Choppy trade inside of well-defined ranges is probably the best way to describe the overnight trading activity. AUD weakness which started in Asia yesterday morning has persisted, although bearish momentum has not been strong and the moves have been slow. The CHF weakened in early European trade but geo-political worries ensure that the market is uncomfortable selling the safe-haven Swiss Franc and those early losses have been unwound. Yen weakness persists, totally oversold but the trend is dominant, whilst the EUR chopped around on cross flows.
New Zealand jobs data might not have much of an effect with Chinese buying still the dominant factor but the Australian jobs numbers could have a significant impact. No reports of any significant activity in AUD/NZD overnight, but the big macro funds still have substantial selling interest so rallies should be capped.
The USD has a reasonably steady feel to it and in any race to the bottom, steady means bullish! The market is already bullish on the EUR and the NZD whilst it’s bearish on the AUD, GBP and of course the Yen. It’s somewhat unsure on the USD and the CHF but we may get a decision here in coming days and weeks. Personally I think the USD is set for some major gains, particularly against the GBP and the AUD.
The break below 1.0350 in the AUD/USD opens the way for a test of recent range lows near 1.0150 (see chart). Intraday resistance should emerge near that previous support level. I still like the bearish bias here given the reported lop-sided positioning.
EUR/USD put in an interim top at 1.3700 last week but any dips are likely to be limited by solid demand particularly from the real-money community. Tuesday’s lows at 1.3460 provide the obvious support levels. The EUR remains well supported against the GBP, AUD and JPY and deep dips in these pairs will also attract plenty of buyers.
The close back below 127.00 in EUR/JPY will have the bulls a little worried (see chart) but they remain totally in control. Volatility should remain high so look to trade a 124/127 range for now.
Initial support in USD/JPY comes in at previous highs of 93.15 (see chart) and a break below there will likely trigger some trailing stop-loss selling.
In EUR/CHF, the important level to watch is the 61.8% retracement and recent lows near 1.2260 (see chart).
USD/CHF is back in neutral around .9100 and cable is oscillating around previous support at 1.5670, so both these levels could become important pivots.
Good luck today.