The recent rise in the EUR gained some more impetus on Friday when cross pairs like EUR/GBP and EUR/CHF joined EUR/JPY on its bull run. With the ECB now looking unlikely to lower rates, and with the Yen and USD undermined by ‘Abenomics’ and the fiscal cliff respectively, it’s little wonder that the market has decided that the EUR might not be a bad bet.
Today might be fairly quiet in Asia with little of note on the economic calendar and with Japanese financial markets closed for a holiday.
EUR/JPY continues to be the lead pair in the market and we are opening this morning within striking distance of the important psychological level at 120.00. Levels such as this inevitably attract profit-takers but with sentiment such as it is, I don’t think too many traders will be trying to short this pair.
USD/JPY will similarly target the big psychological level at 90.00 and with reduced liquidity due to the Japanese holiday, we may even get near there before the European open. The technical picture remains super bullish (see chart) but obviously is still heavily overbought and prone to sharp retracements. The market will open above the base of the monthly Ichimoku, another bullish sign.
EUR/USD took out all those stops which we were talking about on Friday above 1.3325 and the obvious target now is a high near 1.3485 (see chart). With momentum on the crosses increasingly bullish, I definitely prefer the long side here but an extended 1.32/1.35 consolidation is certainly not out of the question. Buying dips is the preferred strategy here.
EUR/GBP and EUR/CHF are joining in the bull run and I think both are headed for more gains. EUR/GBP has touched my initial target near .8275 (see chart) and looks slightly overbought, but as we saw recently with EUR/JPY, there may not be any pullbacks.
Similarly with EUR/CHF, a breakout from the range of the last 12 months would target a 38.2% Fibo at 1.2650 (1.68/1.00).
The AUD/USD was capped by monster sell orders at 1.0600 and slipped lower on lower commodity prices as well as a falling gold price. Macro funds were noted buyers of EUR/AUD on Friday night.
Good luck today.