Big levels still holding firm for all major pairs
We've seen some modest recovery in pairs like EUR/AUD overnight but it's been pretty quiet overall. The BOJ statement will be the main event on today's economic calendar and I'm expecting some tight ranges until that happens.
- AUD/USD is still in .92/.93 consolidation;
- EUR/USD support 1.3650/70 is still holding very firm;
- Cable is also in range trading mode between 1.6470/1.6680;
- USD/CAD support at 1.0950 continues to hold but the lack of bounce will be worrying the bulls;
- USD/JPY is also mid-range in my view and the BOJ language will determine whether we see 102 or 104 next.
Good luck today.
Not seeing many 'value' trades heading into London open but EUR/CAD might be worth a look
The most obvious trade would be to buy EUR/CAD with support levels nearby in both EUR/USD (1.3650/60) and USD/CAD (1.0950). That said, we could easily see a test of these levels in early Europe so best to wait maybe until an hourly low forms and then buy? Not really my side, as I'd prefer to be long CAD, but at present levels the risk-reward favours the EUR/CAD dip buyers.
Elsewhere I'm not seeing much but I think we may be in for a few hours of arm-wrestling in EUR/GBP with the bears looking to break back below .8240 and regain the momentum. If the EUR/GBP bulls can hold firm, then we could see a quick dip in the cable to test that important support levels near 1.6470.
EUR/JPY: Looking quite heavy but solid technical support 140.65/85
This pair looks like it might become a directional leader in coming weeks and it's certainly looking a bit soft post-ECB. That said, the BOJ don't look to be finished with their easing bias, so it could be a case of who prints fastest!
The short-term bias is bearish but there is solid technical support just below 141.00 with an intermediate bullish trendline, and both the 55 and 100-dmas.
USD/JPY: Hard to see it breaking out of 101.50/104.50 range
Some of the JPY crosses (particularly EUR/JPY) are starting to look a bit 'toppy' and if the crosses turn lower then USD/JPY will also struggle to maintain any bullish momentum. The big sell orders at 104.20/50 certainly capped last week and I wouldn't be surprised to see a short-term bearish bias emerge.
That said, further BOJ easing will keep the USD/JPY bulls interested and dips will be eagerly bought. Perfect recipe for range trading; it's what the FX market does best.
Cable: Broken record still playing the 1.6470/1.6680 range-trading tune
No change here from last week, range trading still the order of the day. I've got a short-term bearish bias so I'm expecting a downside test first over coming sessions but I may change this bias if EUR/GBP can break and hold below .8240. Cable doesn't like to be corralled for too long so we can expect a big break one way of the other pretty soon.
AUD/USD: Looks like .92/.93 consolidation range but bias still very bullish
Everything about the AUD over the last few weeks suggests to me that it's heading higher and Friday's price action merely re-reinforces my view. The recent .92/.93 consolidation range may continue to hold for another few days but I'd prefer to be buying the base of the range rather than trying to sell at the upper end.
On the day, sell orders were reportedly solid between .9320/30 on Friday whilst dips should be limited to .9230/40.
USD/CAD: Good support near 1.0950 holding firm
If you are of the opinion that the USD was oversold after the NFP then USD/CAD is offering a reasonable risk-reward entry level. A daily low at 1.0950 was tested on Friday and held nicely, so bulls can consider buying near present levels at 1.0970 with stops below 1.0940 targeting 1.1100.
EUR/USD: Important support nearby, expect stops aplenty below 1.3650
There is important technical support near 1.3670 which held nicely on Friday and needs to be respected. I would suggest that a break below 1.3650 would bring the recent up-trend into question. I wouldn't recommend selling breaks as we may just settle into a usual consolidation mode but exiting longs just in case would probably be a good idea.
Quiet start to interbank trading week
The majors are pretty much unchanged compared with Friday's close. EUR/USD is at 1.3695, cable 1.6575, AUD/USD .9290 and USD/JPY 103.25.
There are some interesting levels nearby across all time frames on some of the main pairs and crosses which I will go through shortly.
It's a holiday in China today and with only minor data on the economic calendar, we may be in for a fairly quiet session.
