The USD is trading firmer to start New York this morning after a slow start in Asia; traders have been waiting for the return of US trading before large volumes were seen. Cross-spreaders and option defense started the overnight session as EURO/JPY sales initially rallied the majors to highs overnight before the USD began to gain in Europe.
Disappointing UK economic data and poor German industrial production numbers pressured both GBP and EURO through the European session knocking both pairs into lows ahead of New York. Cable traded to a low print at 1.9666 as stops fired off under the 1.9700 handle again; traders note that the GBP appears to be trading in a very large triangle/wedge pattern suggesting a lot of potential two-way action over several handles may result.
Now that we are in the “summer doldrums” it is possible that the technical picture will remain more viable for short-term traders and it is my view that the GBP will cover a lot of the same ground twice. EURO sold off briefly into stops under the 1.5700 handle for a low print at 1.5610 before solid bids were seen. Traders report that model accounts were on the offer with large orders at the 1.5630/40 area; also of note the 50 bar MA comes in today at 1.5582 which may offer support on further weakness.
EURO has a strong exponential sell signal from Thursday last week and the rate is likely going to correct into solid support a bit further down in my view. Good quality buys may be seen in the next 24-48 hours. USD/JPY rallied to our limit entry point overnight and aggressive traders should be short at the 107.50 area; high prints so far overnight 107.72 in line with the 200 bar MA.
Traders note that the rate has seen quality buys last week from Asian sovereigns who were seen briefly offering the rate above the 107.50 area overnight suggesting that possibly the rate is capped at the 200 bar MA near-term. USD/CHF and USD/CAD also rallied into near-term resistance but failed to trigger quality sell signals just yet.
Look for Swissy to be a sell above the 1.0350 area and the Loonie to be a short above the 1.0230/40 area; CAD data due out today may be of help there. In my view, the USD is off to a firm start into resistance; we need to look at the short side of any strength near-term.
Disappointing UK economic data and poor German industrial production numbers pressured both GBP and EURO through the European session knocking both pairs into lows ahead of New York. Cable traded to a low print at 1.9666 as stops fired off under the 1.9700 handle again; traders note that the GBP appears to be trading in a very large triangle/wedge pattern suggesting a lot of potential two-way action over several handles may result.
Now that we are in the “summer doldrums” it is possible that the technical picture will remain more viable for short-term traders and it is my view that the GBP will cover a lot of the same ground twice. EURO sold off briefly into stops under the 1.5700 handle for a low print at 1.5610 before solid bids were seen. Traders report that model accounts were on the offer with large orders at the 1.5630/40 area; also of note the 50 bar MA comes in today at 1.5582 which may offer support on further weakness.
EURO has a strong exponential sell signal from Thursday last week and the rate is likely going to correct into solid support a bit further down in my view. Good quality buys may be seen in the next 24-48 hours. USD/JPY rallied to our limit entry point overnight and aggressive traders should be short at the 107.50 area; high prints so far overnight 107.72 in line with the 200 bar MA.
Traders note that the rate has seen quality buys last week from Asian sovereigns who were seen briefly offering the rate above the 107.50 area overnight suggesting that possibly the rate is capped at the 200 bar MA near-term. USD/CHF and USD/CAD also rallied into near-term resistance but failed to trigger quality sell signals just yet.
Look for Swissy to be a sell above the 1.0350 area and the Loonie to be a short above the 1.0230/40 area; CAD data due out today may be of help there. In my view, the USD is off to a firm start into resistance; we need to look at the short side of any strength near-term.
