FX Daily: Light Data Encourages Slow Grind Lower For US Dollar

Very quiet data day today but the markets picked up on the wider comments re Syria and the potential that no strike is now likely to come. The Russians put in a pretty plausible solution for Syria to hand over Chemical weapons today which the markets took to highlight the lack of any real materialising strike coming soon. Markets reacted by correcting Oil prices lower again and pushing the US Dollar with it as an imminent strike looks less and less likely.

The aftermath from a weak non Farm resulted in comments today and over the weekend of a smaller taper expected next week, with some even delaying it until October or November (remember no press conference after October meeting currently and therefore less likely to see action). With current price action though we quickly saw the Retail Order Books reach their extreme levels for US Dollar longs again and although there is some room, large moves lower in the US Dollar are likely to be hit with reasonable resistance as the Order Books will need to be cleared from extreme levels to make room.

EURUSD

Long: 1.3260

RTAS Order Book systems switched to longs today although we had closed our short positions earlier on Friday due to the rather mixed NFP figure and the decreasing likelihood of a Syria strike. Today really saw Retail Trader selling in the EURUSD, although we wouldn’t suggest buying at these levels but sticking to pure Retail Order Book trades the selling pushed us into long territory, if we continue to see Retail Selling this week on limited news flows we could see this pair push even higher although the Order Book is close to stretched levels which could ensure it doesn’t push too high.
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Pair bounced today but closed below the key 1.3280 / 1.3300 level. If this pair manages to break this level where we are likely to see a large number of sellers we could see a push towards recent highs around 1.3355 and 1.3400. Potentially given the light data week and mixed messages resulting in many sitting on their hands until after the FOMC we could see a continued grind higher before next week, given the recent push lower there is now room in the Retail Order book to cope with these moves.
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GBPUSD

Long: 1.5620

RTAS Order Book systems finally booked loses on the shorts and switched to longs in this pair, however with Retail Traders aggressively selling the pair today we now find ourselves back at extreme levels in GBPUSD and likely requiring a correction lower to make further space in the Order Book if it does wish to push higher.
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Pair continued to find good support today and broke the 1.5700 level, although crept back below this towards the close. Pair has been incredibly well supported recently and today was no different, if it can continue to find some Retail Sellers (although note we are close to extremes in this pair) we could see the pair grind a little higher, however if it is to make a real push past yearly highs it needs to clear further space in the Order Book.
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AUDUSD

Long: 0.9185

Systems switched to longs today as we saw the return of Retail Sellers in the pair. With the pair now off of the extreme longs we find far more room in the Retail Order Book for this pair to move in either direction but so far any pushes higher have resulted in further Retail Sales. That said today has seen the Order Book flatten, we have NAB Business Confidence and Chinese data overnight which could have an impact but the pair is starting to look like it may be due a correction again, if it does watch 0.9140 / 0.9100 for support.
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Pair still looks to be carving out the bottom in a rather choppy manner. Next major resistance to the upside comes around the 0.9300 level.
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EURAUD

Short: 1.4690

The RTAS Order Book system holding shorts this pair. Pair pushed slightly higher today from its gap lower but managed to stay below the 1.4400 mark and above the support level at 1.4250. We did see further Retail Buying in this pair today which was a general nice sign for further pressure to the downside. Resistance is likely to come in around the 1.4470 mark and support the 1.4250 and 1.4180 levels.
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Pair had formed a nice double top formation with an extremely large RSI divergence. Break of the 1.42500 level could open the door towards the 1.4180 mark, bounce here could see a move back towards 1.4510 or 1.4600 level. In general though the oversold RSI could suggest we hang around at these levels or correct slightly before making the next major move but the pair has looked weak of late.
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EURGBP

Short 0.8400

Order Book systems have chopped around at current levels as the pair has tried to break lower but found support. Retail Traders have switched back to buying in the pair and although we bounced slightly today we could see this pair make another attempt at the 0.8400 support level. If this level breaks we would expect to see a push lower and further Retail Buying.
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Pair bounced off of support today but resistance comes in around the 0.8475 and 200 day SMA level at 0.8485 levels. The Euro has looked weak against the Pound recently and although we took a minor breather today we continued to see Retail Buying in this pair which could highlight the fragility this pair has to the downside. Break of support now at recent lows could open the door to a much larger move lower, otherwise the cross will need to break and hold previous support turned resistance levels mentioned to trade back within its wide range,
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