Vekslers Forex Blog

Holding patterns

Ken VekslerKen Veksler , Director, Accumen Management
United Kingdom, 20 September 2010 at 09:27 GMT+0
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A quiet weekend overall with last week’s proceedings still leading market and price action at the European open. With Japan out overnight we have been unable to take a serious lead out of Asia and we remain in a holding pattern pending the FOMC meeting this week and given the sovereign debt woes for the eurozone.

The data calendar is light Monday so little by way of market movers coming in there. As noted last week USD shorts on the IMM front continue to grow and the DXY is now significantly closer to the consolidation phase, however, some more downside is still likely.

With regard the majors everything looks to be fairly tightly confined, but the two crosses that deserve special mention are Cable and the AUDUSD. Both are irrationally strong, but at least AUDUSD has some basis for this on hawkish comments from the RBA over the weekend and the lingering 0.9475 digital option that the market seems hell bent on chasing. Cable, on the other hand, is entirely unjustified based on fundamentals - with more poor data out over the weekend. In this instance the story is more of greenback one than that of outright strength.

So where to today? Sideways at best on all the majors and the message from last week still holds value, use options! On the EURUSD we’re looking at 1.3150/70 top, while 1.3030 is now the line in the short-term sand. Cable still looks bid and levels to keep an eye on (outside of the 1.5730 double top) are 1.5670/80 on the topside with 1.5630 providing intermediate support, a break here opening the door to 1.5570.

The USDCAD had a few slips down last week below the 1.0250/30 support zone, but it looks like consolidation has already begun here and outside of market moving events or headlines expect 1.0220 to be only seen in the rearview mirror. It may be worth concentrating on getting long this cross and looking for dips into 1.0250/70 to be good buying opportunities with 1.0350 the initial topside target. There is no pretense here folks, overall I still like this cross higher in the near-term.

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