EUR/USD consolidates at 2-year lows

USD/JPY and JPY crosses traded on soggy. It was debatable whether USD/JPY or EUR/JPY led the complex lower. USD/JPY was as high as 120.75 early but fell on Japanese exporter sales into the Tokyo fix (despite value today interest from importers) and profit-taking by specs. A low of 120.27 was seen before the market steadied. The pair was bracketed by large option expirations at 120.00 ($4.562 bln) and 121.00 (1.856 bln). EUR/JPY fell back from 147.02 to 146.45, never having rallied a la USD/JPY yesterday with EUR generally on the back-foot. Contrasting central bank expectations continue to give EUR a more bear outlook. Trading in both USD/JPY and EUR/JPY was thin, not all that surprising given upcoming Christmas and Boxing Day holidays. GBP/JPY fell back from 187.36 to 186.54 but could still bounce with the downside limited to the 186-handle as of late. AUD/JPY and NZD/JPY losses were limited too from 97.94 to 97.49 and from 93.17 to 92.81, respectively. High-beta currencies look to be in better demand from Japanese players, especially on dips.

EUR/USD opened in Asia at 1.2173 after selling off in US trading after better than expected US GDP data and sharply higher US yields. From 1.2165 to 1.2188 early, it fell back later to where it started on EUR/JPY sales. EUR/USD looks to trend lower into year-end and in a convincing manner on contrasting US-EZ central bank expectations. Option-related buying interest is eyd at various levels either side of 1.2100 but no technical support of note this side of 1.2050.

GBP/USD did little in Asia, holding between 1.5505-27 and above yesterday’s 1.5486 spike low. EUR/GBP treaded water between 0.7842-48.

USD/CHF did nothing, holding bid between 0.9869-80 and just below yesterday’s 0.9886 trend high. EUR/CHF treaded water between 1.2022-29.

AUD/USD opened in Asia at 0.8103 and saw modest gains from 0.8097 to 0.8124 as shorts-covered into Christmas and Boxing Day holidays. AUD/USD does look destined for tries sub-0.80 with USD likely to continue higher into ’15. Key support is eyed at 0.8066, the May ‘10 low, with a break below seen even more bearish. Profit-taking may kick in sub-0.8000 but should only work to slow AUD’s descent. Domestic and China concerns should continue to be the foci.

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