EUR/GBP Technicals: Market pulled up shy of important technical resistance
Anytime a market falls just short of a technical target and then retraces sharply, we need to take note. EUR/GBP did this last night after it failed just shy of a prior high at .8110. I suspect that we may see some deeper pullbacks here and levels towards the bullish trend-line at .7960 certainly look achievable.
EUR/AUD technicals: Favour deeper retracement towards 1.2350
There have been a lot of big players streaming into this pair over the last few weeks, hoping for a massive move higher. That leaves it susceptible to profit-taking and with a possible top now in place above 1.2800, we could see some deeper retracements. The rise from 1.1600 was very steep and the retracement could be similarly so, with the 38.2% target at 1.2360.
EUR/USD: Short-term bearish bias but still in overall range-trading mode
I'm still in overall range-trading mode on EUR/USD but the events of last night have given some of the crosses (EUR/GBP, EUR/AUD techs coming later) a short-term bearish feel. I'm sure that bulls will be very confident about buying near the 61.8% retracement and channel bottom which comes in near 1.2755. In the short-term, with the crosses feeling heavy, I'd expect yesterday's rebound high in London at 1.2960 to provide solid resistance. Therefore, range-trading 1.2750/1.2960 with a short-term bearish bias but a medium term bullish bias is how I read the situation.
AUD/USD outlook: Likely to stay range-bound ahead of tomorrow's jobs data
The market broke below important support at 1.0165 last Friday during thin afternoon trade in NY. The fact that it has been unable to sustain those losses is certainly a slightly bullish factor and the overnight reversal in fortunes for EUR/AUD is another pro-AUD indicator. Nevertheless, overall sentiment remains bearish for the AUD and with further rate cuts to come, selling big rallies remains the trade of choice for many players. I'm expecting the AUD/USD to remain range-bound between 1.0150/1.0280 until the jobs data and short-term moves will be determined by Chinese sentiment and EUR/AUD flows.
EUR/USD: Macro fund sold heavily above 1.2980 causing domino-effect selling
One of the bigger macro funds hit all of the major electronic platforms at once, causing the steep fall in EUR/USD earlier. The amounts were large, but not enormous, suggesting that there was a sort of domino effect into some of the crosses and causing the steep 70 pip fall in EUR/USD.
Funny how sometimes liquidity is unlimited yet at other times a 'normal' market amount can cause big moves. These are certainly unpleasant markets to be trading in.
EUR starting to look tired on the crosses
EUR/GBP has done a sharp about-turn, just as it got in sight of its major target at .8110 and EUR/AUD also looks like it's getting tired after a steep run higher. If EUR/USD is destined to remain range-bound between some big order interest, that means there may be opportunities to buy dips in cable or AUD/USD for the next few sessions?
Bids have already been reported at 1.5950 and 1.0180 respectively, and these are the first levels to watch in these pairs.
Interbank research favours EUR/USD range trading
The big banks are busy sending their morning research pieces out to their big trading clients and of the 3 I've just read, all favour range trading for the EUR/USD:
- Risk sentiment has generally improved although there is a lot of scepticism surrounding any stimulus out of China, more a case of 'heard it before':
- Nothing new out of the EZ, with more delays likely and few decisions expected to be made until after the EU leaders meeting at the end of this month:
- Solid sell orders above 1.3015 through 1.3050:
- Solid buy orders starting at 1.2915 though 1.2880:
Buy dips, sell rallies is the uniform cry.
Cable: initial resistance at 1.6060
That was yesterday's breakdown point and heavy stops were triggered after that break. This level provides the first resistance point. Sovereign buyers are reported near 1.5950 and I prefer the buy-bounce strategy if support holds. EUR/GBP is also nearing resistance levels at .8110 and if cable support points coincide with EUR/GBP resistance, my confidence levels will be all the higher.
Asian currency update: CNY, KRW, SGD, and MYR
- CNY: Fixed at 6.3441; Shanghai Bourse +2%; Speculation increases of an RRR cut this month:
- KRW: Agents suspected below in USD/KRW 1100/05; rate cut expected on Thursday:
- MYR: Agents suspected below 3.0000/3.0200:
- SGD: Waiting for MAS on Friday.
Asian market overview, October 9th
- China's sharemarket rises by 1.5% giving risk-trades a boost:
- Japan returns after long weekend, strong demand for AUD/JPY noted at Tokyo fix:
- RBA's Lowe said soft world growth and local job market prompted rate cut:
- EUR/USD and Cable up 20 pips on session; USD/JPY steady at 78.30; AUD/USD gains 50 pips:
EUR/AUD: Market targeting stop-loss sell orders below 1.2660
Just like the USD/JPY and Cable last night, the AUD has been on a stop-hunting spree today and the next pair to watch is EUR/AUD. There is short-term technical support at 1.2670 but trailing stops are building below 1.2660 and could be the next target.
EUR/USD: Potential ranges getting even tighter
As we know there is very solid technical resistance at 1.3085, which is the neckline for a possible double-top formation. This level also proved to be the high last week. On the downside, large buying interest from reserve and asset managers proved impossible to fill when we last visited near 1.2800 and I'm now hearing that some of this buying interest has moved up and is starting at 1.2915. Looks like we are in for an extended period of ever tightening range-trading.
EUR/GBP: Approaching important technical resistance levels
EUR/GBP has bounced back nicely over the last 8 days and now looks set to test daily highs at .8115. There is more important technical resistance waiting at .8155 and if the bulls can clear that level, then the bearish bias will have been neutralised.
Japanese accounts buying AUD/JPY
Looks like there is some AUD/JPY demand slated for the Tokyo fix and Japanese banks have been actively buying for the last hour or so. There is a 50% retracement level at 80.16 (80.92/79.40) which is currently being tested.
AUD jumps on more short-covering
I suspect that stops in AUD/JPY were targeted above 80.00 but whatever the reason, the interbank dealers had the right idea. Both AUD/USD and AUD/JPY have now taken out overnight highs and there could be more of the same to come.
AUD/USD: Local dealers bullish intraday
The general consensus seems to be that the market is short and susceptible to more squeezes higher. No strong information on where the stops are just yet. Intraday targets range from 1.0225 to 1.0260.
IMF lowers growth forecasts
More from the FT. They don't mention Australia which also got lowered to 3.0% from 3.5%.