EurAnalysis

Good morning fellow traders.

It's official. Japan has joined the easing bandwagon. Just hours ago, the Bank of Japan announced an increase of 10 trillion Yen spread over the next 15 months concluding at the end of 2013 with a statement that the amount may increase as appropriate. I guess that is their version of QE Semi-Infinity.

This move should make the JPY the leading funding currency for risk purchases and will therefore give the USD/JPY a boost as the US 10 year bonds become more attractive to the fixed income markets than the 10 year JGB. Gold is once again back up to Friday's high of $1770 per ounce as an inflation hedge and equity index futures are rallying. Is this move sustainable? Even the world's leading economists don't know how this is all going to play out, so I'm not about to start making any predictions on this. However, in my opinion, if all the major central banks embark on QE programs, then they all cancel each other out or at least reduce the effectiveness of the most aggressive one(s) bringing more balance to the Forex markets from a carry trade perspective, yet still making fresh money available for the purchase of risk assets... specifically equities and commodities.

Yesterday, The Spanish T-Bill auction went quite well with an excellent take up and lower yields than last time. This doesn't exactly give Spain any motivation to apply for aid from the EFSF, which is a pre-condition for the ECB to engage in its bond buying program OMT. With better than expected yields and a good demand for Spanish debt, why bother? Well the real test will come tomorrow, when Spain is set to auction off 3 year and 5 year bonds. If that goes well, then I don't see Spain applying for EFSF/ESM/ECB aid any time soon. Such reluctance to apply for aid will keep the Euro grounded.

Taking everything into consideration, what I expect to see today in the EUR/USD pair, is an attempt to retest yesterday's high at 1.3115 and possibly Monday's 1.3170 5 month high. A move beyond that would require a raging bull to penetrate the tough resistance I have been mentioning daily, which has held the pair at bay since Friday. If the above mentioned levels fail to be penetrated, then I will be looking for a deeper move down. Incidentally, yesterday's confirmed double top pattern failed to reach its target of 1.2990 and therefore may try to complete it today in such a case.

Best of luck today and safe trading as always.

E/U Weekly

Today’s orderboard

Written by Pete Jackson
September 19, 2012 at 06:40 GMT

EUR/USD: Offers 1.3100/20 (SNB related, real money) probable buy stops above ahead of offers from 1.3150 up to 1.3175 (1.3169- 38.2% retracement of the May 2011- July 2012 fall and Friday’s high, Mon high 1.3173). Buy stops above ahead of more offers in front of a barrier at 1.3200. Bids 1.3020 down to 1.3000 (Sovereigns, Middle Eastern), sell stops through 1.3000 ahead of more bids 1.2980/90 and sell stops again below.

GBP/USD: Bids 1.6230 down to 1.6210, sell stops through 1.6200 ahead of more bids 1.6150/60 with more sell stops below. Offers 1.6280/00 fromUKclearers, funds (barrier 1.6300), buy stops above.

EUR/GBP: Bids 0.8020/25 and 80.00/05. Offers 0.8090/00 likely buy stops above. Offers 0.8045/50, 0.8070/75 and 0.8095/00, tech res (Friday high 0.8114)

USD/JPY: Bids 78.50/70 (importers, life co’s) and 78.20/30 (likely semi official) Offers/ tech res 79.25/35 (Ichimoku cloud top 79.27, 200 day MA 79.32) ahead of 79.65/70 (Aug 19 high) and more offers 79.90/00

EUR/JPY: Bids 103.00/10 and 102.80/90 sell stops below ahead of more bids 102.50/60. Offers 103.80/90 (Mon high 103.86), likely buy stops above and through 104.00. Tech res above at 104.75/85 ( 104.80 – 61.8% of March-July fall)

AUD/JPY: Bids 82.40/50 and 82.00/10 sell stops below ahead of tech supp and more bids /tech 81.85/95 (200 day MA 81.91, cloud top 81.93), more tech supp at 55 day MA- 81.72. Offers / tech res 83.15/25 (61.8% of March –June fall around 80.20) and 83.50/60 (83.57 Aug 21 high)

AUD/USD: Bids 1.0435/45 and 1.0400/20 sell stops below ahead of tech supp 1.0385/95 (1.0395- 55 day MA) and further bids 1.0350/60 ahead of 200 day MA at 1.0331. Offers 1.0480/00, possible buy stops just above ahead of offers 1.0540/60

EUR/AUD: Bids 1.2475/85 (61.8% retracement of the fall from May- Aug) ahead of 200 day MA at 1.2422. Offers 1.2515/25 and 1.2465/75 ahead of stronger 1.2590/00 (possible barrier). (76.4% retracement above around 1.2692)

Today’s option expiries

Written by Pete Jackson
September 19, 2012 at 05:17 GMT

For the 1000NY/1400GMT cut

EUR/USD: 1.2900, 1.3000, 1.3100, 1.3120, 1.3150, 1.3260

USD/JPY: 77.90, 78.40, 78.60, 79.00

GBP/USD: 1.6100, 1.6200

AUD/USD: 1.0345, 1.0400, 1.0405, 1.0445, 1.0475, 1.0525,1.0550

EUR/CHF: 1.2100

Slight risk-on sentiment this morning following the BOJ decision.

