From the FXWW Chatroom – EURUSD: Euro-cross buying across the board has been the main theme overnight and seems to be supporting EURUSD. We prefer not to get involved in longs and will stay patient and enter shorts if the pair gets closer to 1.0950, willing to add at 1.0980, with a stop above the 200-day moving average of 1.1032. Support at 1.0900, 1.0880 and 1.0850; resistance at 1.0950, 1.0980 and 1.1000.
USDJPY: Risk is relatively negative, with renewed commodity price weakness. USDJPY has reacted by trading below the support post-US payrolls. Interest is light and price action seems to be mainly driven by EURUSD, but that should change ahead of the FOMC meeting next week. Look to play USDJPY from the long side; support at 122.50, 122.20 and 121.90. EURJPY: Stay short with a stop against the downtrend going back to the 100-day moving average of 134.50/60.
USDCHF has broken below the support at 0.9950 and is generally looking a little weak. This feels more like a lack of buying interest in the market rather than active selling going through, but nevertheless the support is likely to be tested again. The first support is at 0.9910/20, followed by 0.9876, with resistance at 0.9950 and 1.0000. EURCHF tested the lower end of the range yesterday but remains firmly in it for now. It is unlikely to break out before the SNB meeting tomorrow, and even after that it is hard to see the cross moving anywhere in hurry.
Cable was headed towards 1.4900 yesterday after mixed IP data, but turned around in the afternoon to touch a high of 1.5059. This is all very transactional ahead of the BoE meeting, so we prefer playing the range. Sell the pair above 1.5100, targeting a move back to yesterday’s low. Support at 1.4956, 1.4903 and 1.4897; resistance at 1.5059, 1.5073 and 1.5103. EURGBP has failed to test 0.7300 twice now, so look to enter shorts around these levels ahead of the FOMC meeting. Support at 0.7201, 0.7164 and 0.7113; resistance at 0.7279, 0.7298 and 0.7358.
AUDUSD tested the support yesterday and briefly traded below the 100-day moving average of 0.7193, but there was no follow-through today and the pair has been stuck between 0.7209 and 0.7237. With commodities still looking soft, we prefer playing AUDUSD from the short side, adding into rallies towards 0.7280, with a stop above 0.7400.
NZDUSD has been stuck between 0.6613 and 0.6660 over the past 24 hours and the support at 0.6600/20 has held. We expect range-trading to continue today, ahead of the RBNZ’s rate decision at 9:00pm CET. Anything but a cut of 25bp would be a big surprise. Our New Zealand economist expects a 25bp in the OCR to 2.50%, with a watering down of the bank’s easing bias.
USDCAD extended its rally yesterday, breaking above 1.3535 as crude oil continued to sink to fresh lows. The pair eventually dealt to a high of 1.3623 before slipping back down to 1.3550 when oil bounced off of the low. It moved towards 1.3600 again ahead of BoC Governor Poloz’s speech on unconventional monetary policy and traded 1.3580-1.3600 during the press conference. Poloz remarked that the BoC has additional monetary policy tools at its disposal, notably a lower bound for benchmark rates of -0.5%. He also emphasized that the central bank isn’t in any rush to use these tools and that he sees the Canadian recovery as progressing in an encouraging manner with a lower Canadian dollar and earlier rate cuts still taking effect. There is little point of trying to fight the current USDCAD move and we would stick to playing the pair out of the long if it remains above 1.3430. Support at 1.3530/50; resistance at 1.3625, 1.3680 and 1.3820.
EURNOK: Concerns about crude oil prices and a very thin market sent EURNOK up more than 20 big figures to a high of 9.6060 yesterday. Norwegian CPI is due tomorrow and a good print could send EURNOK down to 9.45. There are not many technical levels left with a rate above 9.5000, but the first resistance is at 9.6060, followed by the September high of 9.6270 and then the December 2014 high of 9.8988. We expect to see volatile price action throughout December as market participation decreases. We prefer selling but are reluctant to do so right now as December has historically been very volatile and there could easily be a flash rally to 9.9000. Support at 9.3500, 9.2680 and 9.2000; resistance at 9.6060, 9.6270 and 9.8988.
EURSEK traded to 9.2210 from 9.2700 yesterday in a market predominately driven by NOKSEK trading to a low of 0.9625. Overall, EURSEK remains rangebound between 9.2000 and 9.3000. Play the range, but with a bias to buy ahead of 9.2000 and a stop at 9.1700. Swedish CPI is due tomorrow. Support at 9.1930, 9.1700 and 9.0570; resistance at 9.3000, 9.3460 and 9.3940.