EURUSD doji, JPY a has-been?

The Day's Action
A curious US session saw equities lower on Goldman Sachs earnings beating expectations, but apparently not by enough. The move in risk aversion quickly bottomed by the open of NY trading and the EURUSD righted itself easily after swooning to 1.4850 and headed back to where it opened the da, as did equities. Early US economic data was very positive, but the Philadelphia Fed was disappointing and spoiled the strong upside surprise from the Empire Manufacturing number this morning.

USDJPY managed to maintain altitude above key resistance and several of the other JPY crosses marked new highs for the cycle as the JPY weakened due to long bonds wilting again into the close in a reverse performance of the action in equities.

Technical Notes on the Day

EURUSD: a long-legged doji candlestick for the day suggests "indecision" in the classic interpretation - certainly not a word we can hang our hat on for future direction, but this is a sign of weakness and could set up a reversal - or at least underlines the importance of today's low as the new support level of interest for tomorrow and the next couple of sessions. The last time EURUSD posted a similar candlestick was on October 2, which marked a pivot point setting up the most recent rally. The USD bears would counter that this is simply the market giving the big round 1.50 level a bit of respect before breaking higher.

 

GBP crosses: the huge move in GBP strength was largely over with after the European session as the NY session saw some back and forth consolidation. This is a significant move that could at least set up a bout of range trading between 0.9000 and 0.9300 for a while in EURGBP, if not indicative of an all out reversal down the road. Next key downside objective is 0.9080 and upside resistance is at 0.9245, which is both the pivot for this week and the 0.382 Fibo for the move from the recent top to today's low. See today's chart for GBPUSD implications.

USDJPY: closing above the 21-day moving average and local resistance in the 90.30/50 zone. This is a possible first step for a further consolidation higher - with the 55-day moving average (currently around 92.40) as the next major target and 90.00/20 the new support.

 

Commodity currencies: AUDUSD looks overbought even if spreads have moved further in Aussie's favor over the last 24 hours on the heels of the latest hawkish rhetoric from Stevens in last night's Asian session. USDCAD was sharply higher today, somewhat mysteriously considering the 3% rally in crude oil to a new high for the year and generally robust risk appetite. This may have simply been a bit of profit-taking as the downside action in USDCAD has been very steep of late. The high today at 1.0370 was right at the 0.382 Fibo for the recent wave from 1.0650 to 1.0205.

 

Looking ahead
Just as Intel earnings helped to alter the short-term landscape just the other day, the market may have a hard look at Google earnings after the NY close today. IBM is also reporting.

 

The GBP move higher despite continued strong risk appetite and the move higher in USDJPY are the most interesting new developments here as they don't quite fit with the recent action and suggest that the G-10 FX sands are beginning to shift.

 

Tomorrow has a few data points worth note, including Swiss Retail Sales, EuroZone Trade Balance, Canada CPI, US TIC Flows, US Industrial Production and Capacity Utilization, and the first University of Michigan confidence reading for October.

 

Chart: GBPUSD
GBPUSD sliced quickly through the 1.6120 area resistance, which now serves as support. Now the focus is on the 55-day moving average and the descending trendline from the 1.70+ top, currently coming in well above 1.6400..