Morning Report: Wires On Watch As EU Ministers Gather

KEY DATA RELEASES TODAY (GMT) :

1015 EUR Eurogroup Meetings

OVERNIGHT:

With the strong finish on Wall Street and continued buoyancy in US yields post Fridays NFP’s, USDJPY price action was distinctly subdued due to National Foundation Day Holidays. Interbank traders cited sales from momentum accounts when USDJPY dipped to 119.29 but no follow through and the USDJPY has since drifted higher in line with broader risk sentiment, 120 remains the key upside objective for now.

EURUSD bids are reported by market sources at 1.1280-85: with short term players taking back shorts on concerns that the headline risk today could lead to volatile short term trade flows as witnessed last week, while most don’t see a strong likelihood of a meaningful outcome from today’s session there is a growing market view that an EU summit this Monday Feb 16 might deliver positive a outcome and a potential short term relief rally in EURUSD.

Elsewhere GBPUSD has been largely sidelined after some late short covering in the NY session as shorter term traders pare positions ahead of tomorrows all important inflation report. AUDUSD also remains range bound between .77 – .79 ahead of the domestic labour data released Thursday which will likely prove the catalyst for a break. BOC Wilkins held the line yesterday continuing to point towards spare capacity and the impacts of the decline in oils prices on the economies growth prospects which maintains pressure on the CAD with market looking for another rate cut at the next BOC meeting.

Looking ahead all eyes will on the news wires today with the key headline/event risk coming from the EU Finance Ministers meeting today.

PRICE ACTION OVERVIEW:

EUR: While 1.1300/1.1250 supports focus on 1.1590 upside corrective equality target
GBP: 1.5325 trendline resistance being tested break target retest of December range lows, failure at trendline suggest broader correction targeting 1.5450
JPY:  120 key resistance while this holds scope for one more corrective leg in broader bullish consolidation pattern
CAD: Bullish consolidation continues to develop while 1.2350 supports 1.28 next upside objective ahead of 1.30 key resistance
AUD: Sharp reversal from trend channel support  at .7650, stalls ahead of 0.79 resistance, break targets .8050

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDNeutral Sell Feb 111.5233 OPEN 1.5363Intraday signal
USDJPYNeutral Await new signal
USDCADBullishAwait new signal
AUDUSDBearishShort Jan 29.7878 OPEN.7878Intraday Signal

ANALYSIS:

EURUSD Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBearish

  • Contracting range in the 1.1250 1.1350 area suggests still scope for one final corrective swing to test equality target at 1.16. Loss of 1.12 suggest downside trend resumption.
  • Order Flow indicators; OBV consolidating at lows, Linear Regression and Psychology stalled on weak bullish attempts now bearish
  • Monitor price action at 1.1590 or a break of 1.12 to reset short positions to target 1.10

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GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 WeeksBearish

  • While 1.5350 continues to contain upside we look for a loss of 1.52 to open next leg of downtrend towards 1.48. Break of 1.5350 opens 1.5450/1.55 in broader corrective move.
  • Order Flow indicators; OBV ticking up from lows, Linear Regression and Psychology bearish.
  • Sell orders in play, please see key trades for details

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish

  • While 120 caps upside expect one more phase of corrective price action for a retest of 117 to complete a broader bullish daily triangle pattern before upside trend resumption in earnest.
  • Order Flow indicators; OBV still consolidating below recent highs, Linear Regression pierces midpoint from below, Psychology bullish
  • Monitoring price action for a retest of 118 range highs to target 120 test, will monitor price action at 120 to set interim shorts for 117 retest

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

  • 1.2350 support holds and 1.26 resistance is being eroded for 1.28 test next
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression bullish, Psychology pierce midpoints from above
  • Monitoring price action to set long positions targeting 1.30

uc2015-02-11 08_06_59-

AUDUSDShort Term (1-3 Days): Bearish  – Medium Term (1-3 WeeksBearish

  • While 0.79 contains the upside expect a retest of last weeks lows, break of 0.79 resistance target 0.850 in broader corrective move
  • Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish but lacking momentum
  • Risk free shorts in play, see key trades for details

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