Risk sentiment was at its strongest in early European trade after very strong gains on Chinese equity markets. Strong protection of a barrier in EUR/JPY at 108.00 dampened bullish enthusiasm and economic data on US private sector employment further encouraged risk aversion.
EUR/USD remains in a very solid uptrend on the short-term charts (see chart) but we should remember that the medium term picture still favours range trading. Short-term indicators are universally over-bought but now starting to unwind, so further pullbacks towards 1.3000/30 are certainly possible.
EUR/JPY will probably be the lead pair in Asia again. Those protecting the 108.00 barrier probably had a good night, being able to re-load at lower levels for the next defensive action. With US NFP data tomorrow, we may see some profit-taking ahead of the event but I suspect that 106.50 will provide formidable support on any dips. Initial support on the short-term charts is at 107.20 (see chart).
USD/JPY continues to consolidate its recent up-move between 81.70/82.70 (see chart) and buying dips would still seem to be the preferred strategy.
The AUD should have another busy session with employment data later this morning. The ‘teflon’ currency has been ignoring all bad economic data recently and rallying on rate cuts, so I’m not sure if today’s numbers will have any major effect. The market still seems determined to test sell orders around 1.0510/20 and see if the stops above there are as big as is being reported. Bids were reported overnight near 1.0410/15 and I’d use this as the first support level.
AUD/JPY seems determined to go higher and we will open in Asia near the top of its recent
consolidation range (see chart). Much of course will depend on the Australian jobs data but there could also be large topside stops in this pair as well.
Cable is being totally dominated by option players and there are large bids and orders keeping the market in sideways trading mode.
Good luck today.