There has been virtually no reaction at all to the Bernanke statement that all options remain on the table, tapering is not a foregone conclusion, and all policies remain data dependant. I would have expected such a statement at first reading to be more risk-positive and USD-negative (AUD/USD bullish) but this has not eventuated.
It’s unlikely that Asia will trade over aggressively today and with very little on the economic calendar (China house prices, Australian business conditions), we could be in for a total snore-fest. EUR/JPY is still very interesting from a technical perspective with the market trying to form a H&S topping formation (see chart).
We can expect more choppy sideways trade in USD/JPY between 99.00/100.20 (see chart) and a break will depend on what happens in the crosses.
EUR/USD chopped around in a 75 pip range around the time of the Fed testimony and it’s difficult to envisage anything other than range trading for this pair. It will eventually break of course but for now trade the edges of 1.30/1.33.
The GBP was a big mover yesterday, undoing the CPI-inspired losses from the previous day on the back of the MPC minutes. Resistance levels in the cable start at 1.5280/1.5300 (see chart). Support in EUR/GBP should be solid near the previous highs at .8600.
AUD/USD should be contained between important technical levels at .90/.9350 (see chart) over coming sessions. The very short-term outlook is moderately bullish so buy intraday dips to .9170 looking for .9300. The medium term outlook is definitely bearish, so sell a failure at .9325/50 looking for .9050 again.
The AUD crosses continue to provide plenty of interest, with EUR/AUD back at 1.42 after a possible false break above 1.44. I think we are likely to see some consolidation 1.39/1.44 in this cross (see chart).
Good luck today.
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