At a glance:
With equity markets pushing higher, high beta currencies outperformed yesterday but still within the confines of the recent ranges. Again, with the two-sided action and current themes still intact, additional range action seems likely to persist seemingly into Friday’s event risk.
Again, we continue to note the commodity currencies face several key hurdles. In that regard, a sustained break of the 1.0600/40 zone for AUD/USD will now define whether a deeper short term retracement can develop. While these levels hold, the short term setup suggests a mere range with the onset of a deeper risk unwind in the offing. Moreover, a push above the .8468/.8575 levels for NZD/USD would suggest a deeper upside retracement can develop. For USD/CAD, the .9740/.9648 levels now stand in the way to a deeper retracement of the rally from the July low.
Other USD pairs face important tests as well highlighted by the setup in EUR/USD. Rally attempts continue to struggle against the 1.4500/1.4537 resistance zone. USD/JPY finally extended below the key 76.30/25 support zone and medium term range lows but the failure to extend is consistent with a near term pause. Still, the overall downside risks remain intact particularly following the recent failure at the key 80.00 area. Downside breaks seek a closer test of the 74.85 April channel support with deeper targets near 73.10/00. USD/Asia continues to hold key resistance levels but the lack of sustained follow-through is consistent with the current range bias. Again, the 1100/1110 area for USD/KRW and the 1.23 area USD/SGD should continue to act as key resistance and short term caps.
Yesterday’s bearish reversal in Gold took on an impulsive tone while suggesting a bearish character shift and higher risk that a short term corrective phase is now underway. Again, the 1830/1815 levels will continue to act as key support and define whether a deeper corrective phase is underway.
Trade Strategies:
° Short 2 units EUR/INR from 63.30 risking 68.50 targeting 55.50/52.
° Short 2 units PLN/HUF from 68.604 avg risking 68.600 targeting 64.00.
° Long 2 units USD/CZK from 16.85, add 2 units on a break of 17.65 risking 16.05 targeting 19.02.
° Short 2 units EUR/USD from 1.4205 risking 1.4600 targeting 1.3350/1.3120.
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http://www.easyforexnews.net/wp-content/uploads/2011/08/JPM_FX-Techs_2011-08-23_663616.pdf
J.P.Morgan
Global FX Strategy