EUR edges slowly higher on pre-weekend short-covering
It looks as if the Asian market was overly short of the EUR and we've seen mild short-covering ahead of a 4-day weekend in many major financial centres.
The Cypriot banks will open very shortly, for the first time in about 2 weeks, and the market is watching events closely. If the speculative European market is also short of EUR, we could see an even bigger short-covering rally if the headlines stay benign.
Chinese equity markets now almost 3.5% lower
Moves by the Chinese banking regulator to tighten controls on certain wealth-management products are driving the Chinese share market lower. This is probably having more impact on AUD/JPY than the lack of any concrete proposals from Kuroda-san.
AUD/JPY leading Yen pairs lower
With a long weekend looming, I guess it's no surprise to see AUD/JPY lead the risk-off charge. We are back below 98.00 and the big bear prize will be previous highs at 97.25/50. A weekly close below there would change the nature of the game for this pair.
AUD/USD is trading near short-term support at 1.0420 and a clean break below here targets 1.0360. USD/JPY has stalled near 94.00 but is still targeting 93.50 I believe.
Yen slightly higher after Kuroda speech
USD/JPY shorts are looking a bit safer now that the Kuroda statement is out of the way. I won't waste my time trying to decipher every last word and intonation, I'll let the market do that for me. The obvious target now is at 93.50 but momentum is lacking at the moment so we may have to wait until Europe comes in before that happens.
Kuroda appearing before Japanese parliament for second appearance
We may see a lift in volatility this afternoon when these headlines hit the newswires.
USD/JPY: Still capped below 94.90
That's been the high twice already this week so bears have the better cards in the short-term whilst this level holds. On the other side of the coin, there will be plenty of stops now above 95.00. The downside target is 93.50.
AUD/USD: Intraday moves depend on what's happening in crosses
- Initial short-term support at 1.0420, getting stronger near 1.0360/80.
- Resistance clear at 1.0500 barrier level.
- Asian real-money funds selling EUR/AUD.
- EUR/AUD technical target at 1.2160.
- Risk sentiment weighing on AUD/USD and AUD/JPY (still in well-established 97.25/100 range).
If risk sentiment turns sour in Asia then we could see levels back below 1.0400. But, EUR/AUD is the main play so I prefer to buy any dips in AUD/USD to 1.0360 looking for 1.0500 again.
EUR/USD: Don't try to catch the falling knife
- Obvious target is at 1.2665/80 technical support but bulls will need a premium entry level given current market sentiment.
- Intraday rallies should now be capped below 1.2820/50 in my view.
- EUR/GBP broke technical support at .8445 and selling rallies still makes most sense there.
- EUR/JPY stalled at 120.00 as profit takers emerged again but the rallies are getting weaker.
- Heavy EUR/AUD selling has been noted from Asian real-money funds.
- Cable and AUD/USD look a bit toppy near 1.5250 and 1.0500 respectively, putting even more pressure on EUR/USD.
- Cypriot banks open later tonight with strict rules already in place regarding withdrawals.
EUR/USD: There are some buyers around
One of the big German banks is reporting decent buying interest in EUR/USD around 1.2800. There is no such thing as a one-way bet in the FX market!
EUR/USD: Not much strong technical support until 1.2665/80
There is a daily low from early November at 1.2665 and the 61.8% retracement of 1.2040/1.3710 comes in near same level.
Bulls out there will be sure to defend this level with plenty of vigour.
EUR/JPY trying to establish short-term resistance
The levels in USD/JPY are much clearer, with prices having stalled near 94.90 twice this week already. EUR/JPY levels aren't quite so clear, with hourly charts trying to create some type of resistance band below 122.00.
I'm still looking to 122.50 in the cross as my topside pivot.
EUR/USD starting to look heavier
We are trading close tore ent trend lows and still looking heavy. This is more of a USD move at moment with the Greenback modestly higher across the board. It's probably the safest play in he FXmarket at the moment, to be long dollars against a portfolio.
Saving my energy and bullets for better trading conditions
Asia can be painfully slow at times so best to wait it out; I'm sure there is more vol just around the corner.
Cable: Consolidation below 1.5250, good sign for the bears
As the flow guy never ceased to impress upon us, there were a lot of clever sellers lined up between 1.5225/50. Now that the market is consolidating below previous weekly lows (now resistance) at 1.5250, the outlook is turning at least technically bearish.
Interbank positioning reports suggest that the market is still quite short of GBP, so this is one factor which suggests that further losses might be limited.
Sounds like range-trading to me and as I always liked 300 pip trading ranges in cable, 1.4950/1.5250 sounds like a reasonable bet.
EUR/JPY: Remaining cautiously bearish
The hourly chart looks bearish and is trying to consolidate below 121.70 but the daily chart is trying to form a consolidative wedge with support now near 120.30. I'd play these edges today and I'm maintaining my bearish bias. If 121.80 breaks then we could see more short-covering so keep stops tight above there on the session. The top of the wedge is near 125.00 so rallies towards there are certainly possible.