We continue to see a big move out of macro positions with the Yen taking over the mantle as the main funding currency and EUR shorts getting turned into longs. Gold took a hit on Friday and this is another macro-position which the market may soon start to give up and the commodity currencies like the AUD, the CHF and the CAD got sold off aggressively.
Not much of note on the economic calendar today and Australia has a public holiday.
USD/JPY has opened above 91.00 and there seems to be little point in getting in the way of this runaway train. The long term charts (see chart) are singularly bullish and the next target is a 50% retracement level near 93.15. Previous highs near 90.20 offer the first level of support.
EUR/JPY has accelerated even further and is higher by well over 20% in 10 weeks. Once again we have to look to the long-term charts for resistance levels and the obvious place to target is a 38.2% retracement and previous highs near 123.00 (see chart). Whilst the Yen selling has reached extreme levels, the EUR market is still at pretty neutral positioning levels so it could still have a way to go.
EUR/USD should find further advances to be hard work in coming sessions, with Sovereign sellers and option protection ahead of 1.3500. Nevertheless with the trend for the EUR bullish across the board, this is likely to lead to a period of consolidation rather than a ‘top’.
The AUD and CAD were mainly driven by cross flows in EUR/AUD and EUR/CAD respectively. Falling Gold prices affected sentiment in the commodity currencies. The CAD was also weakened by lower than expected CPI data.
Similarly, the CHF and GBP were primarily driven by flows in the EUR crosses and these are trends not to be messed with.
Good luck today.