PipTrapper, what are your thoughts on UCad for Today/Tomorrow..? Yesterday USDollar rised and Oil dropped, but faker stayed in tight range and now its making LL's.. I got lost with that risk sentiment for this pair...

Look at H4. To me it looks possible that it is drawing the right shoulder of an inverse H/S.

This pair has pretty much bottomed out in my opinion, but there is still the risk that it may fall further towards 0.9400... although I really don't see it happening.

In that case (with H/S on H1) it's going to make that shoulder in 9700 zone which also is 50% of the rally range

.

More likely 0.9712 as there is weekly pivot support there amd it also lines up perfectly with the left shoulder. Anyway, this is all theory. What actually happens is yet to be seen.

Okay... Let's have a poll of sentiment in this thread.

I want to know who is bearish the E/U pair and who is bullish in the medium term. In other words, where do you see the E/U pair hitting first? Is it 1.3500 or 1.2500?

Reasons for your sentiment would be great but not required.

http://123develop.files.wordpress.com/2012/06/poll.jpg

USD rising against everything..

EU and GU about to print biggest red H1 candle since friday events.. I say Down..
..and if we will close day (this week) below Yearly opening at roundabouts of 2950 + below EMA 12 - 2500 in sight

So 1.3500 or 1.2500 first?

2500

Okay so far we have

PipTrapper: 1.2500
Likerty: 1.2500

Anybody else? Or are you too unsure at this stage?

ADD: I guess the North and South Americans are still sleeping.

1.2500 first. Reasons?....

Apart from that, Europe problems still there and not going away and waiting for next big risk off jolt. Mario & Ben have done their worst and where's the hopium gonna come from now? Retrace due after 1000 pip run and China Japan conflict thrown in for good measure .... and yeah ... some more

There is plenty of bad news ahead in the Euro Zone with NO SOLUTIONS that will work. Draghi has shot his load. What could bring it up ?

Can it go to 1.3500 ? Yes however not unless something major changes the fundamentals in Europe. We have a race to the bottom in all fiat currencies.

The DOW will go down and that is almost a sure thing so on Risk Off the money flows to the US Dollar to be used to buy US Bonds. Gold will attact money especially if it breaks $1800 US.

I am looking for EUR/USD to test 1.3000 and I cannot see it going up even past 1.3300.

I will short it everytime it moves up just like I did this morning in three closed trades.

45309420 EUR/USD100,000 9/19/12 1:04 AM 1.30685 Mkt fx144151400 19/19/12 4:59 AM

1.30292 393.000.000.000.00 393.00 Cfx 1441514001

45309421 EUR/USD100,000 9/19/12 1:04 AM 1.30686 Mktfx14415140019/19/12 4:59 AM

1.30291 395.000.000.000.00 395.0 0Cfx1441514001

45309424 EUR/USD 100,000 9/19/12 1:04 AM 1.30688 Mkt fx14415140019/19/12 4:59 AM

1.30295 393.00 0 .000.000.00 393.00 C fx1441514001 Total:1,181.00 0 .000.000.00

1,181.00

Posted at statement period of time:1,181.00 0.000.000.00

3 Positions short and profit taken of $1,181.00 US in 4 hours

Capital risked $2100.00 3 Times $700

Beginning Balance 50,695.06 CommTrading Commission 0.00 Rollover Rollover Fee 7.20 PnLProfit/Loss of Trade

1,181.00


That is my position at the moment !!!

Risk sentiment has gone from "ON" to "MIXED". Is "OFF" next for today?

Attachment

1.25 is too early call in my opinion.. but count me in, buy stopped out.

I agree with all of you and here is my reasoning...

Draghi has in fact blown his entire load and the Fed has pretty much gone as far as it can for now. Furthermore, the BOJ has also eased. The BOJ is key in my opinion because it returns the JPY to the preferred funding currency status. This means that capital looking for safe havens that is currently in JPY will most likely now more over to USD.

All the good news is out. There is really not that much that can come out now that will drive this pair to 1.3500. In fact we are facing a couple of more weeks of economic data which will surely suck, and then after that it is Q3 earnings season in equities which I highly suspect is going to be flat or below expectations. In order words I do not foresee anything that will stimulate risk appetite on the immediate horizon. Of course there will always be surprises, but not enough to take price that high.

1.2500, here we come.

In fact, I still envisage a 1.16 low for this pair, but with the aggressive CB actions of late, it will now take much longer to reach.