Morning Report: USD Longs Give Thanks & Take Profits

KEY DATA RELEASES TODAY:

0855GMT EUR German Unemployment Change exp -1K v -22K
0900GMT EUR Private Loans y/y exp -1.0% v -1.2%
0900GMT EUR M3 Money Supply y/y exp 2.6% v 2.5%
1130GMT EUR ECB President Draghi Speaks
1200GMT EUR GfK German Consumer Climate exp 8.6 v8.5

OVERNIGHT:

Yesterday USD weakened on soft data which helped EURUSD to squeeze higher above 1.2500 and GBPUSD above 1.58. To a certain degree, the market seems to have already priced in that the ECB will be forced into full QE early next year, with lower realized inflation expectation as the trigger, this coupled with month end profit taking in USD longs supports the headline pairs in holiday thinned trade.

AUD was the most active USD major overnight, rallying after much stronger than expected Australia Q3 CAPEX data which marked its first quarterly growth in 3 years – the revision for FY14/15 forecast was also to upside – A$153B vs A$145B prior estimate.

Elsewhere, USDJPY continued to dribble lower, printing a 1-week low of 117.26, tracking a rally in US Treasuries, while also weighing on the Nikkei225 index. Jan WTI crude oil contract also hit fresh 4-year lows of $72.61/brl ahead of the upcoming OPEC meting.

Looking ahead, German Unemployment Change and Prelim CPI are the main data in European session. We also get Swiss GDP, while the result of the OPEC meetings will also be the focus later today. US participants are out today celebrating Thanksgiving Holidays anticipate low volumes this afternoon.

OVERNIGHT PRICE ACTION:

EUR: Trend line resistance pressured on short squeeze
GBP: Range contraction resolves to the upside eyeing trendline resistance ahead
JPY: Profit taking pull back continues, 117 key test for bullish trend continuation
CAD: Trend line broken, 1.1150 next key support for bullish trend continuation
AUD: Descending trendline prompts sharp reversal, trendline resistance ahead

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullishBUY/ Nov 261.2495OPEN 1.2345
GBPUSDBullishBUY/ Nov 251.5745 OPEN1.5580
USDJPYBullish BUY / Nov 25 118.55 OPEN 117.40CANCEL ORDER
USDCADNeutralAwait new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

  • YTD double bottom continues to support for now, descending trendline resistance pressured
  • Order Flow indicators; OBV bearish ticking up from depressed levels, Linear Regression and Psychology bullish
  • Double bottom supports, testing contracting range trendline resistance, please see key trades

eu2711

GBPUSD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish

  • Range contraction resolves to the upside, caution on snap back today. 
  • Order Flow indicators; OBV bearish ticking up from depressed levels, Linear Regression and Psychology bullish
  • Double bottom supports counter trend longs in play, please see key trades

gu2711

USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish

  • Profit taking continues, monitoring price action on the first test of 117 from above
  • Order Flow indicators; OBV bullish ticking down from elevated levels, Linear Regression and Psychology break lower, testing support levels for trend continuation
  • Trend line support eroded but watching first key horizontal support, price action still suggests bullish consolidation for now, cancel resting orders will continue to monitor buying opportunities

uj2711

USDCAD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish

  • Price breaks trendline support 1.1150 next key support area for bullish trend continuation
  • Daily Order Flow indicators; OBV bullish but pulling back, Linear Regression and Psychology break lower testing support levels
  • Monitoring price action at around 1.1150 for new set up

uc2711

AUDUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish

  • Descending trendline supports prompt reversal, potential descending wedge pattern emerging
  • Order Flow indicators; OBV ticking back up, Regression and Psychology positively orientated  
  • Will set counter trend longs on trendline resistance break

au2711

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