Can the pound hold gains after the spike higher earlier?

Sellers are still in near-term control in GBP/USD

GBP/USD H1 09-10

The spike higher on the news here helped to see cable run up to a high of 1.2291 but buyers fell short of testing/breaking the key hourly moving averages near 1.2294-97.

This means that sellers are still in near-term control of the pair as price fades back towards 1.2250 levels currently.

The key question in all of this is does the report represent a significant game changer in Brexit talks between the EU and UK?

It is certainly a breath of fresh air amid talks that look like they're going nowhere but I reserve my doubts about how plausible and how workable the concession is.

And until we hear from official sources, it's hard to place much into the report above to count that as an official stance being taken up by European officials.

The offer itself might sound great on paper as it may be a sign of trying to work towards getting a deal, but if anything else, it could also be in part shifting the blame back to Boris Johnson as the offer still isn't exactly what he wants.

We'll have to see how things go over the next few days but there's no doubt that this is definitely a volatile period for the pound. In any case, sellers remain in near-term control for cable now so there isn't much of a significant upside break to chase for now.



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Yen stays pressured as yields push higher on the day

USD/JPY hits a session high of 107.30

USGG10YR

Treasury yields are holding their own on the session as European stocks are also keeping mild gains to start the morning. 10-year yields are up by 1.7 bps to 1.546% currently and that is keeping added pressure on the yen so far today.

Of note, the biggest beneficiary has been GBP/JPY as the pair holds higher by 0.5% as the pound jumped on positive Brexit news while the yen is weaker as highlighted above.



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Dollar slightly weaker in the European morning

EUR/USD climbs above its 100-hour moving average

EUR/USD H1 09-10

Although the timing of the move comes alongside the report here, I reckon this is more to do with some positioning flows ahead of the FOMC meeting minutes release later today.

There isn't much else happening in markets at the moment as the yen and dollar are holding weaker on the session. The former owes to a move higher in yields with 10-year Treasury yields now up by 1.3 bps to 1.543%.

Meanwhile, the greenback is weaker across the board amid light flows with EUR/USD now testing a break above the 100-hour MA (red line) @ 1.0774 after buyers defended the 200-hour MA (blue line) in overnight trading.

Hold a break above the 100-hour MA and buyers will regain near-term control ahead of resistance around 1.0994-00.

I don't view this as a material shift in dollar sentiment for today but let's see how price action plays out ahead of the FOMC meeting minutes release before we get to US CPI data and US-China trade talks tomorrow.

For EUR/USD, buyers look to be building some conviction but unless price firmly breaks above 1.1000, it's hard to label this as an upside breakout for now.



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Nordea Bank: like EURUSD shorts from 1.1000

EURUSD

They target 1.0760 with a stop loss at 1.1100

Their rationale is as follow:

1. Global slowdown not over

2. new record lows in 5y5y EUR inflation could re-ignite ECN monetary madness via a higher monthly purchase tempo in the QE-ternity (nice term) program in December and...

3. USD liquidity will probably have to become scarce before the Fed really goes big on liquidity.

Well, USD supported today on souring sentiment, so that could be added to the mis as well. Their parameters for the trade are here: 

EURUSD



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AUDJPY moves lower on sour risk tone to 72 handle

AUDJPY at 72.00

The AUDJPY has been weak today on a souring risk tone. AUDJPY now down to 72.00 handle. European indices still broadly lower. 

AUDJPY at 72.00



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USDJPY rises and extends back above recent swing area/broken retracemen

Swing area at 1.0691-95. Risk for longs now

The USDJPY has moved higher after the decent US jobs report. In doing so, the pair will back above a swing area at the 106.91 – 954 . In between, since the 38.2% retracement of the move up from the August 26 low. That retracement level comes in at 106.925.  

Swing area at 1.0691-95. Risk for longs now

The 106. 91 -954 area is now close risk for longs who are looking to take back control after a three day fall that took the price from a high of 108.463 to a low reached yesterday at 106.477. The low price yesterday stall just ahead of the 50% midpoint retracement at 106.451.  That was a good level to find dip buyers.   They now hope that the price can continue the build higher by staying above the swing area.

On the topside the pair has the high from yesterday and low from September 20 at 107.30 as the next upside target.  The swing low from September 26 comes in at 107.418. The falling 100 and 200 hour moving averages come at 107.483 and 107.571. Finally the 100 day moving average is at 107.661.  Those are topside targets if the bulls can keep the momentum going.

The US stocks have reversed higher on the data and  look to open with gains.  The Dow futures are implying a rise of 72 points.  

US yields are also higher with the 2 year up 3.3 basis points. The 10 year up 1.5 basis points.  

Gold is lower by $-6.50 to $1498.50. 

Higher stocks, higher yields and lower gold tends to strengthen the USDJPY, but it is always nice to have the technicals support those intraday intermarket moves.  Hold the 106.91 level.  



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EURUSD moves lower after the decent jobs data

3.5% unemployment rate. Adding jobs but workers still not getting paid more

The US employment report was decent with 3.5% unemployment rate, jobs being added, but workers still not getting raises (0.0% earnings/2.9% YoY vs 3.2% last).

3.5% unemployment rate. Adding jobs but workers still not getting paid more

The EURUSD moved higher and lower on the release.  The low price reached 1.0956 so far.  The 1.0964-67 area is a swing area going back to September 23 (was support), Septmeber 26 (was resistance). Yesterday and earlier today, the price used the level to deflect off at times.  

Sellers are so far trying to lean against that swing area and make a run back toward the 200 and 100 hour MA.   Move above and the sellers may look to cover as they get no satisfaction. The 50% retracement at 1.09769 would be eyed on the topsdies.  Get back above and the 1.1000 level becomes the focus once again.  That level has been a ceiling so far this week. 

Sellers are trying to keep a lid on the pair but there is good two way flows.   The pair is sitting on the wall at the 1.0964-67 area.  Which way will Humpty Dumpty fall



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GBPUSD spikes higher and cracks 200 hour /38.2% retracement

1.23475 is home to MA and 38.2% retracement

The GBPUSD has spike higher in cracked the 200 hour moving average and 38.2% retracement in the process. Those levels came in at the 1.2347 area.  That is now close risk for buyers.  Earlier in the NY session the price was able to also extend above the underside of the broken trend line (see read numbered circles). Bullish breaks for the pair. 

1.23475 is home to MA and 38.2% retracement_

The pair looks toward the 50% at 1.23921. The 200 bar moving average on the 4 hour chart is also near that level.



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GBPUSD consolidates above 1.2250 as EU and UK reach stand off

Stand off

The UK and the EU are both keen to be not seen as the ones to de-rail a Brexit view.

If the EU reject Boris's deal they can be painted as the bad guys. If the UK don't try hard enough to address the EU's concerns over Boris's plans then they will be painted as insincere.

GBPUSD is sat on the daily chart at 1.2250 daily support having formed two inside bars. 

Stand off

  • If the EU says we can work with the deal expect a pop in the GBP 

  • If there is an extension announced expect a pop in the GBP



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Brexit: UK PM Johnson says these proposals don't deliver everything

Via Reuters

  • Can be no path to a deal except through replacing the backstop

  • We are some way from a resolution

  • Welcomes statement from Juncker that EU will examine UK proposals objectively 

  • I have given a guarantee that the UK will never conduct checks at the Irish border

  • Ready to leave October 31

  • If European neighbours do not show willingness to reach a deal will have to leave with no deal. 

GBPUSD is at 1.2287 and waiting for the next move from the EU or the UK to confirm movs towards a deal or no-deal



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