The S&P 500 continues to ease back and the euro has slipped from its recent highs; but this isn't confirmation that a larger reversal is at hand. Just as breakouts in low liquidity conditions fail to generate follow through, a lack of drive in a reversal similiarly leaves us without a real trade in hand. We have yet to see an underlying drive develop in any of the larger drivers; so positoining should reflect these low activity and congestive trading conditions.
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For active trades, my NZDUSD short took a hit after the RBNZ rate decision as Governor Bollard offered a more optimistic outlook for growth and spoke about a gradual pace of hikes going forward. This wasn't exactly a real surprise from what has been said before; but with the kiwi already at highs, the market is prone to positive interpretations. I will keep my stop at 0.8170 and keep my eyes on risk appetite trends - as this more influential driver will undoubtedly claim greater responsibility for price action going forward. In the meantime, my EURJPY short hit its first target at 116.50. Follow through from here is possible; but given the tepid trading conditions, it is probably better to book the rest here and look for the next move.
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In the meantime, I have pending orders on a few pairs. These are setups that look very attractive given technicals and the broader fundamental considerations; but the unless there is a clear drive behind them, they could easily flounder. As such, I'm keeping a close eye on EURUSD for a break below the congestion low at 1.4650 ahead of the ECB rate decision. Even if risk aversion or a dawning of the Greek bailout falling through doesn't take over, we can still have a drop in rate expectations that feeds a euro decline. For the same reason, I'm also interested in a EURCAD reversal below 1.4250 and EURGBP confirming its hold below 0.89.
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The Swiss franc is similiarly ready for major reversals. CHFJPY nudged its 95.50 support; but it didn't close below the floor. We'll have to judge the franc's direction from USDCHF and other pairs. Speaking of USDCHF, I like a confirmed reversal above 0.84 to turn a basing pattern into a true reversal. GBPCHF and AUDCHF are also interesting - watching momentum rather than specific levels.
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There are other pairs out there (USDCAD, GBPUSD, AUDUSD, AUDNZD and AUDJPY); but they are further from completion and require a greater fundamental burden to get going. We'll update these as they develop.
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