Dollar begins 2015 strong

USD/JPY opened the Asian session at 119.76 after firming during the quiet US session on NYE when there was broad demand for US dollars. USD/JPY started tracking higher during the Asian morning and after pausing around 120.00 briefly – the pair ripped above 120.10 when EUR/USD fell hard and led the USD broadly higher. Dovish comments from BOJ chief Kuroda made on the weekend added fuel to USD/JPY move higher. Stops above 120.10 were triggered to 120.43 before settling at 120.35/40 heading into the afternoon session. EUR/JPY dipped from the NYE close at 145.00 to 144.79 when EUR/USD led the USD higher, but the cross snapped back to 145.15 heading into the afternoon when USD/JPY stops were triggered above 120.10. The market in Asia was thin due to the Tokyo holiday, but funds appeared committed to buying USD across the board. The long USD strategy is the one major conviction trade at the start of 2015 at least. There is talk of Japanese sell orders ahead of 121.00 with break above targeting the Dec 8 trend high at 121.86.

EUR/USD opened the Asian session at 1.2105 after moving lower during the NYE session when funds bought USD across the board. It was the same story in Asia today, as funds loaded up with greenbacks for the start of 2015 in thin market conditions. EUR/USD stops below 1.2090 were triggered and the pairing traded down to 1.2051 at one stage before profit taking bids ahead of key support at the Aug 2010 trend low at 1.2042. The bounce was pretty unimpressive and the EUR/USD was trading around 120.60 heading into the afternoon session. Selling EUR/USD and more generally – buying USD – is the FX conviction trade as we commence 2015. A number of analysts pointed out the significance of the IMF COFER data released on Wednesday that showed a significant drop in EUR reserves held by central banks. The net flows from central banks have turned EUR-negative due most likely to the negative interest rates in the EZ. A break below 1.2040 in the EUR/USD could see a fall towards major support around 1.1885.

GBP/USD traded a 1.5541-88 range in Asia on Friday; last at 1.5555.

USD/CHF traded a 0.9932-82 range in Asia on Friday; last at 0.9972.

AUD/USD opened on Friday at 0.8181 and traded a broad 0.8128-87 range in Asia; last at 0.8134. It was a steady start to the New Year, not helped by the absence of Tokyo and China who remained on holidays. That all quickly turned around however when EUR/USD which had closed on New Year’s Eve at trend lower started to breakdown again. USD/JPY rallied in concert while the AUD/USD, which never needs an invitation to join a US Dollar rally, pushed lower. There was no news just broad US Dollar strength across the region. Since the Asia morning slide there has been no bounce suggesting further US Dollar strength once Europe gets up and running. It looks as though players are keen to pick up from where they left off in 2014 and that is long the once mighty US Dollar. The hourly support in AUD/USD around 0.8155/60 provided no support today with the break of the 10-dma at 0.8140 suggesting we are again in line to test the major support level of 0.8066 next.

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