Ivan Delgado
Independent Analyst
After some wild panic yesterday, particularly in EUR/JPY, the market has steadied and the heavy month-end flows have started to ease. Banks report that an almost perfect storm of EUR sales caused the panic, which then snowballed into trailing stops upon more trailing stops.
It’s fairly quiet again on the economic calendar in Asia, with NZ trade data and Japanese retail sales to provide some interest.
EUR/JPY looks to be in retracement mode with a target at the 38.2% Fibo level near 117.20 (see chart). Resistance levels start at yesterday’s highs near 121.30 and get stronger near previous support at 122.30.
USD/JPY looks like it may have posted an interim top now above 94.50 and the danger is for a retracement back towards 88.00 (see chart) in coming weeks. The overall trend remains bullish so dips should still be seen as buying opportunities.
The break in EUR/USD below Fibo support at 1.3060 (see chart)hasn’t really been confirmed so I’m cautious in declaring that support has broken. The shorter-term MAs have turned bearish but overall I think we need a bit more information here. Sovereign names were noted buyers near 1.3020 overnight lows.
EUR/CHF held the trendline support level near 1.2125 (see chart) but the recent up-trend has totally lost momentum. Resistance levels begin at previous support near 1.2260 and I would play the edges of this range for now.
AUD/USD traded down to 1.0200 overnight, where barrier protection and Sovereign buying interest was noted. Hedge funds and Macro Funds were the main sellers. Any further losses are likely to be slow with more optionality and asset manager support seen at 1.0150 as well.
Cable failed above 1.5200 as EUR/GBP finally hit a pocket of support near .8575. More optionality is reported in the cable at 1.5050 and this level may well prove magnetic in coming sessions.
Good luck today.
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