Mysticforex

The AUD/NZD pair faces a double top at the 1.1250 level but a break above opens a possible run to 1.1400. Meanwhile a break below 1.1150 could mark a near term top for the pair

On Thursday we get the results of the ECB's deliberations on interest rates, which will be followed with the Draghi press conference. With interest rates already at zero and a negative charge for money parked in the central bank, how many more monetary tricks does Draghi have left in his magic bag? At the Jackson Hole festivities last month, he pleaded for coordinated fiscal stimulants, but this proposal is alien to the austerity advocates in the EU. Weakness this week in the EURUSD accelerated as the pair traded under the 1.27 handle. The EU economy seems to be slipping back into another recession, partially caused by its own policies, exacerbated by sanctions against Russia. There also seems to be an increasing awareness the single currency is dysfunctional, as the political opposition is growing.

The EUR/GBP pair now finds itself on the 7700's as it approaches very long term support at the 7700 level that has not been seen since 2008. A break there would open a run to 7500 while only a retake of the 7900 figure alleviates the bearish bias.

The euro made fresh 22 month lows as the dollar juggernaut continues unabated. A huge part of the weakness now no longer has to do with EZ economic woes but rather the the assumption that the Fed will definitely begin raising rates in Q1 of 2015. However most of the Fed officials remain wary of moving too fast with Charles Evans even going so far as to cite 1937 as the prime example of monetary policy mistake. That's why tomorrow GDP data could prove to be so pivotal. If the number does print at 5% or better as many bulls anticipate then the pressure on the Fed to hike will increase markedly and the euro could have more to fall fall. Having broken all the key support levels the euro only has 1.2660 as the main support ahead of the big 1.2500 level. To the upside the pair now needs to recover the 1.2900 handle in order to alleviate the downward bias

Now that the threat of Scottish independence is over, cable traders can once again focus on fundamentals. Unfortunately there is not much UK data on the docket this week, but tomorrow could prove to be highly volatile when BOE Governor gives a speech in Wales. The speech, to be delivered at the Institute and Faculty of Actuaries General Insurance Conference's meeting, is closely watched for any clues on the timing of U.K. rate hikes. In a recent speech, Carney said he saw a rate rise next spring, which will rise very gradually thereafter. The Governor said inflation remains relatively benign, dampening the need for an early rise. If he repeats this message tomorrow the pound is likely to come under renewed selling pressure. The pair has been bid on the assumption that UK would be the first G-7 nation to hike rates, but with BOE reticent the enthusiasm for sterling may fade and is could dip to the crisis lows set earlier this month. Technically the 1.6400-1.6500 area remains high resistance for cable as the pair stalls ahead of the key levels from which it broke down earlier in the summer. Support is now at 1.6250 while there is also spike support at 1.6050 ahead of teh key 1.6000 level.

Market Drivers for September 24 2014 IFO hits a 17 month low New Zealand Trade Balance improves Nikkei -0.24% Europe -0.02% Oil $91/bbl Gold $1223/oz. Europe and Asia: NZD Trade Balance -472M vs. -1125M EUR IFO 104.7 vs. 105.9

Technically EUR/NZD faces key resistance at 1.6000 but a break there opens up the run towards 1.6200 and possibly even 1.6500 on a longer time horizon. Meanwhile a break below 1.5800 turns the bias on the pair bearish again.

Technically EUR/AUD faces resistance at the 1.4600 level but a break there could open a run all the way to 1.4800. On the other hand only a break below 1.4200 puts the negative bias back in play as for the time being the pair remains in the Bollinger band buy zone.

The Home Sales figures show that housing remains soft and any hike in Fed rates could hurt it badly USDJPY hold 109.00 for now

USD Existing Home Sales 10:00 It’s been a quiet night of trade on the first trading session of the week with most of the majors tracing our relatively narrow ranges in the absences of any economic news, but both the Aussie and the kiwi saw some serious volatility throughout Asian and early European dealing.

Scotland is voting for independence today and we should have the results at the end of Asian session trade. For now the market is convinced that Scotland will vote No but with polls relatively close and turnout very high anything is possible. If the No vote takes place then the pound may get a knee jerk bounce but with so much information already priced in the prospect of much more upside is limited and the pair is likely to see resistance at the 1.6500 level. On the other hand a Yes would be a shocker that will likely drive pound through the 1.6000 level very quickly as it will open up a very nasty can of worms for not only UK but for the rest of Europe as well. At very least this will greatly delay any rate hiking from the BoE andcould have long term negative ramifications for UK economy and sterling. Technically pound sees strong resistance at the 1.6500 level while the recent swing low of 1.6050 represents support. A break below opens up the prospect of a move to 1.5900 as all key support level get taken out.

Agree. Look at GBP/JPY... bounced off 17900 today. But I think a lot of folks holding their breath over Scotland vote.

Technically USD/JPY has made fresh highs and see no significant resistance until the 110.00 level back from 2008. A break above 109.00 opens the run to that barrier while a move below 107.50 could trigger a selloff to 107.00

GBP/AUD appears to have topped out at the 1.8000 level and the pair now looks headed lower with 1.7500 the first level for shorts. A move below could target the recent lows at 1.7200 while only a move back above the 1.8000 figure relieves the bearish bias in the pair.

