AUD/JPY: Look to book some partial profits near 88.20
Don't think these are the markets for heroics so if we can pick up 100 pips then we should be grateful. I bought some AUD/JPY at this time yesterday below 87.00 and added today after the USD/INR reversal near 87.45. I'm looking to book at least some partial profits near short-term Fibo resistance at 88.20 and re-assess from there.
USD/INR opens 3% below yesterday's highs
I've added to my AUD/JPY longs, my logic being that the market sold AUD/JPY very aggressively on the back of the EM panic so surely we should see AUD/JPY go higher now that a reversal has started?
I know I've said it many times before, but many people have gone broke trying to find logic in the FX market!
Mainly range-based trading so far in Asia
- AUD/JPY moved higher in early trade but with little force behind these moves, traders have given up and we are back close to opening levels;
- Australian Capex came in a bit better than expected but the market has pretty much ignored this;
- USD/JPY bids near 97.35/40 are expected to provide support;
- AUD/NZD has breached short-term technical support at 1.1460 but should find more near 1.1420/25;
- EUR/GBP has drifted lower with GBP shorts in Asia also throwing in the towel after Carney's neutral speech;
- Hedge funds have been buying EUR/CHF during Asian trade, a slightly unusual occurrence as they normally wait for better liquidity during European trade.
EUR and GBP staying rangebound
- EUR/USD looks technically toppy in short-term so long as 1.3425/50 resistance is able to hold;
- Bank reports continue to suggest that this pair underpinned by strong structural demand and will break higher once the speculators wilt;
- Cable back at familiar levels after Carney's speech delivered nothing new;
- EUR/GBP (surprise, surprise) still trading around .8600.
I'm still comfortable with long cable and short EUR/GBP position.
Yen outlook: Expecting Yen to weaken when EM crisis recedes
- USD/JPY is still trading in a consolidative wedge pattern suggesting the next impulsive move will be higher;
- Yen crosses have been heavily sold on risk-aversion emanating from EMs;
- Once this alleviates, I'd expect profit-taking to re-surface;
I favour being short the Yen at or near to current levels. USD/JPY should now find support at 97.20/30 and AUD/JPY has very strong technical support at 86.25/40.
AUD outlook: Downtrend solid but decent buying interest emerging
- AUD/USD saw heavy turnover reported yesterday around .8900 with 'good names' reportedly buying in size;
- AUD/JPY technical support at 86.25/40 remains unbroken;
- EUR/AUD breached 1.50 but failed to consolidate;
- AUD/NZD still stalling near Fibo support at 1.1460.
Much will depend on events in the EMs but the AUD market is undoubtedly building large short positions again and I'd expect these to start unwinding again as the election date nears. AUD/USD bears will be looking to test trend lows at .8840 whilst the bulls will be keen to get prices back above .9070. Perhaps a few sessions of range trading is the most likely outcome.
Asian market open
First impressions are that I prefer to be long USD/JPY and to buy dips in the Yen crosses. Good luck today.
AUD/JPY: Taking small long position with stop below 86.10
- Solid technical support at 86.25/40;
- Lot of buyers suddenly appearing in AUD/USD near .8900;
- USD/JPY still in wedge consolidation but topside danger IMHO.
I've taken a small long position here just below 87.00. I got stopped out of my AUD/USD earlier at .8908 but it feels like its the bottom. I might be wrong again, so I'm keeping stops fairly tight by my normal standards.
USD/JPY: Buying dips favoured
- The most obvious trade to my eye is to buy dips in USD/JPY whilst the wedge consolidation pattern still holds;
- I've been stopped out of AUD/USD long position and will now sulk and reassess;
- I'm still long cable and tiny short EUR/GBP ahead of Mr Carney's first 'on-the-record' speech as BOE Governor;
- EUR/JPY looks and feels like a 'buy' to me but patience required;
- Gold and Silver keep marching higher and it seems to me that the moves are highly correlated with what's happening in EMs like the INR.
EUR/JPY: Could be a good risk-reward prospect for dip-buyers
Presently we are seeing some severe risk-aversion amongst the major FX pairs whilst the EMs are getting smashed but once the panic dies down, the market is likely to ask itself whether it really wants to be long JPY or not? I'm guessing that the answer will be No, and with trendline support near 128.75 I think EUR/JPY is worth watching for signs of bottoming. Patience required on this one but definitely worth following closely.
USD/INR in disarray
That's how my friend who covers emerging markets for Reuters is describing the price action. The INR has just gapped another 1% lower in a matter of minutes. USD/INR currently above 68.50 and few sellers in sight; market now waiting for RBI to calm things down.
These moves will continue to weigh on the AUD and NZD as 'risk' currencies get whacked.
USD/INR on march higher again
AUD/USD has posted fresh lows below .8925 with the FX market using it as a proxy trade for the risk-aversion in emerging markets. USD/INR is making fresh highs near 67.40 at present and the USD/IDR is also marching higher towards 11000.
EUR/JPY technicals: Still looks like classic consolidation
The daily chart is trading sideways in a classic consolidative wedge formation, with edges presently at 128.75/132.25 (see chart). Buying dips preferred with tight stops below the up-trendline.
AUD/JPY: Volatile but maybe best left alone whilst cynics at play
There was a nasty spike lower earlier this morning in AUD/JPY to levels near 86.55 before it immediately bounced. This looked like a typical cynical stop-hunt to me and I hope none of you got caught up in it. If that's the way this pair is going to trade, it's probably best left alone.
EUR/USD keeps on grinding higher but be wary of big bullish spike
If you are bullish EUR/USD then you are in a definite minority. The EUR was supposed to have died years ago but obviously these obituaries were a bit premature and here we still are 5 years later, fluctuating between 1.30/1.40. I cannot think of one good reason to trade this pair so I leave it alone.
The path of least resistance is up, with structural flows all favouring the EUR and only speculators to try and keep a lid on it. One of these days we will get a wild 500 pip gap higher when all the bears are culled, and then it will be back to sideways trading again. Buy-big-dips is way to play this pair IMHO, if you must, but there are much better pickings elsewhere.
GBP: Plenty of two-way flows to end the month
- EUR/GBP rose 40 pips yesterday on the back of M&A flow chatter;
- Asian Sovereign Funds reportedly bought GBP/SGD in size;
- Same types also noted buying GBP/USD dips at regular 15 pip intervals;
- End-of-month flows are expected to weigh on cable with USD-buying expected to dominate coming sessions.
Looks like the GBP flows were pretty much netted out and it's little surprise then that cable is largely unchanged from yesterday, down by around 30 pips.
The short-term 'feel' for cable is bearish but I'm sticking with my medium-term bullish view.
USD/JPY outlook: Prefer to buy dips towards 96.60
- Consolidation wedge pattern still in play with base at 96.60 (see chart);
- AUD/JPY support at 86.25/40 should also attract buying interest;
- End-of-month buying expect from Japanese corporates.
Risk-reward would now seem to favour the dip-buyers, keeping stops below 95.80 if possible.
AUD outlook: Possible double-bottom in AUD/USD but AUD/JPY still looking soft
- AUD/USD has the possibility of forming a double-bottom but needs to break above .9070 to confirm (see chart);
- AUD/JPY looks likely to test recent lows at 86.40 with important Fibo support just behind there at 86.25 (see chart);
- AUD/NZD made a bullish break last week and has retraced to its 38.2% level (see chart), which is usually a bullish sign.
The technical signs are starting to look moderately promising for the AUD and I'm favouring the buy-dip strategy in coming sessions.