Range trading still as jury remains out
Tuesday 2 February 2021
The first day of a new month provided some good two-way business amid lots of the current noise re equities, Silver, WallStreetBets,RobinHood, Redditt and all but nothing of substance so we're ranging still.
The Forex jury remains out amid all the general noise so keep playing what's in front of you and don't over analyze.
GBPUSD found good support at 1.3650-60 again having retreated through 1.3720, then 1.3700 amid EURGBP holding 0.8800 and GBPJPY offers above 144.00 as per my tweets.Still failing to hold above 1.3700 though as I type.EURGBP held 0.8800 (GBPEUR 1.1365) but equally failed to get back above 0.8850 (GBPEUR support 1.1300) and the retreat to 0.8820 (GBPEUR up to 1.1338) has helped underpin GBPUSD. GBPJPY foud a decent cap at 144.10 but equally good support at the old 143.30 pivot as per my tweet and now breaking up to test 143.80 as I type with risk-on demand prevailing and USDJPY still going nowhere.
I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still with price action ever fickle. Equally a case still for going long in the dips therefore as we continue to range. Patience and not getting greedy remain key.
USDJPY had a look above 105.00 but got a bit giddy from the lack of oxygen and now back looking at 104.85 amid the tight range. With Japanese year-end approaching we can expect to see the usual JPY repatriation by corporates in the mix. EURJPY failed at 127.00 as USDJPY ran out of buyers and EURUSD felt soggy again but has held 126.50 on core pair dip demand and better risk sentiment. EURUSD broke down through 1.2080-85 but then found support at the stronger 1.2050-60 area but still looking offered as we fail to get back above 1.2090-00. Cross-pair flows in evidence too. USDCHF has held above 0.8940 with the SNB ever watchful and some risk-on CHF supply along with EURUSD looking a little soggy but failing into 0.8980 ahead of the larger line at 0.9000.
AUDUSD found itself on the back foot after the RBA left rates on hold but added some QE that wasn't expected at this time but was in the pipeline. From 0.7660 we've been down to test 0.7600 again but some decent expiry interest plus AUDJPY demand is helping a bounce to 0.7635 before capping again.USDCAD found a good cap this time at 1.2860 and failing at 1.2780 amid some softer USD tones.
As we look at trading opportunities to begin the year it's even more important not to over analyze but trade the price action with discipline and patience.
Let's continue to be careful out there in all things. Staying safe must be our main priority still.
Interbank rates: 08.42 GMT