Overall signals are still mixed in my view; the metals look bullish but are rangebound, USD/JPY feels solidly well bid, cable feels like it should see a test of 1.45 and both EUR/USD and AUD/USD are still in medium-term bullish mode but looking tired (the technicians will call it ‘working through over-bought conditions’).

I am going to have another go at picking a turn in USD/CHF. I could go into a number of technical and fundamental reasons for this trade, but if I’m really honest with myself, I can probably look harder and find just as many reasons to be bearish. No, this is more of a feel trade, where I think the market overshot at various times and will eventually move back towards long-term neutral levels closer to 1.20. As we well know, opinions are irrelevant and the only thing that really matters is timing, but at some stage we will get ‘lucky’.

I’m trying to trade the upswings in cable and any 50 pip dips are buying opportunities whilst this bearish USD momentum holds sway. I’m expecting this 1.2410/20 level to provide some short-term resistance and dips towards 1.2360/70 are now buying zones. I feel that we will see levels near 1.28 before too long.

AUD/USD is headed to .73c in my view but this may take some time. Patience required.

EUR/USD has the potential to really hurt some of the big shorts out there but personally I feel a bit nervous about being overly long and I prefer to look elsewhere. Similarly with USD/JPY; it will head towards 100 eventually but the market might already be too short the JPY crosses.

The move back above 1.10 in EUR/USD is pivotal in my view and I expect to see further unwinding of speculative short EUR positions across the board. EUR/USD should now consolidate above 1.0950 and start making fresh highs for 2020.

AUD/USD is showing no signs of making any significant dips and it keeps grinding higher in the face of ostensibly negative headlines out of China. I still think we will see .73/.74 on this run.

USD/JPY is a bit trickier with significant short positioning still in play but the big institutional Japanese investors are very long of US assets and will need to start bailing out of these at some stage. Timing will be the key in this pair.

The pair with the biggest potential is cable in my opinion. The GBP is being pushed lower on the crosses with more Brexit-related negativity but once this is priced back into the market., then I feel that cable could start a nose-bleed short-covering rally. I’m looking to build an aggressive position and am hoping to get lucky on the timing (as no one likes sitting for weeks on a big position in sideways markets!). Short-term sentiment is still fragile so I’m thinking we may see levels back around 1.2100 first before the rocket gets launched Call me mad but I see a 20 big figure rally in cables’ future.

I’m still in total disagreement with the majority of analysts out there who have been expecting a strong USD rally. Any structural liquidity issues, especially in emerging markets, which might be USD bullish will be more than outweighed by the fact that the collapse in global trade has led to a huge drop in demand for USD. Add in all sorts of uncertainties surrounding US Treasuries and I could not feel at all comfortable in holding USD for any length of time.

So what to trade?

USD/JPY: For now, be short and stay short for a test of 100.

AUD/USD: Any dips driven by AUD/JPY selling will be short-lived imho and I’m in dip-buying mode. The levels I’m watching are .6325/50 to begin with then .6260-80. Once the USD really turns, I’m expecting a 15% move higher in the AUD/USD.

Cable: Similar to AUD/USD, any dips will be driven by GBP/JPY selling and I feel that levels around 1.2250 will provide good value entry levels. That said, with cable we always need to be particularly vigilant as 300 pip over-shoots are almost the order of the day! I’m not leaving any orders, preferring to trade it on a day-by-day basis.

EUR/USD: The EUR looks pretty ordinary on most of the major crosses so I’m leaving it alone for now. Speculative positioning in some of the EUR pairs is getting towards ‘painful’ levels so no doubt we will get a very nasty stop-loss driven rally one of these days.

But times have changed and I don’t think you can expect markets to react in the same way now that they did post GFC bail-out.

For me the most important factor is that we will go from globalisation to localisation almost overnight. I have no idea how long this phenomenon will last for, but I do know that if global trade ties up, the demand for the greenback will follow suit.

Then we need to figure out what to trade? I can’t buy GBP with any confidence (especially after an 800 pip rally!) so I will be looking for buying opportunities in EUR/USD, AUD/USD and Gold to a lesser degree.

Wishing you all the best of luck, stay safe, and do the right thing always.

Technically speaking, the daily chart has now formed a very strong base near $1350-$1375 and looks to be preparing itself for a powerful bull rally. Any dips should now be seen as buying opportunities.

