Recent verbal interventions on the euro has provided us some amount of volatility and market is at this stage panning out closest to the forecasted Scenario 2 ("Fundamentals vs technical day", 7 Feb Thu). Low on Monday was 1.3322 before the rebound recaptured the DMA21 (Red) at 1.3435 overnight. I would expect E$ to consolidate within 1.3400 to 1.3600 for this week and it will be crucial to monitor its momentum for the following week from this Friday's close. Cross referencing the EURxxx and USDJPY, I would expect another week of consolidation as market is pausing after its recent parabolic rally. Lastly, having said all the above, I am still of the opinion that market is still keen to test the 61.8% fibonacci ratio level at 1.3830/40 before a more elaborate correction is due.
CFTC COT report revealed that speculator accounts have increased its net euro long positions to +37,952 vs +27,472. But its net short JPY positions reduced marginally to -68,413 vs -71,246.
Asian order book:
Stop loss: 1.3300, 1.3330/20, 1.3350 and 1.3500
Limit: 1.3300 and 1.3350
Technically, intraday momentum is still pointing up but E$ needs to hold above 1.3420/30 in order to keep its momentum up. I expect lacklustre consolidation into London but feel the move higher to take place only during the Ldn/NY session. Expected range today from 1.3420/30 to 1.3510/20.
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| E$ Daily chart - Staying above DMA21 (Red) |
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