As expected, the market spent most of yesterday's session probing on the downside after a French name bought the E$ to day's high of 1.2386. Asian sovereign name was heard to be offering as the E$ extended its last wave up. From my observation, price action from the high to current levels has been corrective so far.
What's in the stop loss order book? Last heard sell stops at 1.2240, 1.2260 and buy stops at 1.2385/90 and 1.2450 mixed with strong offers on both levels.
Technically, overnight consolidation has brought intraday indicator back to o/s levels (not extreme). Momentum has turned to consolidation with no hint on direction just yet. However, a few observations put together do suggest that there is a slight skew towards higher E$. Just to mention a couple.... despite the correction yesterday, E$ held support just above 1.2300. Secondly, to further reinforce the E$ daily chart price breakout, we have similar situation in the EURAUD too (see charts below). Do note that a rally in EURAUD has far wider implication for the financial markets than just a stronger EUR on the surface. Rally in EURAUD would imply risk off = sell off in risk assets = lower equities = lower commodities = stronger USD = EUR adopting a pseudo USD status. Something is cooking which may trigger a risk event but nobody knows what it is at this point in time but given that EURAUD is turning up, it seems obvious that it cannot be Europe related..... just a logical speculation :)
For today, I don't expect drama but further consolidation within 1.2300 to 1.2400 for now. Last week's low of 1.2241 would be vulnerable if support at 1.2270/80 fails.
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| E$ Daily chart - Bullish signal |
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| EURAUD Daily chart - Bullish signal |
All the best!
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