Euro

The AUD has continued to weaken after the RBA cut rates by 25bps and issued a moderately dovish statement, setting the scene for a further 75bps in rate cuts over the next 9 months. Chinese
markets remain closed this week for national holidays and the Australian trade data is the main event on the economic calendar.

The AUD/USD fell by 50 pips immediately after yesterday’s decision and subsequently triggered stops below technical support at 1.0320. Sovereign bids near 1.0300 helped slow the fall but market sentiment is turning decidedly bearish and the AUD lost significant ground against other majors such as the EUR. The levels to watch intraday are the overnight lows near 1.0250 and yesterday’s breakdown point at 1.0320. Short-term momentum is bearish so selling rallies is the preferred play. The daily chart (see chart) is showing solid support at 1.0175 but a fall below there opens the way for much steeper losses.

d

EUR/AUD has broken above previous technical resistance at 1.2550 (see chart) and looks set for further gains towards 1.2900, so buying dips is preferred here.

d

EUR/USD is in range trading mode and will stay that way whilst negative EZ-debt headlines are missing. EUR crosses are looking quite strong with support nearby in EUR/CHF, EUR/GBP in stop-loss hunting mode, and both EUR/JPY and EUR/AUD turning bullish. I’d expect 1.2825/1.3000 to cover all eventualities for the next few sessions.

GBP has also been choppy for the last few sessions with speculative players starting to build shorts particularly against the USD and EUR but real money accounts and asset managers have been quite active buying dips. More range trading likely in the cable with a modest bearish bias.

USD/JPY is trying to establish a foothold back above 78.00 as bulls get some control back in the absence of any notable corporate selling. With pairs like EUR/JPY starting to show some strength, playing this pair from the long side intraday makes most sense.

Good luck today.