It was a fairly quiet night overall in the FX market with no major flows reported. The GBP continued its slow slide lower, trading to .8585 against the EUR and 1.5675 against the USD- with little or no bounce forthcoming. The Yen consolidated its recent losses and most of the other majors traded quietly.
The only data of note on today’s economic calendar are the New Zealand trades in early morning and the Australian business and consumer confidence in late morning.
EUR/JPY will again be the lead pair in Asia and there is major technical resistance at 123.10/20 which will be closely watched (see chart). This level is the 38.2% of the big fall from 170 to 94, as well as a weekly high. There is also talk of barrier protection at 123.00.
EUR/USD is also consolidating recent gains and looks likely to range trade between 1.34 and 1.35 for this session at least. A previous hourly high near 1.3400 provides the technical support level (see chart) and optionality as well as Sovereign offers near 1.3500 should provide a cap.
USD/JPY is consolidating above the important psychological level at 90.00 and bears will be keen to reclaim it. But with momentum definitely bullish, buying dips seems the logical trade. Most analysts who were bearish at 78 are now super bullish, so maybe a top is about to develop!
The GBP remained weak, touching .8585 against the EUR and losing ground against all other majors. Sentiment is weak and with no sign of any major buyers, there seems little point in fighting the trend.
The AUD/USD traded quietly above 1.0400 after a few attempts at breaking lower. Interbank reports suggest that asset managers in particular are still keen buyers on dips, so we may simply be in a range-trading phase yet again. I’m still overall bearish but I’m not going to chase it lower.
Good luck today.