Euro

Short-covering on longer-term EUR short positions, across all financial markets, continues to gather speed and there were some pretty wild moves in the crosses again on Friday night. The EUR strength is being driven by significant flows from players who, one feels, need to buy EUR rather than want to buy it! The ongoing JPY weakness seems to be more of a speculative bubble but one that’s showing no sign of bursting anytime soon.

There is minor Australian economic data today, including un-official inflation data, but nothing that’s likely to sway the RBA tomorrow. They are expected to stay on hold this month as indeed are the ECB and BOE later in the week.

EUR/USD took out a barrier at 1.3700 on Friday night during the usual whip-saw post-NFP trading. The trend remains solidly bullish (see chart) with initial support at 1.3585 and resistance at 1.3710. The overall target for this move is a weekly high at 1.4250.
d

EUR/JPY accelerated again on Friday and the target here is the bottom of a previous consolidation band which comes in near 128.00. A clean break above there would open the way for another 10 big figure move.

USD/JPY is showing no signs of tiredness at the moment but we can still expect significant volatility. If you are planning on buying dips then it may be best to wait for 150/200 pip moves in this environment. Rhetoric from Japanese government officials is likely to ease as officials in the EZ and Asia fight back to talk their currencies down.

EUR/GBP joined in the bull stampede with poor UK economic data putting the blowtorch under the bears. Heavy turnover was driven by plenty of stop-loss buying. The technical target is a 50% retracement level and weekly highs at .8790/.8825 (see chart).
d

Cable is again looking to test recent lows at 1.5675 and the outlook is bearish (see chart). With EUR/GBP on such a bullish move, once EUR/USD hits any sort of resistance then the cable will start to fall heavily.
d

AUD/USD is still in medium-term range trading mode but the short-term bears do seem to be gaining ascendency. I’d expect the pair to remain range-bound ahead of the RBA tomorrow with parameters at 1.0360/1.0450.

Good luck today.