EUR/USD: 1.3080 feels pivotal all over again
We are back at 1.3080 again, just like we were this time yesterday albeit approaching the level from a different direction. I feel that this level is becoming very important; if the bulls can re-take and hold, then we may see the beginning of the next leg higher whereas if the bears can hold firm then we should see a deeper retracement in coming days towards 1.2915 https://www.tradingview.com/x/4zz0rUtD/.
It's the levels where the big turnover happens which nearly always turn out to be pivotal.
USD/JPY: Retail market sitting quite long
According to data this afternoon from two retail brokers, around 78% of open USD/JPY positions are long. That should mean that rallies meet with plenty of selling interest.
Next technical resistance of note is a daily high at 79.65. I'm sticking with my buy-dip strategy and will look to re-enter near 78.75 I think, depending on how it looks if/when it gets there.
USD/JPY: Profit booked on longs, look to reload on dips
I'm hoping for a dip back to 78.75 during early Europe to reset my long trade. JPY crosses should be well supported on dips so also favor buying EUR/USD and AUD/USD dips. Latter should find support again around 1.0410/20 so stay in range mode with offs reported 1.0500 and above.
Staying quiet in Asia: More trading opportunity post-BOJ
Looks like its going to stay quiet in Asia so I'm taking a few hours off and will return to the coalface after the BOJ, which will hopefully inspire some volatility.
Professional-market positioning data
- USD shorts are at 13 month highs.
- GBP longs getting close to levels not seen in 4 years.
- EUR positioning now back to neutral levels as most shorts have squared up.
- AUD mixed with macro players still long but shorter-term players tending to short.
- Emerging market currencies are relatively flat.
RBA: Implications for Australian economy of strong growth in Asia
Just in case you feel yourself nodding off this morning, here's some inspiring reading from the RBA.
AUD/NZD trading strategy
I got an email overnight from a trader who has sold AUD/NZD at 1.2610 and is looking for some strategy advice. 
The daily chart shows that this pair is in a solid downtrend so being short is an obvious play but this is one pair that tends to move sharply and then range trade so I'm not 100% convinced on this trade. The weekly chart is in a 1.23/1.33 long term consolidation and to sell towards the bottom of this range is certainly tempting fate in my view. Bears can put tightish stops above 1.2675 but realistically the down trend is in play until 1.2750 breaks so stops need to be kept above that level.
In other words, stay short by all means but keep positions relatively small, exit above 1.2675 and re-enter shorts if 1.2740 resistance holds.
AUD/USD: Look to Chinese stock market open for leads
Chinese stocks are coming off two very bad days and this had had quite an adverse effect on the AUD. Dealers will be keeping a close eye on the Shanghai index for some sort of a lead.
There is fairly solid technical support at 1.0395 (which is a prior hourly high and the 50% retracement 1.0165/1.0620) and there are sell orders reportedly building above 1.0500, so playing this 1.04/1.05 range looks like a reasonable strategy.
EUR/USD: Intraday moves depend on EUR/JPY flows
There is slightly more expectation than usual ahead of the BOJ and this should generate plenty of turnover in EUR/JPY. The cross has initial support at 102.40 with a 38.2% Fibo behind there at 102.15; resistance levels are at 103.20 and 103.85. EUR/USD will move according to directional flows in EUR/JPY pre-BOJ.
There was talk overnight of solid demand for EUR/USD below 1.3030 from Sovereign names, including Russia and Middle East Sovereigns, but these players are usually not active during Asian trade.
Range trade between 1.3020/80 seems the most likely outcome.
What's the BOJ going to do, according to big investment bank analysts
After reading analysis from 3 investment banks I would suggest that the BOJ will do nothing. Contrary to reports in the Nikkei, all 3 analysts feel that the BOJ will maintain it's present stance.
- They may stress the slowdown in domestic, regional and global economies.
- A downward revision of growth and inflation forecasts is also quite likely.
- The Asset Purchase Program may possibly be expanded by up to JPY10 trillion and/or the time-frame could be extended.
It feels to me that the market is pricing in the latter, at the very least, so anything less will be a disappointment and would lead to some JPY short-covering.
NZD: Rise in milk prices should support
Fonterra announced earlier that milk powder prices have risen by 4.1% for November. Dairy exports make up a significant percentage of the New Zealand total exports and this will some positive effect on the NZD (which has already bounced significantly against the EUR).
EUR/USD fails to hold below 1.3080
There was a possible double-top on the short-term charts but this continued action back above the neckline would seem to be negating the formation. Perhaps we should give it a bit more time but it seems to me that the bears are trying to force this pair down and are running into very committed buyers. I'm tempted to call the break a 'fail' already.
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Flow updates
- Real money and macro funds are main buyers of EUR/USD and interbank players seen selling.
EUR/USD: Now needs to stay below 1.3080
Big fight at 1.3080 (one investment bank reported EUR 1 billion on the bid) but the bears have finally pushed it through. The pair now needs to stay below the neckline at 1.3080 in order to confirm the double-top technical set-up. Might be tough as more solid bids are reported at regular intervals but lets give it a chance.
EUR/USD support holds amid heavy turnover
There was a heavy push to get EUR/USD down below 1.3080 but the bids must've been very large indeed and the bears were repelled; we are now back at this morning's opening levels. The German ZEW is out a little later and that should shift the market out of its 40 pip holding range.