Very whippy trading conditions last week meant position traders like myself got chopped around but the intraday volatility will have delighted daytraders. There has been no major change in either fundamental or technical outlooks for the major pairs; the whippy market conditions can be put down to positional adjustment and thinner-than-usual markets due to Northern hemisphere holiday periods.
Most interest this morning will revolve around the AUD and the chatter in the professional market is getting louder that the RBA will start intervening to halt the AUD rise against the EUR in particular. The RBA has been involved in some ‘quiet’ AUD selling over the last week and this intervention may become more public if the AUD continues to rise. A quick look at the longer-term charts (see attached) shows that we are nearing the upper end of a long term consolidative pattern and I’m guessing that the Aussie Central Bank will be eyeing this level closely. Last week’s highs near 1.0580 provide the first level of interest. Today’s a bank holiday in Sydney but there is some minor economic data, and of course the main focus will be on tomorrow’s rate decision.
EUR/USD was all over the place last week but it ended the week on a positive note, which the big Prime Brokers are putting squarely down to positional adjustment. Draghi disappointed everybody it seems and the US NFP data was mixed, so it’s hard to find any clear message in all of that. Technical resistance is strong around 1.2400 (see attached chart) with a 50% Fibo and the 200-day MA just above; watch for large stop-loss buy orders to be positioned now above 1.2410 and again above 1.2435.
EUR/JPY had a very large bounce on Friday night, which the banks are also attributing to heavy short-covering in this market. The pair closed near weekly highs at 97.40 and there will undoubtedly be more stop-loss buy orders above 97.50.
USD/JPY is being dominated by big orders either side of the market; semi-official buyers are holding the pair above 78.00 but real money and corporate offers are solid above 78.75. It will take some large scale moves in the JPY crosses to shift USD/JPY out of its torpor.
Good luck today.