German All Clear But Is The Euro Losing Momentum?

So we finally got the all-clear from the German Constitutional Court all be it with a slight condition that liabilities must not exceed 190bn Euros unless they come back to the court (although interestingly this is actually more than what they are expected to contribute...we think) ECBs Barroso proposed to set up a single supervisor that allows the ESM to directly recap banks as well as provide overall supervision.

Risk rallied on the news out of Germany but it was relatively short lived and markets seemed to pull back slightly (probably as everyone was focused on the new iPhone instead of trading). Meeting on the ESM is now scheduled for the 8th of October.

Big day tomorrow with QE expectations on the Fed, we reckon the market has priced in about 60% of QE, potentially Bernanke might come up with something although we aren't expecting direct QE. Sign of action from Bernanke might spur some short term selling of the dollar but at current levels it looks like the market is poised for a pull back first.

EUR/USD
The euro seems extended here but managed to put in a slight push higher on the German Constitutional Court ruling, but didn't really manage to keep those gains. We could easily push higher tomorrow but we are now looking for a pull back and a good entry signal towards the 1.26 handle.

GBP/USD
Similar to the euro, I am looking for a pull back and rejection of previous resistance now turned support to enter this pair long.

AUD/USD

USD/JPY
Given the slight break lower recently and push higher today we are looking to see if the pair can hold the current support level, if it can we are likely to see a retest of the descending triangle.

Few interesting set-ups tonight.

USD/CHF

GBP/AUD

CAD/JPY
Put in another pin leading the way lower, if you took the original you can reset your targets and stops.

GBP/CAD
We highlighted yesterday that the GBP/CAD trade might be a good option and it took off today. Moves stops up to lock in profit and see if it can test T2.

AUD/JPY
Pushed higher and tested resistance today, however, then pulled back, we are still currently in this trade short and will need to see a good push lower to maintain our position.