FX Daily: Pre-FOMC Retail Order Book Extremes Maintained

Today

So far we have had two rather quiet days in the market, Monday sparked slightly more volatility off of the US data, where as today saw either static or some minor grinds in most pairs.

The entire focus over the past two months has been on jobs data out of the US and the potential for the Fed to taper asset purchases. As we have stated all along we still believe the Fed will taper tomorrow with the consensus now looking like a $10bn taper.

The event itself will be highly anticipated and may see some volatility, however it could turn out to be a bit of a non event unless there is a major shock with markets already pricing in some form of taper or the comments from big Ben. No taper and dovish comments are likely to be viewed as US Dollar negative with a much large taper and hawkish comments US Dollar positive.

Retail Order Books have chopped around lately but the Fed could provide the next major turning point.

EUR/USD

Long: 1.3260

RTAS Order Book systems still holding longs this pair as we continue to see some Retail Sellers prior to the FOMC meeting as many Retail Traders are positioned for US Dollar strength. Support comes in at the 1.3280 level, resistance comes in around the 1.3360 / 1.3400 mark.
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Pair is at some key levels again with 1.3400 / 1.3430 acting as major resistance. Overall we still prefer this pair for a push lower from these levels with the Retail Order Books close to extremes. A break above 1.3450 could open the door to a much larger push higher. We remain long until we see a turn in the Retail Order books and Retailers buying in the pair.
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GBP/USD

Long: 1.5620

RTAS Order Book systems holding longs in this pair as it continued to push higher again on Friday. Holding below that magic 30% figure in Retail Traders long this pair, which inevitably means that any move higher now will need to clear out orders if it is to proceed. Having now broken the 1.5775 level convincingly this turns to a key support level. MPC minutes may actually be more critical than the FOMC statement tomorrow so watch for those in the morning, the market has been extremely Pound positive recently with rates rises being predicted and priced in before the BoE has estimated. Fundamentally we still sit in the camp suggesting that the good UK data is more cyclical than a real turn around, the weaker UK data today could be a sign of this.
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Cable now sits below the 1.6000 mark which is likely to act as a key resistance level. We are likely due a correction from these relatively overbought levels even if we are due to push higher from here a push back towards the 1.5775 level could be on the cards. If we do see Retail Buyers at these levels we could easily see a large reversal in the pair.
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AUD/USD

Long: 0.9320

Systems switched to longs today as we started to see some further Retail Selling in the cross. Strong resistance comes in around the 0.9380 / 0.9400 mark with interim support around the 0.9300 level followed by the 0.9250 mark.
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Key to watch resistance and supports levels in this pair now as we are approaching retracement levels with the RSI back towards the 70 mark and the Retail Order book not far of the 50% mark meaning a swing in either direction is easily possible.
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EUR/AUD

Short: 1.4320

The RTAS Order Book systems finally booked profit on the shorts and jumped long this pair on some minor Retail Selling, however during the day we have seen a rather flat Order Book with even some Buying suggesting that unless this pair pushes higher sooner we could actually see this break lower again.. Support comes in at the 1.4250 / 1.4180 levels with key resistance at the 1.4470 mark.
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Pair had formed a nice double top formation with an extremely large RSI divergence. The key support levels offered a nice area for this pair to bounce from oversold RSI levels. If we break the 1.4135 support level we could easily see this pair then move back below the 1.4000 handle, the 1.4470 level now acts as key resistance.
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EUR/GBP

Short: 0.8380

Order Book systems have chopped around at current levels with an almost perfectly flat Retail Order Book. Pair seems nicely sat within a range for breakout trading as traders are waiting for the next major move. The pair has seemed relatively supported at the 0.8375 / 0.8350 level but resistance comes in just above at the 0.8430 / 0.8445 level.
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It continues to look heavy but is likely due a correction from the oversold area and as it chops it continues to move away from the extremes. The Order Book now has much more room in it and we could see the next major move shortly.
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