Forex Market

Behavioral Finance: Daily Forex Outlook: EU summit expectations may have been too low

EUR USD (1.2575) Given the ultra-low market expectations for the EU summit, even a very modest softening in Germany’s tough stance would have been enough to surprise positively.

FX Trends daily (FOCUS: AUD/JPY)

AUD/JPY After a slight consolidation, the AUD/JPY has gone back to the recovery and should test, over the coming trading sessions, a resistance at 81.58 (June 2012 peak).

EURJPY jumps on EU Summit developments

The latest version of extend and pretend is seeing a dramatic squeeze higher in JPY crosses as USD and JPY longs head for the exits. Where from here?

Technical Analysis

It’s all about the EU summit. Technically no changes only an opportunity to get in at better levels we think. EURUSD look for offers around 1.2625, same for AUDUSD around 1.0170,

EUR/USD: Recovers 21-Day Moving Average, Fibonacci Level. The euro makes a sharp recovery over the $1.2500 5-DMA and $1.2545 21-DMA to test a 61.8% retracement of the pullback from 18 June, at $1.2618.

GBP/USD Analysis

Closed in NY at $1.5520, rate recovered from pullback lows of $1.5485 in late trade. Cable ground higher in early Asian trade albeit stuck in a tight 30 pip range, before spiking sharply in tandem with EUR/USD to highs of $1.5628 as headlines from the EU summit began to hit the wires.

EUR/USD Analysis

Closed in NY at $1.2440, rate recovered from $1.2414 lows in late trade. The euro opened flat before spiking in Asian afternoon trade, as risk appetite picked up in the wake of comments from EU officials.

USD/JPY Analysis

EUR/JPY was the stand-out in Asian trade Friday, powering higher as EU officials outlined some short-term fixes for the Spanish and Italian borrowing cost issues.

Asia today: EUR surges on EU summit headlines

The EUR put on a huge spurt higher midway through today’s Asian session as headlines emerged from EU’s Van Rompuy that the Euro-zone had reaffirmed its commitment to use its bailout funds (EFSF and ESM) flexibly and efficiently.

Asia FX Rundown

Europe news It’s all about the EU summit today. Here’s the statement: Summit. The market is most excited about the idea that the ESM/EFSF will not be senior to other Spanish bondholders, indeed this is good news for Spanish bonds.

JPY Analysis

Opened at Y79.44/98.88 after Y79.23/75 and Y98.33/99.48 overnight ranges, USD/JPY had found bids ahead of Y79.00 area after risk unwinds had weighed on the pair, and USD had rebounded to Y79.45 as the US session got underway, with EUR/JPY recovery stalling at Y99.00.

EUR Analysis

Opened at $1.2450 after $1.2407/1.2524 overnight range, EUR was again on the defensive ahead of the EU Summit after a brief rally atop $1.2500 fizzled, the pair erasing layered stops in a sharp slide to $1.2407.