The FX Trader: JPY and GBP weakness dominate

The rundown

• EURUSD – stuck in no-man’s-land, having nominally reversed the break below the former range low of 1.1542, but not finding momentum. A rally and close well above 1.1600 and even close to 1.1650 needed to reset the focus higher – until then neutral.
• JPY pairs – the JPY carry trade continues as long as volatility remains low it seems. The going will likely get far choppier and more vicious if we get a squeeze higher above 155.00 in USDJPY, with mounting resistance from Japanese officialdom if 160.00 nears again. When does the EU decry EURJPY approaching 180? It’s crazy.
• GBPUSD and EURGBP – sterling on tilt again after yesterday’s weak UK labor data. With sideways USD, GBPUSD still in downtrend, but resistance zone extends much higher to 1.3250-1.3325 if local resistance can’t hold. EURGBP more  clear-cut. See GBPCHF chart above.
• AUDUSD – mean reversion has been the name of the gam here for months – has now established a strong support zone ahead of 0.6450 and looks like it wants to take a stab at 0.6600+ resistance for another go at 0.6700.

Others

• AUDNZD – the bull trend has been one of the most consistent trends of late and probably needs fresh fuel to extend, even if valuation levels have yet to catch up with the huge yield differentials that suggest something like 1.2000 is a fair price for the pair. Our trend indicator has been in uptrend for an incredible 94 days, during which time the trend has extended over 15 ATR’s from the time the trend was established.
• Scandies – the recent rally showed that EURSEK and EURNOKcan suddenly prove sensitive to risk sentiment, as has been the case historically, especially for EURSEK. But the very big 11.08+ area held for the third time in EURSEK – now we focus on the big range support just below 11.90, which opens for a test of 10.75 and possibly beyond. Similar setup in EURNOK, with 11.54 th ekey range support and 11.26 a massive level going back ages – might need some fireworks in crude oil / nat gas to get anything below 11.50 there.

Looking ahead

US data please?  The US government shutdown will continue to reverberate as October data will either be delayed or even never released at all in some cases as some of it was simply not collected in October, according to White House economic advisor Hassett. The originally scheduled October CPI report for next Tuesday will inevitably face a delay, therefore. The first data we will get soon is the September Nonfarm payrolls report, which could come any day, while the schedule for other important data will likely be made available next week, according to an article I came across citing Goldman Sachs analysts.

FX Board of G10 and CNH trend evolution and strength.
Note: If unfamiliar with the FX board, please see a video tutorial for understanding and using the FX Board.

JPY and NZD weakness are the most pronounced, with sterling on tilt and nervy. Elsewhere, the USD strength is not convincing and has backed off over the last week - needs an impulsive rally to prove the point that it wants to rally further.

Table: NEW FX Board Trend Scoreboard for individual pairs.
EURCHF is tilting downward again and could go on to test lows of the cycle. Elsewhere, the new GBPJPY rend is tough to interpret when both GDP and JPY are weak, while EURSEK is still within the range even as it tilts lower – key levels noted for that pair above. EURNOK should follow EURSEK directionally if no drama in energy markets.