EUR/USD technical analysis: Weekly chart has scope for 1.3140
The short term charts are bullish but somewhat overbought on most indicators; the daily chart is in retracement mode but is running into initial resistance near 1.2885 with stronger levels at 1.2935/40; and the weekly chart looks to have scope to test the full 38.2% retracement of the 1.4930/1.2040 decline which comes in near 1.3140.
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EUR/USD: Fresh trade in play
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EUR/AUD trade idea
I'm thinking we might see some volatility in the EUR in early European trade and I favour playing this through the EUR/AUD cross. If the German constitutional court delays its decisions on the ESM, this will be short-term bearish for the EUR. On the other hand, the iron ore price rose by 7% overnight and this could be short-term positive for the AUD.
I'm looking to play this through the 'legs', selling EUR/USD rallies towards 1.2820 and buying AUD/USD dips towards 1.0275.
German constitutional court may delay verdict.
This breaking news could have some short-term bearish effect on the EUR.
The BBC is reporting that the German constitutional court in Karlsruhe may have to delay it's decision on the legality of contributions to the ESM bailout fund due to a challenge from a German Bundestag member.
Recent polls of German legal experts are overwhelmingly of the opinion that the court will approve the bailout albeit with some minor conditions.
EUR/USD orders: Bids nearby, stops below 1.2750
AUD/USD: Bids reported nearby
Interbank reports suggest that there is some decent-sized buying interest near 1.0325.
EUR/USD daytrade: Profits booked on this morning's shorts
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Interbank flows and orders: SNB expected via Dutch PB
- EUR/USD: Picking up plenty of selling interest now above 1.2820 with light bids starting at 1.2770. Plenty of activity today with ACBs, real money and macro funds all active. Expect to see SNB selling EUR in early European trade through Dutch Prime Broker.
- AUD/USD: Bids near 1.0330 and offers above 1.0425 should ensure range trading to start the week.
- Good sized MYR/SGD flows noted.
JPY crosses: Further gains likely overall
With QE3 now expected sooner rather than later, further gains in the Yen crosses would appear to be very likely.
- EUR/JPY has exited a consolidation phase (98.00/99.00) and looks set to test highs near 101.70 in coming sessions. Buying dips is favoured here.
- USD/JPY is likely to trigger those large stops below 77.90 but I fancy buying a bounce off 77.50.
Flows and Orders
- USD/JPY: Usual story with semi-official bids at 78.00, stops below 77.90 and heavy optionality at 77.50.
- AUD/USD: Hedge fund sell orders at 1.0425.
AUD/USD: Looking to sell into 1.0435/40 resistance
Nice strong bounce after the market got heavily oversold but there is strong technical resistance (trendline and Fibo, see chart) looming around 1.0435/40. Friday's data out of China was moderately positive (at least good enough to set off short covering) but the weekend industrial output data was less than stellar. Watch for today's Chinese trade data to introduce more volatility.
I will try selling a failure at technical resistance with a tight stop-loss order. EUR/AUD is consolidating recent gains and still looks strong but with the EUR/USD looking a tad toppy in short-term, any further gains in the cross are more likely to come from the AUD leg imho.
EUR/USD: Initial technical resistance at 1.2825
As you can see from the attached chart, the 61.8% retracement of 1.3280/1.2040 comes in at 1.2825 and this level should attract plenty of profit taking interest. EUR/GBP has made a bullish break above .7965 and both EUR/AUD and EUR/JPY are consolidating recent bullish moves, all of which points to continued support for the EUR. Buying dips is still the preferred play overall but EUR/USD is looking a tad overbought in the shoirt-term so some care is warranted.
EUR/USD orders
- Sell orders solid 1.2650/60 from real money and corporate accounts
- Heavy stops from Hedge Funds above 1.2665
JPY crosses turning bullish
AUD/JPY has broken through the downtrend line and is also looking like a buy-dip proposition.
EUR/JPY had been trading in a 98.00/99.00 trading range for 11 consecutive trading days and the bullish break last night opens up possibilities for a minimum short-term move to 101.70. Care is warranted due to the NFP numbers later tonight but I'm definitely in the buy-dip camp here.
EUR/CHF: Rumours that floor will be raised to 1.2200
With the 1st anniversary of the EUR/CHF floor almost upon us, rumours have started circulating that the SNB will raise the floor to 1.2200. EUR/CHF moved 40 pips higher from 1.2010 to 1.2050 on this unconfirmed chatter.
AUD/USD: Sovereign buyers reported at 1.0170
- Asian central bank seen buying at 1.0170 in moderate size.
- Hedge fund stop-loss sell orders below 1.0160.
- Sell orders starting at 1.0220.
AUD/USD trade update
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