Russian Solution To Syria Gathers Momentum, Market Reaction Muted

Syria today agreed to join the WMD Proliferation Treaty and comments from the US, France and the UK have become decidedly less gung-ho, instead replaced with talk of diplomatic solutions. The market reaction was muted though after yesterday’s bullish jump higher on the initial suggestion from Russia, being replaced by sleepy consolidation at important levels, likely the result of focus shifting towards the FOMC next week. The bullishness of diplomatic risk-on must now be weighed against the bearishness of FOMC expectations, however taking an objective look at this shows that this is merely a case of timing since the risk-on sentiment will fade as FOMC sentiment gains. Today’s lack of bullish risk-on moment could see the latter returning sooner rather than later.

USD% Index
USD% index RSI is primed for dollar strength and the bullish trend line that halted the breakout from bullish channel has continued to hold after three attempts to break to the downside, finishing the day flat although posting minor higher highs and higher lows since yesterday’s low. A break above broken channel support turned resistance is needed to confirm a return to bullish trend following this retracement to the 50% Fib level of the recent dollar rally, although another pop lower can’t be ruled out at this stage. I remain cautiously bullish USD%

USD% Index Resistance (EURUSD support): EURUSD 1.3240, 1.3216, 1.3150
USD% Index Support (EURUSD support): EURUSD 1.3275, 1.3300, 1.3333

EUR% Index

The EUR% index today failed to break above yesterday’s high, although finished the day slightly up. The index looks decidedly undecided regarding price action with a lower time-frame expanding triangle indicating the tussle between bulls and bears. We have crept slightly outside of the bearish channel shown although the proximity of significant resistance should be considered before viewing this as a breakout. Further resistance above may be within reach if the index can finally break this Fib Expansion resistance, but a failure to do so soon should be viewed as bearish for the Euro. The upper resistance of the Ichimoku Kumo has so far acted as a barrier for price action on spot EURUSD, but with volumes quite thin on account of the lack of major economic news today, the market has reverted to wait and see mode for the time being. That said, I remain bearish EUR%.

EUR% Index Resistance: EUR/USD 1.3277, 1.3300, 1.3345
EUR% Index Support: EUR/USD 1.3259, 1.3217, 1.3170

EUR/USD Trade Positioning

I am short EUR/USD from 1.3232 with quite wide stops above 1.3317

JPY% Index

A push lower today from the news of Syria’s willingness for a diplomatic solution returned the JPY% index to it’s original bearish trajectory, posting a lower low and seeing USDJPY hold onto gains above 100.00. Currently hampered by European strength weighing on the US dollar it seems we will need to see a return to European weakness before Yen selling can gather the same traction as Nikkei buying, which continues to post impressive gains. I remain bearish JPY%

JPY% Index Resistance (USDJPY Support): USDJPY 100.13, 99.71, 99.00
JPY% Index Support (USDJPY Resistance): USDJPY 100.89, 102.00

USD/JPY Trade Positioning

I am long from 97.21 and I’ve added to this from 98.00 with stops set to break-even for the basket of trades
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GBP% Index

A fresh high was observed from broken double-top resistance turned support and gains were maintained into the close. The GBP% index seems comfortable now within the higher channel and a push higher seems likely unless a very poor Claimant Count release and a more doveish than expected quarterly Inflation Report is released this week (tomorrow and Thursday respectively). If it seems that Carney’s so called knock-outs are further out of reach than has been priced in by the recent bullishness then some sharp profit taking will likely be observed and the pound may become a popular short to capitalise on dollar strength ahead of the FOMC. trend is still bullish until the bullish channel has failed

GBP% Index Resistance: GBP/USD 1.5773, 1.5827
GBP% Index Support: GBP/USD 1.5684, 1.5587, 1.5500

AUD% Index
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Slow and unrelenting bullishness from the AUD% index continued today, with minor sell-offs quickly bought. The index is now approaching some strong levels and some offers will likely be seen in an attempt to hold the index within a wide horizontal consolidation channel. A break above these levels would be very bullish for the Australian dollar and would delay the possibility of a return to the strong bearish trend that has been the major theme for this year. AUDUSD 0.9325 and 0.9367 are critical levels in that regard. I am short term bullish, long term bearish AUD%

AUD% Index Resistance: AUD/USD 0.9325, 0.9367
AUD% Index Support: AUD/USD 0.9288, 0.9200, 0.9126

AUDUSD Trade Positioning

I am long AUD/USD from 0.91348 with stops set to break-even however I will take some profit at 0.9325

CHF% index

Weakness from the CHF% index was seen today with a failed attempt at a rally following risk-on news. The index is still held within a bearish channel having broken through Fib Expansion support this morning and as a favourite currency to pair against the dollar to capitalise on FOMC volatility, the bearishness of the index today hints towards further dollar strength ahead of next weeks FOMC. I am bearish CHF%

CHF% Index Resistance (USD/CHF support): USDCHF 0.9323, 0.9284
CHF% Index Support (USD/CHF resistance): USDCHF 0.9377, 0.9400, 0.9438, 0.9450