EURUSD: Topside: 1.3711Downside: 1.3657, 1.3638, 1.3617
1.3711 remains key in the pair as major resistance and everyone knows it. I have supply ahead of the level and in fact all the way up to 1.3900. The market is short of USD’s now and payrolls tomorrow is setting up to be an event. The pain trade is for a good print with some decent sized and probably low conviction positions out there. For now though the USD remains under pressure but I don’t feel we have enough momentum to make significant progress lower. Consolidation remains the favoured route leading into tomorrow afternoon. 1.3657, 1.3638 and 1.3617 are levels to pick up EUR/USD if that’s your way. Topside break of 1.3711 has to respected but I‘ll be quick to flip out of break longs if we stutter. 1.3862 comes into focus if we sustain that break.
GBPUSD: Topside: 1.6260, 1.6381Downside:1.6064
Consolidating, ahead of tomorrow’s NFP release. I have a very modest cash long only right now, hoping for more attractive levels to re-enter a more significant position. 1.6100-24 represents the short-term buy zone, and I would not expect 1.6064 (post Employment release highs) to be lost on a closing basis, in the short-term. A stellar NFP release could provide the opportunity to buy GBPUSD – Barclays Economics are expecting a topside surprise in the headline number and a fall in the UR. 1.6260 marks the recent high and then the highs for the year are 1.6381. Client flows have been firmly skewed towards buying in recent sessions, with a diverse range of clients having been active.
EURGBP: Topside:0.8480Downside: 0.8422
Continues to find Leveraged supply on small rallies, though a close below .8422 is required to see momentum increase to the downside. I am square here for the time being, but would willingly enter a short position on any strength above .8480. A number of clients have expressed an interest to initiate a short position in the last week, and I do expect the pattern of selling rallies to continue, given the strength of the UK dataflow right now.
USDJPY: Topside: 99.01, 99.36, 99.67Downside: 97.56, 97.34
Some Spec and Leveraged demand has emerged in the last session or two, as participants re-focus on the possibility of a stellar employment report tomorrow. Personally, I foresee rangy conditions remaining overall, and rallies towards 99.01-36 will be sold into as willingly as dips to 97.56 are bought. X-JPY longs continue to make sense however, with GBPJPY and AUDJPY having been recently favoured amongst our client base. I have a small long USDJPY position, and intend to cross that position into GBPJPY on a positive outcome from tomorrows Jobs report. Support in USDJPY will now be found at 97.56 and 97.34, with topside objectives located at 99.01, 99.36 and 99.67.
USDCHF: Topside: 0.9092, 0.9147Downside: 0.8978, 0.8935
Corporate selling of CHF around current levels, has been the theme amongst our flows in the last week. I expect Leveraged clients to be focused on USDCHF in the next 48h also – with US dataflow on the horizon – but ultimately we will continue to look for opportunities to sell USDCHF. .9092 – .9147 marks out our preferred sell zone now, and whilst the CHF is not one of the G10 currencies we most want to buy, we remain committed to the bearish USD view and expect USDCHF losses as a result. To the downside, .8978 and then .8935 will offer good support, and a close below .8978 would be an encouraging development for the bear camp.
AUD/NZD: The USD remains on the back foot with AUD/USD near recent highs and Kiwi not far behind. 0.9679 marginal high set the morning in the Oz but I expect some supply ahead of 0.9701 tech resistance. NZD/USD stutters a little with 0.8525 and 0.834 resistance levels. AUD/NZD continues to rumble higher and we sit just shy of 1.1400-1.1430 resistance. It feels like we are set to test these levels, with a break targeting 1.1600. Domestic data on the 23rd in the form of CPI from Oz and trade balance data from NZ. U.S payroll data tomorrow though is the main focus and I expect USD consolidation ahead of that event. For those looking to short USD’s into that event, 0.9647 and 0.9605 support in AUD/USD, 0.8475 and 0.8446 in the Kiwi. I sense the market has built a short USD position last week and am wary about following suit.
CAD: Downside: 1.0261, 1.0246
Wholesale trade sales at 1:30. USD/CAD finally cracked 1.03 last week with the general USD weakness filtering through. 1.0275-1.0302 has confined price action since Thursday evening and USD/CAD remains one of the least favoured ways to play recent events. Liquidity remains solid and ranges should remain subdued. Mixed flows and an order book suggesting further consolation has me looking elsewhere for opportunities. Having said that, keep and eye on 1.0261 200 DMA and 1.0246 H2 low. Break these and things look more interesting.
Skandies: EUR/NOK has quietened down a touch but trades heavy as USD/NOK selling takes its toll. 5.9000 remains tough to crack for now in USD/NOK and support in EUR/NOK kicks in at 8.0730 short term. I expect a consolidative move back towards 5.9500 vs the USD ahead of tomorrow. EUR/SEK a little quiet and nothing new here really. A patch of SEK buying last week caught my eye but price action doesn’t back it up. 8.75-8.8250 should contain on the day. Rate decisions from both CB’s on Thursday.
Barclays