Morning Report: EURUSD, USDJPY, AUDUSD.

This morning’s weak IP figures out of Germany have failed to initially impact the Euro which witnessed a modest recovery yesterday from Friday’s post-NFP multi year lows.

BOJ statement delivered only minor tweaks, creating a sense that the market’s expectations of a significant move in BOJ rhetoric are somewhat premature. BOJ Head Kuroda is due to hold his press conference shortly but the statement would imply little will be delivered during the presser, the BOJ positioning and pause is likely to prompt some further short term Yen profit taking.

The RBA, like the BOJ , delivered no real new news with their statement although the RBA maintains its stance with respect to the fact that the current rate of the Aussie is doing little to support the required growth of the Australian economy. The next real driver for the Aussie will be Labour market data due later this week.

Technically the EURUSD has seen a decent drive off the post NFP lows it is also worth noting that after this mornings poor German IP data the EURUSD has only registered a shallow dip (as of writing). A week ago this type of data would have been the catalyst for a significant decline. When a market stops going down on bad news pay attention as this implies a corrective phase at a minimum with potential for a more meaningful consolidation especially when this price action initiates on a meaningful psychological level.

Daily On Balance Volume is still moving lower and so a continuation lower cannot be ruled out but with Order Book Regression having crossed up through its midline and the Psychology indicator only just below its midline, the pair could present some decent short term counter-trend trades on lower time frames with stops below Friday’s low, with highs and the psych 1.27 level as immediate bull targets. Bears will looking to hold yesterday’s highs and pressure stops under 1.26 in a bid to revisit Friday’s lows and the probable sizeable stops under the Friday print.

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Technically the USDJPY is seeking a support base from where longs may reposition for a resumption of the established but slightly stretched trend. Like the Euro, there is a huge amount of option related interest on the books this week specifically between the 109-110 levels, with 2.95 billion on the slate at the 109 level for the NY session today. With equally large structures set at 110 we are likely to witness decent topside defence from current levels.

Bulls would likely feel increased pressure on an hourly close below 108 level which harbours good sized reported stops. A breach of this level could be the catalyst for a more meaningful corrective phase this week especially so considering that both the Daily Order Book Regression and Psychology indicators have crossed down through their midlines with On Balance Volume showing some early signs of downward direction. Consolidating in a tight range at highs, intraday traders could see good risk:reward from fading the range high/lows with little directional play likely to come until post FOMC.

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Technically the AUDUSD survived the anticipated pressure post the RBA’s on hold posture. The initial drift lower post statement was supported in the 8720’s, and the subsequent recovery has the Aussie trading back within yesterdays range. Technically, if the pair can hold the range low retest during the LDN session then this could build better support for a retest of 8850 and the stops just above this level, with Daily Order Book Regression and Psychology indicators having both crossed up through their midlines in support of this view.

Price action wise, the pair is in the same boat as the USDJPY, just at opposite ends of the river, with price consolidating in a range at lows. If we fail to hold yesterday’s lows then bears will mount a more meaningful test on the low 87’s and the figure where decent demand interest is likely to emerge. With Daily Order Book Regression and Psychology indicators having both crossed up through their midlines.

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Considering current Order Flow indicators and price action, there is opportunity for lower timeframe counter-trend trading against the USD uptrend, across all three pairs, but with important data in the upcoming sessions it is likely we could remain range bound at these levels and so looking for intraday ranges reversal trades could be key.

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