereigns point higher
The danger with extended periods of range trading is that we go looking for reasons to break out and I guess I'm guilty of doing exactly that. Nevertheless, the 50day/200day technical cross-over mentioned below could be important and the consistent buying by Asian central banks (diversifying out of interventionist USD purchases?) will also have an impact. This allied with the potential short-term basing patterns in EUR/GBP and EUR/AUD leads me to think that we will at least see a test of range highs near 1.3180 in coming sessions. On the other hand, I see no reason for any 'panic buying' and any moves are likely to be orderly and with plenty of pull-back buying opportunities.
EUR/AUD trade update
This interbank trader seems to be getting a bit aggressive in his old age. :) You can follow all trade updates in the members section, look to Latest Trade for this particular gem. :)
Asian market open, Wednesday October 31st: EUR starting to look bullish.
You can click through here and read my opening comments on FX Street.
EUR/USD: 50-day MA clearly above 200-day MA for first time in over a year
It was around this time last year that the 50-day MA last crossed the 200-day MA (bearish cross), and for much of that time the EUR/USD has been in a solid bearish trend. Now that we've had a bullish cross, look for many of the macro macro players to start unwinding long term positions. This could be the signal which drives the EUR/USD out of its range trading mode (forlorn hope) and for now at least the stars are more positively aligned for the bulls.
EUR/GBP trade developing nicely
The potential base at the 38.2% Fibo near .8005 coupled with a possible basing pattern on the short-term charts (see members section) convinced me to go long of this pair yesterday. We are also coming to that time of the month when the Bundesbank usually buys EUR/GBP (up to 1billion) in the open market and I'm hoping this is the case again this month. Deutsche Bank analysts reiterated their call that the cross could trade to .8500 by year's end (a very bullish call from normally conservative analysts) and this has given me a bit more confidence. My initial target is at .8095 and I expect this pair to now stay above .8015.
The only reason to buy JPY is to cut existing positions
The BOJ action of today is certainly not a strong signal to suddenly buy the Yen. On the contrary, its yet more reason to look to sell the Yen but finding the correct entry level is extremely important. As we spoke at length about last week, the entire market was ueber-short JPY (long USD/JPY) and after gorging itself to bursting point above 80.00, the only way was down from there.
Eventually the Yen will fall heavily, but from where and when nobody knows. Japanese corporates are scared and the market has become accustomed to levels near 80JPY and so long as this trend remains in place, the Yen bears are in for some pain.
If you're bullish USD/JPY or AUD/JPY, then patience is a must. I'm convinced that when the tide turns both these pairs will be back above 100 but staying solvent until that happens could be tricky :)
EUR/USD: Sovereign names still buying dips below 1.2900
The amounts are not particularly large but for the last three days there have been reports of Asian Sovereign names buying EUR/USD below 1.2900. If you were to speculate that it might have something to do with the large USD/SGD and USD/HKD buying of the last few weeks, with Central Banks now diversifying out of those USD purchases, then you might well be on to something :)
Could be some good entry levels for bulls post BOJ
USD/JPY has fallen back towards support at 79.50 after the BOJ only slightly outdid it's expected 10 trillion easing. Look for stops below 50 to get triggered but buying deep dips towards 79.00 could be a nice intraday trade opportunity (it was an easing after all).
Levels to watch post-BOJ
- USD/JPY: Sell orders reportedly heavy 80.40/50 and again near 80.85/90; stops reported below 79.50 and 79.40 with bids at 79.25 and heavier near 79.00:
- EUR/JPY: Sell orders still reported above 103.25; technical parameters at 102.50/103.60.
BOJ running late
We normally would have the BOJ decision by now, but remember this is a one-day meeting, not the usual two, so that might explain the delay. USD/JPY has recovered from its earlier sell-off on the 'nuclear alert' headlines and is back near session highs.
Edit: Now hearing that the press have been called in, must mean an announcement soon.
Reports of alert at nuclear plant in US
Risk trades have turned lower on reports of an alert at a nuclear power plant in New Jersey.
Some hedge fund interest to buy USD/JPY
Dealers say that demand for USD/JPY has been very steady over the past 2 hours but that EUR/JPY offers above 103.20 have slowed down momentum. Looks like the market is happy to take a punt on the BOJ over-delivering on its easing measures. I'm happy to stay out of it and hope for some good opportunities if volatility picks up in the afternoon.
EUR/JPY: Trimming open positions ahead of BOJ
We can expect the decision to be announced sometime after 12pm Tokyo time (edit: between 03:10 and 03:50 GMT according to Dr Rosie) but I don't like having open positions heading into major risk events and prefer to exit the trade and re-enter once the dust has settled. Once again, you can follow these trades in the Members section and I soon hope to start tracking some aspiring strategists and you'll be able to follow their calls as well.
Fresh EUR/AUD trade signal
One of our professional trade contacts, an interbank trader here in Asia, has just taken a fresh EUR/AUD position with fairly tight stops which you can follow in the members section.
Asian market open, Tuesday October 30th
You can click through here and read my opening comments on FX Street.
EUR bounces back as sellers lack momentum
The EUR has managed to bounce back across the board, with Sovereign dip-buyers and lack of news causing the bears to run out of momentum. With many US markets closed on Monday due to the hurricane, I'd expect trade to gradually drift to a halt, barring major announcements of course.
The EUR recovery on Friday night was mainly caused by reports that Spain would finally ask for a bail-out this week, but with no confirmatory reports over the weekend, the bears had been trying to build up some steam. The uncertain start to the trading week caused by the weather in the US has put these bearish plans on hold.
AUD/USD: Solid bids at 1.0340
AUD/USD is holding up well despite the lower EUR/USD and cable, and dealers say that decent-sized buying interest at 1.0340 is influencing dealer's bias; low so far 1.0342.