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  • Mike Paterson

Soggy risk sentiment greets the new week

Monday 18 January 2021

I warn of the inherent fragile global risk all the time and we're seeing some softer tones again with equities beginning the week in retreat and some firmer USD tones generally.ECB announcement/presser on Thursday in focus too. US markets closed today for Martin Luther King Day so beware the thinner liquidity.

The jury is still deciding how 2021 might pan out in the ever-fickle world of Forex as risk and USD sentiment continues to vary. Either way, we're seeing some good two-way business so keep your focus on the price action and key levels breaking/holding and don't over analyze or look too far ahead as always.

GBPUSD has seen a steady decline since failing again at 1.3700 then 1.3660 and 1.3600 and now posting lows of 1.3525 as I type. Pips banked in the retreat and down here as per my recent tweet and will look to re-sell into 1.3580-00. Immediate offers now at 1.3560 then 1.3580, 1.3600, 1.3620-25, 1.3660, 1.3688-85,1.3700, 1.3720-25 and 1.3750. Bids building at 1.3520 with more at 1.3500, 1.3480 and 1.3460 then 1.3430, 1.3400, 1.3385 and 1.3360.

EURGBP has found a current base at 0.8880 and 0.8900 ahead of the key 0.8860 area and now back up testing 0.8920 as GBPUSD retreats. Some more dip buys duly made but cautious given the generally soft EUR tones elsewhere. Offers building now at 0.8930-35 still then larger at 0.8950, 0.8980-85 and 0.9000 then the pivotal 0.9030-35 area and 0.9055-60 again. Some bids building at 0.8900 and 0.8880-85 again then larger at the key 0.8860 area then 0.8830 and 0.8800 with more at 0.8785 and 0.8760.

GBPJPY broke down through the 141.50 support on Friday amid the softer risk tones and now posting 104.40 lows as the theme continues.Bids at 140.30 and 140.00 still then 139.75-80, 139.60, 139.30 and 139.00. Offers at 140.80, 141.00, 141.30, 141.50, 141.80 and 142.00.

I still have a naturally bearish stance on GBP overall and remain poised to sell into rallies but respecting dip demand still as we retreat with price action ever fickle.

USDJPY failed into 104.00 after holding 103.60 with the rally once again tempered by JPY risk-off demand.Re-sells duly placed with some pips banked on the retreat into 103.75 as per ongoing strategy.Rinse and repeat as we continue to range. Bids building still at 103.50-60 (560m expiries too), 103.30-35, then 103.00-10 with more at`102.85 and the key 102.60 area. Offers at 103.85 then larger at 104.00 and 104.215-25 (550m expiries) again then 104.50, 104.80 and 105.00 still. I remain a rally seller overall.

EURJPY failed around 126.00 this time amid some general EUR selling and softer risk but has held 125.20 on the retreat so far. Offers now again at 125.50, 125.75, 126.00, 126.30 and 126.60 then 126.75-80 and 127.00.Bids building at 125.20 and 125.00 then 124.85 and 124.60 with more at 124.30 and 124.00.

EURUSD capped at 1.2150 on the firmer USD/softer risk tones plus the option expiry interest and re-sells duly placed per ongoing strategy. Some pips banked into 1.2100 and 1.2080. Bids building now at 1.2060 still then 1.2030 and 1.2000, 1.1980, 1.1960, 1.1930 and 1.1900. 530m Puts in the mix at 1.2080 and 630m Puts at 1.2100-05. Offers again at 1.2080-85, 1.2100, 1.2120, 1.2135 1.2150, 1.2175-90 and 1.2200. I remain a rally seller overall as my preferred side.

USDCHF found a decent base at 0.8870 with the SNB ever watchful but now failing into 0.8930 again as EURCHF drops further to test 1.0750 amid the general EUR selling/softer risk tones. Offers now at 0.8925-30 and 0.8945-50 again then 0.8965, 0.8985 and 0.9000. Bids building again at 0.8900, 0.8880-85, 0.8850-60, 0.8830 and 0.8800. EURCHF bids still at 1.0750 then 1.0730 and 1.0700. Offers at 1.0780-85, 1.0800, 1.0830 again then 1.0850. I continue to play both sides amid all the USD/sentiment uncertainty but dip buying the preference still.

AUDUSD found a cap at 0.7750 then 0.7720 and made a steady retreat to 0.7660 as I type helped by the risk-off AUDJPY supply.Bids now at 0.7650, 0.7630, 0.7600, 0.7585, 0.7560, 0.7530 and 0.7500. Offers now at 0.7680, 0.770, 0.7720, 0.7750, 0.7765 and 0.7680 then 0.7800-05 again. Rally sell still my preferred strategy while always respecting the dip demand too.

USDCAD has based at 1.2680 this time amid some softer oil/firmer USD tones and now back up testing 1.2800 helped by some general CAD cross supply. Offers at 1.2800 still then 1.2830 and 1.2850-55 with more aT 1.2875 and 1.2900.Bids building at 1.2775, 1.2760, 1.2730, 1.2700, 1.2680 1.2660-65 again then 1.2630 and 1.2600.

There's little doubt that we live in strange times and rationale was thrown out the window a long time ago so 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. I can help with this in my 1-2-1 sessions and now is the time, more than ever, to get on board with those if you haven't already done so. Contact me to take advantage of currently reduced prices for January.

Let's continue to be careful out there in all things. Staying safe must be our main priority still.

Interbank rates: 08.40 GMT

GBPUSD 1.3540

EURUSD 1.2074

EURGBP 0.8915

GBPEUR 1.1209

GBPAUD 1.7643

GBPCAD 1.7313

GBPJPY 140.43

USDJPY 103.76

EURJPY 125.27

EURCHF 1.0764

AUDUSD 0.7672

USDCAD 1.2793

USDCHF 0.8914

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