In absence of market moving news all is well in world of forex

All’s well that ends well... Or so say they say.
So we had the Ecofin meeting yesterday with nothing of any real significance passing. In fact all we got was an extension to Spanish deficit diminishment efforts by another year and the resolution to think about, considering, perhaps discussing something... Net/net, nothing.
The follow through this morning was minimal, until the UK print of data and while that in itself was smalls better than expectations, it could hardly be considered the catalyst for the move in risk we’ve witnessed in the last 40 or so minutes.

I was asked about an hour ago what was behind this move and quite simply my answer was that a complete lack of follow through yesterday in dead markets of Friday’s move would lead to an inevitable short squeeze, the likes of which we’re witnessing now. The logic is simple, human nature dictates that if we don’t hear anything remotely cataclysmic then everything must be alright and we want to be long of risk once more. This is exactly what played out this morning.

A slight tangent, but certainly worth a mention as it gives an insight into the broader herd/crowd mentality. I was in Berlin last week to see Pearl Jam in concert and while the crowd was waiting for the band to take the stage and in the absence of concrete evidence that they were in fact about to walk on, the crowd every three or so minutes would spontaneously erupt into applause and wolf whistles in their anticipated appreciation. Now bear in mind nothing had actually happened to instigate this reaction, but only the sheer anticipation that something was indeed about to happen... And thus it is the same with this market, in the absence of horrific news (all of which seems to be already known anyway) the market (and punters) want to believe that something good is just around the corner and thereby you get price action like we’re witnessing this morning. Clear as mud?

In terms of levels for the crosses;

EURUSD: Small intraday stops from yesterday at 1.2320/30 have now been cleared and we wait to see how serious the offers at 1.2350 really are, with a raft of stops of a sizeable nature starting to be seen around and above the 1.2380/00 level.

GBPUSD: Notable offers start to come in around the 1.5550 area, with stops littered just above. My personal take is wait for the stops to get cleared and then look to fade the ensuing rally.

AUDUSD: Much like the others this morning is looking healthy with 1.0250 providing initial resistance and 1.0280 the last line in the sand. Overnight lows will likely hold any real downside move now.

GBPJPY: This cross while volatile has been a nice little earner for dip buying strategies. Anything below 122.70/65 could be regarded as long and wrong, while the topside should be contained at the 123.80 level in the first instance.

USDCAD: The Loonie remains a range play with 1.0150 and 1.0230 the boundaries to pay particular attention to.

All in all it does look like we’re entering Summer markets in earnest now and with that comes thin and whippy price action, fed by emotion and headlines rather than anything remotely resembling fundamentals.

Helmets on and good luck.