Sell USD rallies intraday
It's Friday in Asia, which 9 times out of 10 means that nothing happens but we also have the unpredictable 1 out of 10 to deal with. Many of the big macro funds will only initiate trades after the NY close so there is always the possibility of some movement after big events like the FOMC. Selling USD is the obvious play and with risk definitely on again, buying the AUD looks obvious as well. Don't get too carried away with bullish AUD/USD imho as the economic news out of China is still rather downbeat but we should at least get a few more sessions of bullish AUD/USD sentiment.
Resistance in AUD/USD is clear at 1.0615 and I'd expect support to be now very firm around 1.0485/1.0500, with clear buy-dips bias for now.
If USD/JPY is your weapon of choice, then 78.20 is the obvious bearish entry level or yesterday's high at 77.85 ahead of there.
EUR/USD should find support near the previous technical resistance level at 1.2935.
Overnight trade updates
I got it basically wrong overnight but still managed to make some tiny profits, which is always a bonus. More in Members section.
EUR/USD staying well supported
I'm cutting my earlier shorts for a tiny profit as this pair seems unable to fall despite SNB selling. I'll stick with my partial Aussie shorts as I've locked profits in there. Good luck to those trading the event, which I'll be fast asleep for.
AUD/USD: Booking partial profits
I'm expecting plenty of range trading pre-FOMC so therefore I'm booking partial profits at 1.0442. Full details are in the Members Club.
Next levels to watch in major pairs
Nice way to start the session, having picked the ding-dong in the AUD/USD. One bank is reporting decent-sized buying interest at 1.0430 and another is reporting heavy stops below 1.0425. Maybe they will both be right.
The EUR is holding up well, trading just below session highs with strong Fibo resistance still intact at 1.2935. EUR/AUD buying has been noted over the last 2 hours. I'll stick with my shorts from earlier as the risk-reward is excellent.
USD/JPY is supported by reported semi-official bids below 77.65 with heavy optionality at 77.50.
Short the screen into the European open
I hadn't planned on running any significant risk today but the levels have presented themselves so I'm short AUD/USD, EUR/USD and I've squared up my cable long position as well. My s/l in the EUR/USD is above 1.2950 and I'll start worrying about the Aussie short if it can establish a foothold above 1.0500. Let's see what the early Europeans have in store for us.
Cable stalling at trendline resistance
There are quite a few important technical resistance levels looming, what with the 61.8% in the EUR/USD and this trendline and prior highs in the cable near 1.6150. Risk-reward would seem to favour shorts near current levels in both pairs.
AUD/USD: Favour selling intraday rallies with tight s/l
Yesterday's technical analysis still applies and risk-reward would seem to favour intraday bears. I favour selling near 1.0480 with tight stops above 1.0510, targeting 1.0425 initially and some 'fresh air' below there.
Trade of the day: Could it possibly be USD/JPY!
Big call given that we normally trade in a 15 pip range but I have a feeling that we could see a sharp move in USD/JPY, and I suspect that it will be down. There is plentiful buying interest between 77.50/65 at the moment so I would certainly not enter the market near current levels at 77.85. I'd rather wait for an intraday rally to 78.20, where corporate and real-money offers are waiting. I will start selling there, with a tightish stop, and see how the market develops from there.
My logic is that the market has been piling into long positions on the JPY crosses in the expectation of a return to risk-on conditions brought on by the Fed's QE3. But the market is slightly unwilling to embrace this risk-on sentiment, as can be seen by the fact that the AUD is not out-performing the other majors. Therefore I'm concluding that the USD may well stay heavy after the FOMC statement but the JPY crosses will fall in a buy-rumour-sell-fact event.
If that happens, than USD/JPY could well fall below 77.50 and start setting off some more big stop-loss sell orders. That's my theory anyway.
EUR/USD: Range trading ahead of FOMC; sell-rally bias intraday
EUR/USD has jumped a long way in a short space of time, 900 pips actually from 1.2040 to 1.2937. I'm yet to be convinced that the market is comfortable being long EUR and that means that the EUR is always susceptible to sharp sell-offs on relatively minor news/statements. We are also nearing important technical resistance at 1.2935 (61.8% retracement of year's high to year's low) and that will make EUR bulls even more cautious.
The market is also unwilling to buy the USD at the moment on the back of more QE, and this is of course very understandable.
What about EUR/JPY then? The market is trying to force a risk-on play at the moment but as can be seen by the AUD, we are not in a full risk-on environment so this EUR/JPY buying could end in tears. It could be a case of buy-the-rumour-sell-the-fact.
Overall then I like the idea of selling intraday rallies with 1.2935 as topside resistance and 1.2820 as initial support. A break outside of this range will necessitate some reassessment.
EUR/GBP: Bids/offers noted
Good two-way interest in the cross heading into the European open, with sell orders close by at .8010/15 and strong bids noted near .7965/70.
All 4 bank reports that I've read today are bullish on this cross in the medium term, with expectations of a monthly high ranging from .8100 to .8230. Usually when all analysts are leaning one way, the market goes the other!
Bundesverfassungsgericht likely to give ESM green light (with strings)
The market is anticipating that the ESM will get the nod of approval out of Karlsruhe but I have a feeling that the news, if and when it hits the newswires, will nonetheless lead to another round of EUR buying. I'm looking to play a 1.2820/1.2940 range through the European session with a mildly bullish bias.
USD/JPY orders
- BOJ agents expected between 77.50/65.
- Option protection ahead of 77.50.
- Large stops below 77.45.
- Sell orders starting at 78.20 from real money and corporate Japan.
EUR/USD pops up on Rajoy comments
Reuters: Rajoy considering asking for help from ECB's bond buying program.
EUR/USD up to 1.2885 from 1.2865.
AUD/USD: Getting boost from iron-ore price rises
Comments overnight from Premier Wen that China has scope for further stimulus have boosted the iron ore price yet again and this has encouraged more AUD/USD short-covering. Where have all last week's bears gone? Initial resistance comes in on the daily chart near 1.0550. High so far 1.0480. Sell orders reported at 1.0505/10.
Click here for full AUD/USD technical analysis.
Interbank and Prime Broker positioning update: Cable set for some profit-taking?
- EUR shorts at lowest levels in 1 year.
- USD shorts increased to near record levels (only 5% of time is market running shorts of this size).
- GBP longs also reaching record levels.
- JPY positioning flipped from long to short in last 2 weeks as market piles into crosses like EUR/JPY and GBP/JPY.