G10 FX SPOT TRADER VIEWS POSITIONING => We added to our EURUSD short position and we entered a new small short in USDJPY.
Short EURUSD => We added overnight on the spikes at 1.2720 and 1.2750. We think the pair will stay rangy for the time being with support at 1.2670/80 then 1.2650. S/L at 1.2800 (above 1.2791 last week’s high).
Short USDJPY => We added a small short at 107.35 with first support at 106.76 (overnight lows). We are also positioned in X-JPY via a short NZDJPY.
Short NZDUSD =>Levels to watch: support at 0.7795 (week lows), and on the topside resistance at 0.7920/30.
Flat AUDUSD => Levels to watch: support at 0.8720/30 then big levels are 0.8652 (week lows) then 0.8643 (YTD lows). First resistance at 0.8820/30.
Flat EURGBP => Levels to watch: first support at 0.7853 (week lows) and 0.7950 the first clear resistance above.
BNP: Don’t give up on USD longs
US bond markets return on Tuesday with front-end yields not far from the mid-August lows. As the recent FOMC minutes highlighted, a plausible explanation for fact the that the market’s view is more pessimistic than the Fed’s, is that market rates are pricing in a high probability that the Fed may need to unwind its initial tightening campaign. The risks to US rates are skewed to the upside as long as data holds up. We view that just like earlier this year, when markets remained unconvinced of ECB easing, USD longs will need to be patient. We remain short EURUSD and long USDJPY in our recommendations portfolio.
Citi: EUR from Trading
EURUSD finally broke out to the topside last night on weak equities and lower yields, taking out a number of stops from 1.2700 to 70. We failed to make a new high in this move, however, and it now looks more like a blowout double top on NY holiday trading. The EUR is now facing even more political headwinds after the Italian Five Star Movement, lead by comedian Beppe Grillo, launched a petition to withdraw Italy from the Eurozone. The price action and the political headwinds are not good signs for continued currency strength.I believe positioning is a lot cleaner now after last nights move and if we can break 1.2700 today, we should resume our downtrend. Short term supports come in at 1.2665 and 1.2650 in the short term and resistance at 1.2730. Various CPI figures and the ZEW survey will all be important for price action.
Citi: Short USDJPY => We added a small short at 107.35 with first support at 106.76 (overnight lows). We are also positioned in X-JPY via a short NZDJPY.