Intermediate resistance around $1560 will be defended but I believe this will only be a temporary slowdown. The price is severely undervalued in my biased opinion and as tensions in the Gulf continue to ratchet up, I’m expecting some impulsive moves higher towards $1800.

On the currency side I am expecting to see EUR/USD start a strong rally which should see us testing 1.20 in Q1 2020. I have started with a small long position already but I feel the timing might be a fraction early on this one so I’m trading cautiously and waiting for the ‘unexplained momentum’ which is usually the harbinger of something much bigger.

CONCLUSION: The market is starting to get comfortable with the trends which started earlier this month. Short-term positioning is getting over-stretched suggesting that we may see a short-term rebound in the USD. Trade-of-the-moment: Buy dips in AUD/CHF towards .7425.

There are two ways of seeing this of course but I am still of the view that the USD is going to have a very rough year and that the EUR/USD will find a higher plane to range trade on.

I’m happy to buy any 100-150 pip dips back onto the 1.21 handle, looking for a move towards 1.2550 by the end of February.

In shorter term, 1.2200-1.2325 should cover most eventualities.

The early-year trend of a lower USD looks like it might still have some legs and I am not looking for a reversal just yet. Cable remains on track for a test of 1.45 and EUR/USD is starting to look comfortable above 1.20. USD/JPY still looks like a medium-term range play (107-114) so I am trying not to get overly bearish as we near the lower end.

USD/CHF is still the most likely pair to give the USD bulls some joy as I feel the CHF has more scope for losses on the crosses, especially against the GBP, AUD and NZD. I’m not jumping in just yet but and will certainly sharpen my pencil on any impulsive sell-offs.

1. Open a fresh workspace on FXWW Connect and select the ‘desktop’ option;

2. Right-click on the screen and select ‘Reuters Full Quote’;

3. Use the following RIC, ‘DE10YT=RR‘;

4. Right-click once again on the empty part of the screen and select ‘Chart’;

5. Insert the same RIC in the instrument panel;

6. Move and re-size either panel by left-clicking on the top bar and moving, or left-clicking on the bottom right-hand corner and re-sizing;

7. For more details on which RIC codes to use for other markets like US Treasuries, UK Gilts, Australian Bonds etc, please consult the PDF file  for FXWW Connect Help.

The big levels to watch topside would seem to be around 1.1550, as a break above that will have many re-assessing their medium-term strategies. On a shorter-term scale, I’d expect to see plenty of stops above 1.1460 based on what I’m reading.

I’m also hearing reports out of New York (in the FXWW chatroom) that the market read too much into the FOMC minutes and that we can expect a more hawkish Yellen at the Humphrey Hawkins testimony.

Looks like the current phase has all the hallmarks of bearish consolidation. Selling rallies still the preferred play here.

I’m sticking with my contrarian long AUD/USD position but with the AUD struggling against the GBP and NZD for now, I may have to remain very patient.

Some of the EUR crosses like EUR/JPY and EUR/AUD still look to have significant downside potential and that might be a good way of playing the bearish EUR card, in the shortish term at least.

The longer term term for the EUR is less clear. Whilst any shock of a Greek EZ exit would be immediately EUR bearish, the longer term implications would be quite bullish. That is presuming that there is no contagion into Spain, Italy etc. Any sign of that and the EUR will be totally friendless.

Overnight reports suggest that there is decent sized sell interest near 1.1500 and with a recent spike high at 1.1530 just above there, we know where to put our stop!

On the other hand, if you’re bullish EUR/USD, there will be plenty of trailing stops now above 1.1530 and a break above there should see a momentum spike.

Yesterday’s lows near 1.1150 are the obvious support levels and any rallies towards 1.1400 will attract trend followers. Trading near the edges of a range like this makes sense to me.

The anti-austerity, left-leaning Syriza party will win the Greek election but may fall just short of the absolute majority needed.

Next technical support of note in the EUR/USD is at 1.1050.

I’d now be using 1.1500/30 as my topside resistance area and selling rallies towards there looks like a sensible move. It’s more difficult to pick any downside stopping points but many longer-term technicals have been calling for levels around 1.1200 so that might be the first area which attracts profit takers.

What does this mean for EUR/USD? The break below 1.1750 failed to generate fresh momentum so we might see some short-term short-covering kick in, especially if cable takes on a bid tone for a few sessions. But, I’d be looking to sell into that rally in EUR/USD, perhaps around 1.1875ish?