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  • Mike Paterson

Weaker Yen tones still prevailing

Friday 15 October 2021

Another week draws to a close with the main trend of weaker JPY prevailing still amid the firmer risk tones overall as equities and oil remain underpinned along with yields albeit all three off their tops again as I type. Also some weakening of CHF but all relative given the demand this week.

These extended moves no doubt will have caught traders out if on the wrong side in the same way the moves lower a few weeks ago were equally as productive which is why discipline is so important in limiting losses as many of you who have held 1-2-1 sessions with me will be aware. It's easy to think the trend will stop and reverse so you can just watch it play out but the reality is you have to remain in control and be bold enough to say enough is enough (preferably sooner rather than later) and take your losses. You can then stand back but remain poised to re-enter when momentum fades.

Just focus on the price action and decide what presents value or doesn't, and if in doubt, keep out. Be aware of those rising support lines (as we're currently seeing) or falling resistance levels as we saw previously. Forex is not rocket science but it is ever-fickle so you have to stay in control of you/your trades as much as you can.

GBPUSD: Yesterday's test of 1.3750 failed but equally held the rising lows of 1.3670-75 in its retreat helped by GBPJPY capping and EURGBP rallying per my tweet and pips banked but it didn't stay down there long again and we've seen another move up as GBPJPY demand soars to ever-increasing highs. I remain a rally seller overall but still respecting the ongoing dip demand as I've been warning all week while keeping an eye on EURGBP and GBPJPY as always. EURGBP: 0.8470 bids gave way yesterday but support found into 0.8450 then a sharp rally only to fail at 0.8485 and now in retreat again as GBPJPY demand lifts GBPUSD. GBPJPY: Good support now at 155.80-00 and up through 156.30 to post 156.63 as I type. I still feel it'll get top-heavy again but respecting current market sentiment on this and core pairs so still not standing in the way on any of them. As I always say, if in doubt keep out.

I remain a GBP rally seller across the pairs but being patient as ever. These markets are ever-fickle so good/tight position management essential.

EURUSD: 1.1580-00 support now helped by the firmer risk dip demand but rally sellers poised around the 1.1620-30 area still as the pair continues to find itself in the middle of cross-flow action and variable risk plays. USDJPY: Bursting higher again after finding a higher low at 113.50 amid the ongoing JPY supply generally and now up through 114.00 to levels not seen since 2018. EURJPY: New support line in the sand at 132.00 now as the upward journey continues led by the JPY supply and core pair dip demand. Sellers certainly not winning this battle at the moment. USDCHF: A good hold of 0.9200 along with EURCHF back up through 1.0700 (hello SNB?) but rallies still limited amid the CHFJPY demand. EURCHF: 1.0680 support now with SNB shadow ever present but failing above 1.0720 as I type.

AUDUSD: Finding a support line in the sand now at 0.7380-00 and up through 0.7420 on the AUDJPY demand. USDCAD: 1.2400 now capping the rallies helped by the ongoing CADJPY demand and generally softer USD and now down through 1.2400 to post new lows of 1.2345 amid this strong trend. Option interest still drifting ever further away therefore.

Have a good week-end one and all.

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

Interbank rates: 08.37 BST

GBPUSD 1.3715

EURUSD 1.1608

EURGBP 0.8462

GBPEUR 1.1815

GBPJPY 156.54

GBPCAD 1.6937

GBPZAR 20.1395

GBPHKD 10.6879

USDJPY 114.12

EURJPY 132.48

EURCHF 1.0719

EURHKD 9.0460

AUDUSD 0.7421

USDCAD 1.2342

USDCHF 0.9235

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