September 17th, 2014 Market Drivers for September 17 2014 UK employment BOE minutes AU LEI at -0.1% vs. -0.1% Nikkei -0.14% Europe 0.34% Oil $94/bbl Gold $1237/oz. Europe and Asia: AUD LEI -0.1% vs. -0.1% GBP UK Employment -37K vs. -29K GBP UK Boe Minutes 7-2 EUR EZ Final CPI 0.4% vs. 0.3% North America : USD CPI 8:30 AM USD FOMC 14:00 AM Cable sold off session highs after the release of the BoE minutes revealed that the MPC was generally circumspect about the state of the UK economy and saw some risks to growth from both the Scottish referendum and the weakening of demand from the Eurozone.

After 5 straight days of selling the Aussie has finally had a positive day as the key 9000 level provided a modicum of support. The pair needs to hold above 8950 in order to show some signs of a bottom and could then rally towards 9200. A break below 8950 invites a test of the swing lows at the 8750 level.

As shown in the monthly chart, the EUR/USD found support at a fairly important technical level, the 23.6% Fibonacci retracement of the 2008 to 2010 decline. If this level is broken, the next area of support will be the 2013 low of 1.2750. On the upside, if EUR/USD breaks above 1.30, there is no major resistance until 1.3150.

A poll last week end showed the Scottish Yes votes for independence taking a narrow lead. This crushed the pound, causing it to gap lower when the trade resumed Sunday evening. The pound-selling, combined with the frantic USD buying, took the pound to the lowest level since November 2013. The sell off from the July high of 1.7180 to the yearly low of 1.6052 was quick. The GBPUSD has since bounced from this low but a small portion of the gap remains. Shedding the yoke of London has appeal for those craving independence. The Scots, however, are known for their parsimonious tendencies and the start up costs for a new government will not be cheap. Further, the new Scotland seems destined to be a country without a currency.

After making a quadruple bottom at 136.00 level and now breaking above the 138.00 figure the EUR/JPY looks ready to make an assault on the 140.00 level. A break above there opens up the prospect of further move to 142.00. Meanwhile only a break of 136.00 would resume the bearish bias.

As traders know when the size of your account grows, an increase in trading volume soon follows. Unless, of course, you are one of those rare disciplined traders who takes money out of the account and time away from the market after a serious of successful trades. Speculators were correct with their large bearish bets in the euro and the yen. Now, with the increased equity, the trading volume has forged ahead. Yesterday at the CME forex futures markets, there were 1,659, 838 contracts traded, At day's end the total open interest in all futures contracts was 1,687, 451 contracts. This shows the turn over was almost the entire OI of CME currencies in a day. The most actively traded currency is the euro, which finished the day with total OI of 484K. This represents an increase in the OI of 41,117 contracts in a day, which tells us the specs are continuing to sell the euro. How do we know? The most recent COT report with data from September 2nd, showed specs were short 211,006 contracts of futures and delta adjusted adjusted options. Since the OI has gone up significantly for the past two days this means there are new shorts entering the market.

Breaking 92 cents is extremely important for the Australian dollar but as you can see from the chart, the main resistance level for the pair is closer to 0.9150, the 32.8% Fibonacci retracement of the 2008 to 2011 rally. If NZD/USD closes below this level in a meaningful way, is next target should be 90 cents. On the other hand, AUD/USD needs to recapture 0.9250 to negate the downtrend.

Taking a look at the monthly chart of USD/JPY the currency pair has broken above the 61.8% Fibonnaci retracement of the 2007 to 2011 decline and at this stage there is no major resistance until 110. As long as USD/JPY remains above 104, the uptrend is intact.

Japanese Yen Falls To Lowest Since 2008, It was a banner week for the USD bulls as they pushed the euro (EURUSD, FXE, UUD, UDN) to the lowest level versus the USD since July 2013, and the lowest in the yen versus the USD since September 2008. It was euro and yen weakness that widened the spreads. Since the market was loaded with spec shorts, it has been a good week for those correctly positioned. Going forward, this means we are headed for trading sessions with increasing volatility. From personal experience, I know when traders have more equity in their accounts, they trade more. The euro and the yen were both helped lower by government action to expand their respective money supplies. For the EU, this belated growth in the money supply is one of the factors which is sending the EU back toward another recession, but the ECB President Draghi's policies cannot be blamed. The US, UK and Japan were are all actively increasing the money supplies but this policy was opposed by Germany. As we have mentioned before, the German word schuld has two meanings, debt and guilt. This might explain the German reluctance to take on new debt. Now the entire EU is paying the price with slow or no growth and record high unemployment.

Amidst all the hoopla surrounding the euro, few market analysts have notices that cable's decline has been even more dramatic. The pair is off more than 800 points from its 2014 highs and shows dew signs of stabilizing. Ironically the latest economic data from UK suggests that activity remains strong and that all things being equal the BoE may be the first G-7 central bank to move on rates. However, the trade in sterling is no being driven by politics rather than economics. The surprising gains of the Scottish independence vote - which analysts describe as a movement not a campaign - has made the outcome highly uncertain. If Scotland does spin out from UK, the ramifications are unknown and cable could drop further. The vote is not until September 18th so in the meantime traders will be watching the polls and this Tuesday's commentary from BoE Governor Mark Carney. Any pick up in the NO vote could provide a relief rally in cable, but if Yes continues to gain momentum the pair could drift towards 1.6000

Having broken below 1.30, the next area of support for EUR/USD is between the 2013 low of 1.2746 and the 23.6% Fibonacci retracement of the 2011 to 2012 decline near 1.2730. If this zone is broken, then there is no major support until 1.25. Today’s high of 1.3155 is the resistance.