From the FXWW Chatroom: Major Bias Changes: Renewed bearish bias against EUR, CHF, and GBP. Reduced bearish bias against AUD, NZD, CAD. Neutral EM and JPY.
EUR: Draghi’s prepared statement at last week’s press conference implied another deposit rate cut. Since his statement, rates have moved accordingly and you can argue that EUR should start moving independently of other risk assets. If this plays out, prices towards the yearly low (1.0711) are favoured at a minimum, good luck.
GBP: A major bottom may have been formed at 1.4080 and a recovery towards 1.4525 max may be required to flush out short positioning. Shorts should be set between 1.44 – 1.45 and a revisit of 1.4125 – 1.4150 on the downside should find support. Consolidation is required before a new low is made.
JPY: A failure to breach neckline trend support at 116.50 has led to a correction towards major resistance at 118.80 – 119.20. The market appears to be short risk, and in particular JPY crosses, so a further recovery to 119.50 – 120.00 should not be ruled out as the market takes its medicine. Dips to 117.50 should find support.
CHF: We have not written about this one for a while but USD/CHF bulls can start to get excited again. The pair closed on weeklies above 1.01 and is poised to clear trend channel resistance at 1.0180, en route to 1.0330 again. We are bullish and dips to 1.0030 should find support.
AUD, NZD, CAD: Strong pullbacks from fresh cycle lows in the commodity bloc currencies as risk sentiment and Oil bounces into the weekly closes. Further corrections look possible but would look to fade Aud and Nzd back towards .71 and .66 if seen to re-engage short cash positions. Maintain downside structures in Aud and Nzd but have gone delta neutral for now. Risk events will be AU CPI (tues nite) and RBNZ (weds aftn) and I maintain a bias for higher AUDNZD ( via cash and options) going forward. Usdcad finished an extremely volatile week and I have moved to the sidelines for now but would look to re-engage Usd longs near 1.40.
EUR: Draghi’s prepared statement at last week’s press conference implied another deposit rate cut. Since his statement, rates have moved accordingly and you can argue that EUR should start moving independently of other risk assets. If this plays out, prices towards the yearly low (1.0711) are favoured at a minimum, good luck.
GBP: A major bottom may have been formed at 1.4080 and a recovery towards 1.4525 max may be required to flush out short positioning. Shorts should be set between 1.44 – 1.45 and a revisit of 1.4125 – 1.4150 on the downside should find support. Consolidation is required before a new low is made.
JPY: A failure to breach neckline trend support at 116.50 has led to a correction towards major resistance at 118.80 – 119.20. The market appears to be short risk, and in particular JPY crosses, so a further recovery to 119.50 – 120.00 should not be ruled out as the market takes its medicine. Dips to 117.50 should find support.
CHF: We have not written about this one for a while but USD/CHF bulls can start to get excited again. The pair closed on weeklies above 1.01 and is poised to clear trend channel resistance at 1.0180, en route to 1.0330 again. We are bullish and dips to 1.0030 should find support.
AUD, NZD, CAD: Strong pullbacks from fresh cycle lows in the commodity bloc currencies as risk sentiment and Oil bounces into the weekly closes. Further corrections look possible but would look to fade Aud and Nzd back towards .71 and .66 if seen to re-engage short cash positions. Maintain downside structures in Aud and Nzd but have gone delta neutral for now. Risk events will be AU CPI (tues nite) and RBNZ (weds aftn) and I maintain a bias for higher AUDNZD ( via cash and options) going forward. Usdcad finished an extremely volatile week and I have moved to the sidelines for now but would look to re-engage Usd longs near 1.40.
EM: Battered and bruised NOK and ZAR have rebounded strongly to begin the week. Further gains in NOK may be seen going forward as oil bounces higher. We maintain light risk and wait for a further correction for any negative EM biases. (DB)
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