Good luck this week.
EUR/USD: Strong technical support levels nearby
- 100-dma at 1.3688
- Trend-line from 1.2750 also near same level at 1.3685
- 61.8% retracement at 1.3662
- Prior daily lows at 1.3640
If it gets through all of them then it must be headed lower.
Big levels to watch during Asian trade today
- USD/JPY: Most of the market is talking about large sell orders 104.20/50 but the dips are still quite shallow so far at least;
- USD/CAD: It seems there is option protection ahead of 1.1000 and we can expect large stops below there;
- EUR/GBP: Important technical support at .8250;
- AUD/NZD: The 100-dma at 1.0810 is proving quite difficult to crack.
Cable: Sorry to sound like a broken record but we are in range trading mode
Yesterday's price action confirmed to me that we are in a short-term holding pattern between 1.6470/1.6680 and as we are near the middle of this range now, I don't have a strong bias.
However, with important EUR/GBP support not far away at .8250 and with both GBP/CAD and GBP/JPY looking short-term 'toppy' to my eye, I think we are more likely to see the downside tested in cable first.
EUR/USD: Approaching critical support levels
The important support levels in EUR/USD in my opinion are around 1.3650/80. If this band of support breaks then I believe the up-trend from 1.2750 might be in trouble and we at least revert to the usual sideways consolidation. I'd prefer to play any EUR weakness on a medium-term basis through EUR/CAD or EUR/AUD, but each man to his own.
EUR/GBP technical support is still intact at .8250 and EUR/JPY will be worth watching today to see if we get any sizeable selling from the big Japanese accounts.
NFP Friday usually means position reduction
And in Asia that means that the JPY crosses should be busy. The market has again been selling Yen over the last week and we will likely see some of these positions exit ahead of the volatile NFP market conditions.
I will look to sell any intraday rallies in the JPY crosses but I'm still looking to buy any big AUD/USD dips for a more medium-term play.
Good luck today and TGIF.
GBP: Still looks heavy to me on the crosses
- GBP/CAD was the market's bull leader for months on end and it's positioned accordingly! Likely to be heavy stops below 1.8275 and I prefer shorts here;
- GBP/JPY feels overbought to me and I know that's unscientific but so be it;
- EUR/GBP strong technical support at .8250.
I'm staying in 200-pip cable range playing club, 1.6470/1.6670, with a definite bearish bias.
ECB under increasing pressure for more 'accommodative' policy
Overnight we heard from the IMF's Christine Lagarde, calling on the ECB to ease policy further as low inflation in the EZ causes increasing concern. She is not alone, with plenty of other analysts and commentators calling for some sort of increased stimulus.
It seems to me however that the ECB will not act until the signals are exceptionally strong. Despite the reportedly low inflation, retail sales across the region remain reasonably strong which suggests that the consumer isn't overly worried that prices are set to continue falling.
I'm not willing to take any big risks based on what the ECB might or might not do/say, but if we get a sharp sell off in the EUR ahead of the meeting then I might be persuaded to put on a small wager that the ECB will do absolutely nothing.
USD/JPY: Looks really well bid but....
I haven't been trading this pair, although I did take a small long in CAD/JPY near current levels based on the basing formation break. Buying USD/JPY near trend highs does not seem to me like a long-term winning strategy so I'd prefer to leave it alone and hope for some downside clean-out dips.
Support levels will now start around 103.00 and sell orders between 104.20/50 are expected to be very heavy indeed. Perhaps waiting for the edges of this range makes good short-term trading sense.
AUD bullish now against all other majors
The last pair to turn was AUD/NZD but that seems to have happened now and we can safely say that the AUD is in a very strong bullish phase.
That's not to say we won't have pullbacks, of course we will, but all dips are buying opportunities in my opinion.
- AUD/USD: Buy any dips back towards .9135/50;
- EUR/AUD: Sell rallies towards 1.5015/30;
- GBP/AUD: Sell rallies towards 1.8100;
- AUD/NZD: Buy dips to 1.0750;
- AUD/JPY: Buy dips to 94.75;
- AUD/CAD is probably the only one that looks a bit overbought already so best left alone.