EURUSD rally fade head fake  - it's the new black!

So far, so good. Insomuch as we’re running a carbon copy of last week’s trading patterns. The Monday (post Asian gap open) rally fade, followed by disbelief as to why we’re still rallying and taking out last minute stops as well as entrenched longer/larger plays. I tried to make a point yesterday that the Greek rally fade has nothing to do with the Spailout in its similarity, but perhaps I wasn’t clear enough. Needless to say, the point is valid and the price action supportive of my train of thought.

Most will argue that this is more of the same ahead of the FOMC tomorrow, there will/won’t be more QE etc etc.

For the record, this is how I see it, Ben will Twist but not Print tomorrow, the market will take a day or two to chew through what that actually means as regards the USD and in the interim will continue to sell the big buck, deciphering it as easing any way you choose to look at it. Upon 2 days of rally and reflection however, coupled with the inability of Greece to form a coalition government attention will once again turn to reality and back we go...

Levels for the EURUSD on the back of the above intimate that we trade into 1.2750/1.2850, with stops needing to go in on the wide above 1.3100, looking for another attempt (orderly or otherwise) into 1.2300. This is my short/medium term macro play on Europe folks, those expecting 1.1500 and lower magically before end of Q3 this year will likely be smalls disappointed. My twig and two berries on the line there. Once the dust settles on this broader move, I think we simply retreat to range play for the duration of what will hopefully be a decent summer in the Northern Hemisphere for a change.

Further afield, the Cable looks healthy and set for a resounding test of 1.5750, a daily close above confirms that 1.5850 really isn’t too far away.

The USDCAD is finally moving, having broken recent strong support and range lows. All in all, fair enough given what the USD is doing elsewhere. However, your scribe looks for the broader move above and this one in the Loonie to get long again with revised bottom fishing levels of 1.0150/1.0060 and targets only so far as 1.0350/80. Call it a 1 Sigma shift lower, if you will.

The AUDUSD now has 1.0250 as the next pivot in sight and again in line with the above shouldn’t have too much difficulty getting there. The question however, is what does it do once it gets there? I remain vigilant and will make my mind up closer to the print.

EURJPY, personally I can’t wait to fade, but will of course wait and trade what is no more than an already well established range of 101 by 98.70 on the wide.

On relative value, keep an eye on GBPAUD which is now simply a battle of which has the greater beta...

Helmets are starting to look shinier, then again perhaps it’s the hint of that elusive English sun...