Currency Updates:
It’s been pretty quiet overnight with some minor adjustments in the crosses but no big market-moving events. Today’s calendar is also light with only the Japanese CPI data likely to cause any volatility. Most of the focus will be on big technical levels like 97.25 in the USD/JPY or continued breakdowns in the NZD crosses.
The main level to watch now in AUD/USD will be previous highs at .9520 (see chart) but with the 200-DMA forming a very strong cap, I expect the rally-sellers to win out in the short-term and that we do indeed get a test of this support level in coming sessions.
AUD/NZD has made a strong close above 1.1500 and although progress remains slow, further gains are very likely in my opinion and buying dips for a test of 1.1650 is the obvious play. AUD/JPY has drifted lower but technical support will get much firmer near an important trend-line at 92.80. EUR/AUD looks to have formed a firm base now at 1.4120 and a test of topside resistance at 1.4570 looks more likely.
Plenty of conflicting flows with the sellers coming out marginally on top. Looks like many big players are looking to sell the AUD on the crosses, especially against the European currencies, but real money bids in the AUD/USD will be very solid below .9550.
We picked the 100 pip range yesterday but got the levels wrong by 20 pips. More of the same today, just adjust my levels by 20 J. Support should be strong near .9525 but it is Friday and we often get some risk-off moves during Asian trade, so we may indeed get a modest sell-off; I’m picking .9535/.9635 as the range.
Range trading the AUD and selling USD rallies are my preferred trades at the moment. USD/JPY is sitting right on its important 200-DMA and Goldman Sachs reckons that a clean break and close below could be worth around 530 pips; so sell intraday USD/JPY rallies towards 97.70 and add on a break below 97.10. Medium-term players can consider buying EUR/NZD if we get a clean close above 100-DMA at 1.6570.
