EURUSD – So mkt takes the Cyprus news badly very similar reaction to the Italian election result. Eurjpy in particular an ugly open, followed by eurusd – Since the gap open lower we have seen steady lev supply which has capped us on bounces towards 1.2930. Now we watch for the Cypriot vote, news on any tweaking of the deal, comments from Europeans suggesting that this is a one off case and any probably most importantly any contagion to other periphery countries. Expecting eurusd to remain under pressure at least in the short term with 1.2930 then 1.2965/70 resistance. downside 1.2880 support below there opens up possibility of a move towards 1.2815 then 1.2750. Orderbooks mainly wiped clean o/n however offers now appearing against 1.2970 topside while downside small bids lingering 1.2850/80.
GBPUSD – Caught between the USD safe haven bid and the breakdown in EURGBP. I expect more consolidation between now and the UK Budget on Wednesday, though I have reinstated a small short position. For now, resistance will be found between the Asian high of 1.5160 and Fridays high of 1.5177, with buying interest likely around the Sydney open level of 1.5070. Below there 1.4965 – 1.5000 marks a very important pivot region, which if breached to the downside this week, should reopen new lows for the year. Real money supply has remained a theme, on the way back down from Fridays 1.5177 peak.
EURGBP – Has broken the neckline of a head and shoulders pattern at .8570, and from a technical standpoint does look very weak now. I am not positioned here currently, but for choice, would look to sell a rally into the .8570 – .8600 band on the day. To the downside, some support will be found towards the low from the 24th Jan at .8391, with momentum likely to pick up, if EURUSD can sustain price action below 1.2880. Macro supply the recent theme.
JPY – Disappointing end to last week has spilt over into a gap open lower on the Cyprus news to 93.45,as mkt cuts its main risk positions. That said the way we hold in to date is still encouraging for bulls. we saw strong demand from Japanese names off the lows, however against 94.70/95.00 we ran into a wall of leverage selling that has capped us nicely to date. For me 95.00 now is key topside. a move back above there would signal the recent selling is over and would suggest a resumption topside into the Japanese year end towards 96.70 and higher. The longer we stay below this lvl this week as we get towards the fed on Wednesday and the possibility of an emergency meeting once the new BOJ govenors are in, the more chance of a further unwind towards 92.80. Orderbooks still have selling 94.80/95.30 topside and downside bids 93.20/50 for now.
AUD & NZD – A taste of ‘risk off’ in AUD and NZD just as they were staring to extend to the topside. AUD/USD was on a slow climb, getting a foothold on 1.0400 and NZD/USD was taking out frustrated shorts put on in the wake of dovish RBNZ sentiment. I guess we will be watching the EUR/equities for clues of further risk unwind. In my mind NZD/USD should be lower anyway, with a lower rate path in play and a medium term market that sits long of NZD. Price action though has been confused of late. I sit short for now and won’t be buying them back this side of 0.8310. I look for a move to 0.8100-20 daily uptrend. AUD? Well, far from exciting. Suggest range contained within 1.0330-1.0400.
CAD – a one-off levy on Cypriot bank deposits has leant support to the USD, and for now USD/CAD remains well supported against 1.02 with further support at 1.0160. Topside 1.0280 remains key resistance where we have good supply in the orderbook for a number of accounts. I’m looking to buy into dips early on this week as European issues will continue to be scrutinised looking to target 1.0280 first-off. CA Manufacturing sales and retail sales to come Wednesday/Thursday.
Scandies – No data from the region today. All about Cyprus now and EUR crosses open up lower this morning, just as EUR/Scandies were running out of steam on the topside anyway. We’ve seen the knee jerk in price action and will be interesting to see if we get any follow through on the day. 8.4000 is the major tech resistance level above but short term 8.3400 is setting up as hourly resistance and may start to see some supply. Back through 8.3000-8.2830 and we may start to attack new recent lows. EUR/NOK now sub 7.5000 should also be vulnerable to setbacks. 7.4800 tech support despite trading dubious prints below 7.4500 o/n. Resistance now at 7.5350.
Barclays