The market is split 50:50 down the middle when it comes to the question of a Fed rate hike and this indecision is filtering through to FX traders with plenty of indecision across all time-frames.
The big macro positions, short AUD/USD being the favourite, still remain in place and these particular positions are unlikely to start getting worried unless the market trades above .7250.
Last week’s Morgan Stanley positioning indicator suggested that the market was getting itself short of USD/JPY but I’m hearing quite the opposite from some Prime Brokers; uncertainty again rules the roost.
Sentiment is still overwhelmingly bearish for the EUR but there are big macro forces at play and a wide range between 1.08/1.17 seems likely to contain prices for some time to come.
So how should we trade this? Volatile range trading is my best guess over all of the major pairs with a modest USD-bearish bias.
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