ForexChaser's  Instablog

The major pairs and the S&P 500 have diverged to some extent in Monday trade. The day started very strongly in the currency market and continued on a strong momentum during the European and the U.S. sessions, but the price action of the futures indexes was sluggish most of the day. With today’s gains, the major pairs are trading near vital price points, which will probably have an important word to say over the next few days.



The Eur/Usd was the best performer of the day, gaining 180 pips. Moreover, the pair is approaching the 1.2900 resistance area, which has been in place for almost a month now. A break above this level would be very bullish, and with the S&P futures staying in the 1130.00 area, chances for such a move to come are quite high.

The Gbp/Usd was a real disappointment in intra-day trading, even though the pair traded rather volatile. The Asian session saw the Gbp/Usd gaining ground very fast, but then several sell-off episodes followed. On the daily chart, the pound had an effective range of only 120 pips over the last two weeks of trading, meaning that the market has no clear direction in regards to where the pair might move next. We recommend newer traders to avoid trading the Gbp/Usd until it develops a trend.

Carry trading and risk-tolerance had been two of the main factors that drove the Aud/Usd 15% higher over the last three months of trading. That is 60% in annualized terms, which is probably a record for any major pair. Moreover, the Aud/Usd is now trading in the 0.9350 area, which has been the main resistance area over the last two years of trading. A break above this level is very likely, but the Aud/Usd will need to catch a day of broad Usd weakness.

The Usd/Cad continues to trade in wide ranges, with most of the action concentrated around the European session. We expect the Usd/Cad to move slowly lower over the next two weeks, but the pair will run into some troubles around the 1.0200 area. This might be too soon now, but we expect the Usd/Cad to hit parity once again.

The Usd/Jpy seems to have hit a wall of orders in the 83.50 area. Some suggest that the BoJ is there safe-guarding the pair to avoid new lows, but the market will eventually prevail some say. We expect the Usd/Jpy to continue its downtrend as long as the state of the U.S. economy remains surrounded by uncertainty.


Disclosure: No position