EUR/USD orders: Bids reported at 1.3070
Despite the fact that a break below 1.3080 should imply a double-top formation, investment banks are saying that bids outnumber offers and there are plenty of buyers near 1.3070. Looks like we should find out real soon as EUR/USD is trading at session lows.
Edit: Good-sized bids seen on interbank trading platforms at 1.3080, low so far 1.3081
USD/JPY: No confirmation re stealth intervention
There was some very heavy chatter overnight that Japanese banks were involved in stealth intervention, buying USD/JPY on behalf of the Japanese central bank. Reports that many of the big Japanese corporates cancelled their sell orders simply reinforced for many the idea that the sharp rise from 77.10 was caused by Sovereign forces. I've heard neither confirmation nor denial today so we'll just have to keep our ears to the ground.
RBA close to cutting rates, but more likely in November: WestPac
Analysis of the latest RBA minutes by WestPac says that the RBA is very close to cutting rates, with the term "scope to adjust policy" being very important, but any cuts are more likely to come in November rather than October.
The market is now pricing in a 50% chance of a rate cut in October.
AUD/USD is trading near the middle of its session range at 1.0465.
In other words, indecision abounds!
Cable: Looks set to test 1.6300
As you know I'm generally long and bullish on cable so I'm not very objective on this pair. There is an important weekly high at 1.6300 which must be respected given that this pair has been in sideways mode for the last 2 years. Nevertheless there will undoubtedly be plenty of stop-loss buy orders through this level so buying a break with a tight trailing stop could be a profitable intraday strategy.
Short-term support is at 1.6140.
EUR/AUD: Looks headed to 1.3000
A quick look at the daily chart shows a very solid recent uptrend which seems destined to test prior highs and trendline resistance near 1.3000. The previous consolidation-range highs near 1.2400 is now the obvious support level.
Buying dips still the obvious strategy here.
AUD/USD: Steady after RBA minutes
My first thoughts are that the minutes are not quite as bearish as many had anticipated. Statements like "the AUD may have been somewhat overvalued but not substantially so" will give the bears some cause for reconsideration.
Yesterday we were trading near 1.0525 and we could easily return to that level later today if the bears, who had anticipated some RBA action to counter the strong AUD, decide to reduce their exposure.
You can read the full minutes here from the last RBA meeting.
USD/JPY: Fresh longs in play
I've just taken a small long USD/JPY position at 78.55 and will see how it develops over the next few hours.
Initial support is at yesterday's highs at 78.46 and if this holds I'll look to add to the position.
EUR/USD: Break below 1.3080 targets 1.2915
Possible double-top on the short-term EUR/USD charts which would be confirmed by a break and hold below 1.3080. The obvious target should it break lower would be 1.2915.
Obviously such a break lower would need USD sentiment to improve dramatically and the recent EUR bullish sentiment on the crosses would also need to weaken.
Wait for the bearish break to be confirmed and then sell any small rallies with a stop-loss order clearly above the neckline.
EUR/JPY: Buying dips preferred strategy
As you can see from the attached chart, 100.50 was the magical level and the market started to pick up bullish momentum thereafter. Buying dips is now the obvious play and the levels where we can consider dipping our toes in the water are 103.00, 102.55 and 102.20.
Bearish Monday's becoming firmly entrenched
Just reading an interesting piece of research from Deutsche Bank which shows that the AUD/USD has rallied from 1.0213 on Friday July 6th to 1.0470 this morning yet in that period, it's fallen by a cumulative 365 pips on Mondays. Additionally the Dow Jones index has fallen on 14 of the last 15 Mondays. Perhaps I'll have to switch my mantra from risk-off Fridays to risk-off Mondays!
USD/JPY: Should see some volatility today
It's not something we say very often, that day-traders should have a look at USD/JPY, but it's shaping up as being the most interesting of the main pairs today. The USD was heavily sold pre-FOMC and fell again immediately after the event, but perhaps the market is now short enough and we could see some aggressive profit taking?
- If USD/Asia starts to rally today then that will drag USD/JPY along with it.
- More rumours of possible intervention overnight and if the FinMin hits the newswires early with the usual verbal intervention than we could see USD/JPY start to rise.
- First line of offers now reported at 79.00
- Very solid technical resistance around 79.25/30 with the 200-day MA and a 61.8% Fibo (https://www.tradingview.com/x/jrCjCSOI/)
- Intraday support should be solid near previous hourly highs at 78.45.
I'm looking to enter with a small long position around 78.55 and see what happens after that.
No sign of Central Bank demand for AUD to dwindle any time soon
The RBA has been quite explicit recently that it will start to use monetary policy to fight the higher AUD. A rate cut next month is a distinct possibility and if Reserve Managers and Central Banks continue to buy the AUD, then the rate cut will become a cast-iron certainty.
As for levels to watch, I think my technical analysis from earlier today for the AUD/USD is still relevant.
EUR/USD: Stops done below 1.3095, next line of bids reported at 1.3070
The squawk boxes are fairly quiet so far this session and flows seem to be quite light still. Those stops below 1.3095 have had a target on their back since this morning and the target has finally been hit. Next level to watch is around 1.3070/80 where the bids are reported to be 'decent'. AUD and GBP haven't really followed the EUR/USD lower so it looks like a pure stop-loss exercise.
Asian market flows and orders update
- Flows during the Asian session were heavily weighted towards Asian currencies with little or no action in the G10 currencies.
- Dips in AUD/USD towards 1.0515 attracted plenty of buying interest but not much was filled so we can expect dips to remain well supported.
- EUR/USD is a mixed bag with stops below 1.3095, bids at 1.3075/80 and more serious bids at 1.3020/30.
- USD/JPY sell orders at 78.65.
EUR/USD: Technical resistance still holding
Europe are getting up and about now so let's see if we can't find a few trades. There is decent technical resistance at 1.3145 in the EUR/USD and as we've stalled there on 2 occasions over the last few sessions, I'm tempted to try picking a top for a 100 pip dip. I got a bit burnt trying to daytrade on Friday so I'll keep my powder dry for the moment. I'm still of view that cable is a 1.6140/1.6300 short-term prospect and AUD/USD should be also a range trading proposition.
Short technical break
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