We saw another round of short-covering on Friday as EUR shorts panicked a bit before the EZ FinMin conference call and meeting, which is on later today in Brussels. Any decisions seem to be extremely hard-fought but the market is expecting a positive outcome in terms of rubber-stamping the next tranche of Greek aid. Nevertheless, such an announcement will likely lead to further EUR short covering whereas another delay will have the EUR bears back into the market in force.
EUR/USD made a sharp move higher on Friday afternoon in thin and illiquid markets. The short-term charts are bullish but overbought (see chart) and as Asia often trades contrary to overnight trends (initially at least) then we might see some consolidation this morning. Nevertheless, much will depend on the EZ headlines that hit the newswires.
The EUR/JPY move has been spectacular with the USD/JPY rally immediately followed by the EUR/USD rally. These trends are usually not to be trifled with but we are entering December trade so if you’ve missed the first part of this move, I wouldn’t go chasing it! Sell orders reported on the day near 107.35 but buying dips is still the obvious play here.
USD/JPY is also trading impressively from a bullish perspective, making solid gains and then consolidating in tight ranges; this is usually the sign of a solid trend. Sell orders are reportedly solid between 83.00/20 and I’m sure there will be plentiful support near prior highs at 81.50. Barring something very unexpected, this range should hold steady for the week. Short term moves are totally at the mercy of intraday flows.
AUD/USD is trading back towards the top of the weekly wedge which we’ve been monitoring for a while (see chart). Prices will need to break back above 1.0635 in order to break this pattern cleanly. Initial resistance lies at former daily highs 1.0480/1.0510 and whilst there should be plenty of selling interest in this window, watch out for large stops above 1.0525. Initial support should be found near prior intraday highs at 1.0420.
Cable is fast approaching important technical resistance at 1.6060 (see chart) and that should prove hard to crack on the day.
Good luck today.