Vekslers Forex Blog

Dish of the day: Navel gazing or EURUSD upside on news bombs

Ken VekslerKen Veksler , Director, Accumen Management
United Kingdom, 20 July 2012 at 09:59 GMT+0
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Your scribe is feeling a little dusty this morning having celebrated his own version of a Pagan ritual in honour of what briefly resembled the sun over London yesterday afternoon. Speaking to various contacts this morning, it seems however, that I am not the only one...

Moving onto markets, well... The USD continues to be sold against most everything except the EUR as noted in this piece yesterday and the close tonight will be all important in giving a clue as to next week’s trading. Longs in Cable and AUDUSD have all reached targets but still look rather bid for now. Personally I’m loathed to get involved today and as alluded to would rather see how we close this week and re-evaluate accordingly. I do however think it is far too early to be looking for reversals in the above mentioned as not enough work has been topside to arrive at that conclusion just yet.

On the EURUSD, I still have a sneaking suspicion in my bones that on the slightest piece of half decent news we will blow through the 1.2350 area and start tackling stops and offers layered above into far more significant resistance at 1.2430/50. This won’t happen today, although with potential headline bombs from the Eurogroup meetings today and an incredibly thin and summer oriented market... who knows?

Defensively if you’re not as excited about USD sales as it would seem the market is at the moment, I suggest looking at the USDCAD, not right now for dip buying, but it’s starting to do enough work on the downside around the parity mark, to potentially allow for hedging of other USD shorts next week.

Little making its way news wise today or even in event risk for that matter outside of Bono auctions... Flip a coin as to how the market will react...

Interestingly though it is worth noting however two things, one, the Bank for International Settlements (BIS) was on top in size at 1.2320/30 yesterday and two, EURUSD risk reversals have turned on a dime to favour upside in the 1 to 4 week tenor... I’m still trying to understand what this means personally, but for now my bones are nagging at me for some more EURUSD upside...

But as always on a Friday I recommend not ruining your weekend with a cheap punt and keeping those helmets well attached.

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Saxo Bank provides an execution-only service. The material on this website does not contain (and should not be construed as containing) investment advice or an investment recommendation, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Saxo Bank accepts no responsibility for any use that may be made of these comments and for any consequences that result.

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