EUR/USD broke below short-term ranges, as traders struggled to find any good reason to be long, and most of the significant overnight flows were reportedly in cross pairs like EUR/AUD and EUR/CAD. We can expect the usual positional adjustment pre-weekend during Asian trade but the going is likely to remain slow. Once again we will look to the economic calendar for some potentially market-moving events.
Medium-term traders are keen to sell EUR/USD rallies in line with the dominant downtrend but a quick look at shorter-term charts (see attached) shows a slightly different picture with a modest uptrend in control. Support should be solid near 1.2250 and again near 1.2215/20. The pair struggled to get above 1.2320 during NY trade so we can expect initial resistance to lie there. I expect the range-trading bias to remain; the trick as always will be in picking the edges.
EUR/USD H4 chart
AUD/USD has had a very quiet week, trading an 80 pip range for most of it, and bulls will not be disheartened by the price-action. True, prices have struggled to gain a foothold above 1.0600 but dips have also been quite limited. Chinese trade data and the RBA policy statement are the main risk events today. EUR/AUD will also need to be closely watched as it sits just above the recent record lows at 1.1605 and further heavy losses might be enough to trigger some RBA intervention. AUD/USD is expected to trade in tight ranges pre risk events. Stop-loss buy orders are again reported above 1.0615.
USD/JPY is doing what it does best, choppy sideways trading inside tight ranges. US yields look like they might be slowly turning a corner and this is inspiring some USD/JPY buyers. Talk of semi-official bids near 78.00 is also helping to encourage the bulls. Corporate offers are still being reported above 78.75. CGPI data is unlikely to have any effect on the market. Initial EUR/JPY support lies at 96.30.
GBP/USD remains capped just below 1.5700 but losses were limited there by further falls in EUR/GBP.
Good luck today and TGIF.