Things are well and truly overdone, but is this the end?

A relatively quiet Asian session as most “risk” trades/crosses remain firmly in favour awaiting the much touted abortion of a Greek PSI deal and more importantly Services ISM and tomorrow’s NFP print. Equities provide the lead in most of these instances, while elsewhere it's simple carry trade dynamics as interest rate differentials start playing a more than significant part in the daily to and fro.


On the day we have French and Spanish auctions at 9.30 and 10.00 GMT respectively and with yields coming in significantly in the last 24hrs on the periphery, we can safely assume that the ECB will have its buying boots on once again this morning giving the EURUSD an artificial lift. Otherwise we also have the UK Construction PMI and US weekly claims (little significance here as tomorrow is the real day of reckoning).


With regards to the crosses, the main pairs, USD based are all in consolidation mode sitting firmly on the precipice of either outright success or disastrous failure. With everything in heavily overbought territory we are either due for one almighty correction or sitting on what is clearly an unsustainable up-trend - only time will tell. Either way, here’s how your scribe sees them today.


EURUSD: Support and bids come in initially at 1.3130 and then 1.3080 with stop orders layered somewhere in between. Offers won’t arrive on the scene until 1.3230 as profit takers and stop orders just above that level sit and await another dirty auction result.


GBPUSD: On steroids, but perhaps fairly so in light of what else is going on in the area. Having broken recent highs and resistance levels, the pair is due for a mild correction/retracement, but should be more shallow than most expect. A break and close above the 1.5900 handle would see a short squeeze, while below 1.5750 we can see mild confirmation of the retracement.


AUDUSD: Looking healthy, perhaps a little too healthy but nonetheless here we are. Plenty of offers in the market and a clean break below 1.0680 sees us retrace all the way into 1.0550 before a pause. The topside remains open for interpretation


XAUUSD: I’m starting to take a closer look at the cross as I fear also another correction is on the cards... I will keep you posted.


Helmets, as always, firmly on.