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There’s a storm brewing over EURCHF. Overnight the 1.2045 key support was breached and so the next level is both technical and fundamental/political at the SNB’s 1.20 peg. You can already sense traders out there buying EURCHF with their stops just under 1.20. Beware!
EURCHF – The challenge of the 1.20 peg is now imminent. My guess (and it can only be that) is the SNB will let the market trade right through 1.20, thus stopping out the amateurs with their stop losses in the 1.1990’s causing a more serious acceleration lower down deeper into the 1.19’s. At that point I will be prepared to have a nibble with a plan of attack to buy more when we get back above 1.20.
GOLD – It seems that having broken through multi-year support at $1180 we have moved significantly lower and may continue to do so. Any rallies should be capped by $1180 which now turns to resistance.
EURUSD – I sold some EURUSD this morning as it seemed to play catch up with the drop in the gold price. Breaking back below 1.25 is not in the least surprising as we head down to the 1.21’s in the coming weeks. Any rallies should be capped in the 1.26’s.
USDJPY – Governor Koroda was speaking overnight and it’s put USDJPY back into the 114’s this morning. At this point USDJPY is quite stretched and I would expect a period of consolidation as we have moved quite aggressively of late.
AUDUSD – Markets are cyclical and therefore when I see dollar strength displayed across the board I look around to see which pairs are yet to participate. My eye fell on AUDUSD which has been flirting with the 0.8650 area for weeks. If the buck is strengthening then cyclical markets will eventually get around to AUDUSD and decide that Aussie should be buying fewer greenbacks. Therefore I’ve sold AUDUSD and will likely sell more below 0.8640.
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