Great times for cross traders in the FX market with massive volatility and a choice of trades to pick from. EUR/JPY rallied strongly yesterday, up almost 300 pips from this time yesterday, taking out the important 120.00 psychological level once again.
EUR/CHF has inevitably tracked towards the massive option level at 1.2500 and we should see a big fight taking place there over coming sessions. The EUR was the stand-out performer, with bond flows still the main driver, the GBP, USD and AUD did very little and of course the Yen and CHF were the losers yet again. I think this trend will continue although we may soon see the USD start to move.
EUR/JPY looks like it will close above 120.00, another bullish sign, and the market is now targeting a major 38.2% Fibo near 123.00 (see chart). There is also a weekly high above there at 123.70 and this general area should provide some very meaningful resistance. If the market gets there quickly, then I’ll definitely try a quick short trade.
USD/JPY is playing second fiddle to the cross but of course is still motoring higher. Once 90.00 is definitively breached, the next target will be a 50% retracement level at 93.15 (see chart). No point in getting in the way of this bull train.
EUR/CHF will almost certainly stall ahead of barrier protection at 1.2500, unless something unusual happens to further spook the market. Buying dips is the play here and be ready for plenty of volatility with EUR/USD and USD/CHF generally tracking in the same direction.
EUR/USD stalled ahead of the Sovereign and real money bids at 1.3250/60 and should now find a base near the prior short-term highs at 1.3310. My target for this move is 1.3435/50 and, depending on what happens in the main EUR crosses, we should see plenty of volatility inside this range.
Cable has held steady near 1.6000 with EUR/GBP moving onto a higher plane. There is talk in the market of big buyers around 1.5950 and huge stops below 1.5900. I’m not sure what happens to cable, but the cross looks destined to go higher, with the usual swings and roundabouts of course.
The AUD is also secondary at the moment and we will look to China GDP this afternoon for further clues. AUD/USD is capped for now below 1.0600 but if GDP is strong, we can expect AUD/JPY buying to emerge out of Tokyo and that might be enough to trigger AUD/USD stops above 1.0605.
Good luck today and TGIF.