The Yen was again at the forefront of market moves, driven higher this time by comments from the Japanese FinMin. There were various interpretations of what he said but whatever the exact wording was, Yen shorts covered fairly aggressively as they are worried that the upcoming G20 might censure Japan for its aggressive stance.
Chinese New Year starts today and the majority of Asian markets will be closed, with the exception of Australia, which should ensure a very quiet session. Japan is back on Tuesday, Singapore on Wednesday, HK on Thursday, whilst China will be closed for the entire week.
EUR/JPY is in retracement mode with possibilities for a move to 121.00 (see chart). The next layer of support is near 122.30/50 whilst resistance levels should be firm near Friday’s highs at 125.50/60. I’d play the edges of this range with a bearish bias.
EUR/USD is similarly in retracement mode and is stalling near a 50% retracement level at 1.3350 (see chart). We could see a deeper dip towards strong support at 1.3270, especially if EUR/JPY continues to fall, and this should be an excellent opportunity for bulls
to re-join the up-trend.
USD/JPY is still on a bullish trend but I like the short side more in the short-term, with overbought technical and the G20 all set to weigh on this pair. I’d look to sell near 93.50 with a stop clearly above the recent 94.20 highs. It’s best not to start chasing a pair lower when the overall trend is bullish, and I prefer to wait and sell rallies.
AUD/USD is still stuck in medium-term range trading mode and it can be very hard to shake a market out of this. Barriers at 1.0250 are being protected and this should ensure a short-term base although I still feel that we will get a test of 1.0150 in coming weeks (see chart). Look for 1.0460/70 to provide a solid resistance level, as this is where hedge funds were selling in recent weeks.
EUR/CHF has again tested important technical support at 1.2260 and we can expect to see plenty of stops below there. Cable rebounded strongly to 1.5850 as more EUR/GBP longs were unwound but I’m looking for some cheap bullish entry levels on the cross. USD/CAD surged back above 1.0000 and the path of least resistance for this pair would seem to be higher, based on prime broker flow reports at least.
Good luck today.