Which Way Will the DXY Blow This Week?

A new week, a new start.
Seemingly at least, but if news over the weekend and Asian bourses' price action last night are anything to go by, then we’re likely in for a quiet start to the trading week, with data on tap today light to say the least.

Friday saw a return to price action we observed in the latter part of last year, which was the good old Friday squeeze into the weekend. Those that had been buying USD all week against the other majors were shown the exit door relatively quickly as a late afternoon stop hunt took place. Those that piled on last minute into fresh USD longs and likely the retail sector predominantly wore some pain and we walk in this morning to find levels relatively unchanged from Friday’s close.

In my humble opinion it is unlikely that there will be too many willing participants looking to really take this market by the horns first thing this week, so in all likelihood price action should be relatively mute for the trading day.

Levels to keep an eye on in the major pairs are as follows:

EUR/USD: Small stops sit under 1.3160 with good bids coming in around the 1.3120/25 area and more sitting below 1.3100. The real stops are now likely to be below 1.3080. The topside however isn’t seeing much action until we get into the 1.3210/15 area where there are decent offers placed.

GBP/USD: There is a good amount of sizeable offers into 1.5880, with smaller offers lined up around the 1.5860 area, in fact it's only predominantly offers topside for now as Friday was quite the move in this pair. On the downside first bids come in at breakout level of 1.5820/25, with stops just below. More bids and stops are layered and mixed into 1.5770/80. If we are to see any retracement of Friday’s move I fear it will be relatively shallow to begin with.

AUD/USD: Topside looking for 1.0630/35 to hold any further moves with strong offers lined up above there and into 1.0660. The downside however is equally tame at the moment with 1.0580/60 set to hold on the day unless the overall USD buying resumes with a passion. Comments from Reserve Bank of Australia's Stevens overnight gave the little battler a boost as the gist was basically that things domestically were rather okay for the time being.

USD/JPY: This pair is a mixed bag and with touted option expiries and barriers scattered as far as the eye can see. Initial support comes in at 83.00/82.80 while the topside will need to reclaim the 83.30 level before we can consider a real push higher again. First thing this morning good US names were selling the pair in a mix of spec and profit taking around the 83.10/15 area.

That about covers it for today folks, good luck and helmets on.