Considering the US government is more or less shut down until a deal is reached to secure funding and agree the next phase of the debt ceiling, the market has reacted in a matter of fact way. The dollar did fall to major support but this retraced back higher again in the run up to the ISM manufacturing data, which came in quite well above forecast and allowed for a rally. This was not exactly a strong rally but price action was reasonably normal considering the political situation in America. The RBA held rates flat and released a fairly neutral statement which gave the Aussie a push higher, although with bullish trend now broken for the AUD% index, this rally failed to push back inside the bullish channel and rejected from the broken trend line. With data this week likely to be thinner than expected due to government offices closing down, the market is likely to be quite sluggish this week and sensitive to headlines, never the less, some very interesting levels have been successfully rejected and the market may begin to turn a corner.
A push lower today to major support saw a modest rejection and rally higher before running out of steam. Overall there continues to be an unclear and foggy direction for the dollar and the confusion is driving traders away causing thin volumes and slow price action for most of the day. We met some very significant levels in some pairs with today’s push higher, but the political uncertainty regarding the shutdown has taken the shine off a full blown reversal, with traders in wait and see until more clarity is shown from the US. Never the less, we have pushed higher from significant resistance and this may continue into the week.
I am bullish USD
USD% Index Resistance (EURUSD support): EURUSD 1.3500, 1.3450, 1.3420
USD% Index Support (EURUSD support): EURUSD 1/3560, 1.3589
A relatively flat day in the end for the EUR% index following a rejected push higher within the current consolidation range. It is unclear which direction the breakout will be currently and much will rest on the situation in America. Down seems preferable if there is a resolution to the debt ceiling row although a push higher and reversal can’t be ruled out currently. With other indexes rejecting nicely from strong levels, this may inflate the dollar and keep a lid on the EUR% price action for now.
EUR% trend is still bullish, although a reversal seems likely
EUR% Index Resistance: EURUSD 1.3588, 1.3650, 1.3739
EUR% Index Support: EURUSD 1.3517, 1.3461
EURGBP Trade Positioning
I am short from 0.84389 and set to break even having taken 50% profit already.
The JPY% index is now paying respect to a small bullish channel which may mean further upside for the time being and today’s push lower to support met some Yen bids to hold support outside of the previous long standing bearish channel. Nikkei futures rallied slightly although trend remains bearish, which may add to Yen strength for the time being and potentially push out some longer term Yen shorts and allow for a correction higher I am bullish JPY
JPY% Index Resistance (USDJPY Support): USDJPY 97.41, 96.46
JPY% Index Support (USDJPY Resistance): USDJPY 98.28, 99.33
AUDJPY Trade Positioning
I am short from 91.727 with stops at 92.713
A push higher to meet the very significant 200% fib expansion level today met some offers and pushed the pound lower, although the uncertainty from the US really put the dampeners onto a full blown reversal likely due to the fact that holding dollar longs is quite a risk at the moment. That said, if we see resolution from the US political brinkmanship, cable shorts may become a very crowded trade and push the pair lower for a correction within it’s bullish trend and possibly further.
Trend remains bullish although a correction lower seems likely
GBP% Index Resistance: GBPUSD 1.6250, 1.6295
GBP% Index Support: GBPUSD 1.6145, 1.6045
A relatively neutral RBA statement and a hold on rates pushed the AUD% index higher up to retest the broken trend line that was the bottom of the previous bullish channel. How the index reacts now that this has been met will be key to see if we get a reversal anyway given the rejections in other indexes, although much like the pound, the uncertainty for the dollar is preventing any significant positioning from the market at the moment. That said, we may have the beginnings of a reversal here with risk currently to the downside despite the slightly bullish RBA statement. I am bearish AUD
AUD% Index Resistance: AUDUSD 0.9400, 1.9500
AUD% Index Support: AUDUSD 0.9313, 0.9269
AUDUSD Trade Positioning
Short from 0.9351 with stops at 0.93497
A good rejection today from very significant resistance has brought the index down to support. With USD longs currently still a bit of a risk, this may make for a messy reversal but it is very encouraging to see this price action given the current state of the political situation in the US.
Trend remains bullish although a rejection from the push higher may be the beginings of a medium term reversal
CHF% Index Resistance (USDCHF support): USDCHF 0.9042, 0.9078, 0.9130
CHF% Index Support (USDCHF resistance): USDCHF 0.90000