A strong ZEW survey and a decent performance in the Spanish debt auction helped the EUR/USD to close above its recent pivot near 1.3350 and also make decent gains against the struggling pound. Sterling was undermined by more market chatter about a possible ratings downgrade and these rumours are starting to get louder.
I’m expecting another quiet session in Asia with little on the economic calendar to get us excited; Japanese trade data and the Australian wage price index are the main events. There were no reports overnight of any major stop-loss levels so best we prepare ourselves for some 30/50 pip ranges.
USD/JPY has edged slowly lower but the heavy selling from earlier in the week above 94.00 does seem to be putting an interim top in place. Technical traders are still watching a possible H&S developing (see chart). Hedge fund Yen shorts are at quite extreme levels but Prime Brokers report that they have been adding to these already large positions post-G20.
The pennant formation in EUR/JPY is still relevant (see chart) so I expect further range trading inside of a broad 122.50/126.50 range.
EUR/USD has managed to close back above the recent pivot area around 1.3350 and the strong performance in EUR/GBP overnight does give some sense that the bull run in the EUR might be about to recommence. Decent economic data overnight will have helped the cause and the path of least resistance for now would seem to be higher.
EUR/GBP is testing recent highs at .8690 and there is only the .8715 peak beyond there before more daylight returns. EUR/CHF has been somewhat uninspiring with the focus elsewhere whilst EUR/SEK bucked the trend and fell heavily at times in European trade.
AUD/USD will test recent highs and Fibo resistance at 1.0370/75 this morning and there are certain to be trailing stops now above 1.0380 (see chart).
The NZD has recovered all of its losses from yesterday’s rumour driven market and the trend here remains very strong indeed.
Good luck today.
