EUR/USD Technicals: 1.3080 pivotal for next directional move
The weekly chart is in a slow downtrend oscillating either side of the 100-week MA line. The daily chart has now formed a base and looks to have scope to retrace back towards 1.3500. There is a double-top on the short-term charts with a neckline at 1.3080 and this level becomes pivotal for the next directional move.
If we enter a full-on risk-off environment then the EUR is likely to outpace most other currencies, perhaps even the USD, as the market reverses out of its current short positioning. The lack of any catastrophic news re the EZ debt crisis is also fuelling the short-covering.
Range-trading is the most likely outcome here with important parameters at 1.2740/1.3500.
AUD/USD: Bearish but decent support waiting at 1.0100
Fibonacci retracements are obviously much less reliable in non-trending markets and this pair has been forming a sideways wedge pattern on the weekly chart for the last 18 months, basically trading without a trend. Nevertheless, the market still pays attention to these levels and with a low on the daily chart also near the 50% retracement at 1.0100, intraday dips are likely to run into solid support.
I'm still of the view that big global macro hedge funds are trying to build shorts in AUD/USD after the RBA rate cut and bearish statement on China, so the most immediate pressure will remain to the downside.
Have a pleasant weekend and good luck in the lottery
That'll do me for the week, thanks for your company and hopefully we can pick a few more winners next week. I'm taking 2/3rds of my GBP/JPY longs off the table here at 127.00, a 140 pip gain isn't to be sneezed at and if I do that every week I'd be a happy chappy :) I missed an 'easy' short in AUD/USD on Tuesday when it broke below 1.0325 and couldn't rally, but there are always plenty of missed opportunities, and ones that got away.
Have a great weekend and catch you on Monday++
EUR/USD: Still prefer sell-rally bias in short-term
The market has been buying EUR across the board for the entire week, with the single currency making solid gains against the AUD, JPY, USD and GBP since Monday; up 2% this week against the JPY, up 2.5% against the AUD, up 1.5% against the USD and up 1% against the GBP. This rally has happened on 'lack of bad news' rather than any particular good news. I'm not saying the EUR cannot continue to rise (remembering that long-term positioning is still quite short EUR), but that on the brink of a major event risk, the chances are that some of these gains will be given back before the weekend.
From a technical perspective, EUR/USD is stalling ahead of an important 61.8% retracement level at 1.3030 and there is more important resistance at the double-top neckline at 1.3080. EUR/JPY is also running into Fibo resistance at 102.25. [I see EUR/AUD as a special case in that it has fallen so far so fast and has still a lot of scope for retracement].
I think the danger after the NFP is that we see a flurry of EUR profit taking ahead of the weekend. If this doesn't happen and we open next week above 1.3100, then we will all need to sit up straight and take very careful notice of this EUR rally.
AUD holding on to gains heading into European open
Let's see what the early European traders have to do, hopefully a bit more that we saw here in Asia.
Sovereign offers reported in Cable 1.6210/20 but that's all I'm hearing of note on the order front. Here's a quick overview of events so far:
- AUD rallies on short-covering, higher equities and strong bond auctions:
- USD/JPY falls after BOJ decision to keep bond-buying fund unchanged:
- EUR/USD and EUR/JPY capped by 61.8% Fibo retracements at 1.3030 and 102.25 respectively:
- EUR/USD trades 10 pip range for much of session.
EUR/JPY: More likely to go lower in short-term
- Fibo resistance at 102.25 now confirmed:
- BOJ decision out of the way:
- And the market was short JPY ahead of it:
USD/JPY dips after BOJ decision
Obviously with the market already long, there was nowhere to go but down. The BOJ has kept the size of the asset-purchase fund unchanged.
EUR/JPY Fibo resistance at 102.25 (61.8% 103.85/99.60) now looking stronger.
Strong Aussie bond performance giving AUD another boost
This morning's small auction of 3-year bonds had the highest bid/cover ratio in almost 18 months. It does bring us back to the fundamentals behind the AUD rise, namely that investment in Australian assets still looks very attractive when compared to other currencies out there (USD, EUR, JPY etc). I'll still try selling into a 1.0300 rally but I'll keep my stops fairly tight just in case.
AUD: Looks like a Friday short squeeze
Maybe I will get to see my preferred entry levels near 1.0300 after all. Australian shares are up by over 0.5% in early trade and the short-term market looks like its been caught short AUD, as the Aussie is really the only currency moving at present. Overnight highs at 1.0273 now coming into view.
USD/JPY: Retail market 90% long heading into BOJ
I only have data from 1 broker to back up that statement so if anyone else has access to data then please let us know. If this consistent across other brokers, then it will again be a case of buy-the-rumour-sell-the-fact.
USD/JPY: Trying to sneak higher but momentum lacking
The market looks like it's hoping for Deja Vu all over again :) Remember the last BOJ meeting when we spent the entire day around 78.50/60 and then spiked to 79.20 on the BOJ measures? The market is already long according to interbank reports and there are plenty of sell orders now starting at 78.80.
AUD/USD: Prefer to sell 1.0295/1.0325 but may not get the chance
I see no reason at the moment to move away from my bearish AUD stance and with big macro hedge funds seemingly also looking to sell, rallies should meet with plenty of supply. The recent pivot at 1.0325 would be an ideal entry level, as we've been unable to get back above there since the RBA rate cut. Perhaps it's best not to be too greedy and look to sell at the 38.2% retracement (1.0475/1.0180) which is at 1.0295.
NZD/USD: Still looking soft; sell rallies for move to .8000
There was a very cynical stop-loss drive overnight which took out stops below .8175 before immediately jumping 60 pips. This pair still looks soft to me and I like the idea of selling rallies for a move to .8000 in next couple of weeks. A break back above .8300 would have me re-thinking.
EUR/USD: Mild bearish bias at current levels
As I mentioned earlier, there is Fibo resistance at 1.3030 in EUR/USD and at 102.25 in EUR/JPY and this might be enough to encourage profit-taking ahead of tonight's NFP. I still think that EUR/USD is basically trendless so I favour playing a 1.2970/1.3030 range in Asia