USDJPY EURUSD AND EURAUD UPDATES

USDJPY

Further to my recent posts on USDJPY highlighting the prospects of significant gains (See here) and the more recent post highlighting the possibility of some consolidation for a few weeks (See here), I thought I would update my view as it stands. But first an interesting chart showing the US v Japan 2 year govt yield spread over the past year versus the USDJPY.

There seems to be a clearly visible correlation between these two.  Though I always caution against to much reliance on correlations, one can see that this correlation is suggesting that the USDJPY spot fx rate may have got slightly ahead of itself. - I myself am looking for a pullback possibly to the mid 81s on USDJPY at some point in the next couple of weeks, though in the volatile world of fx it could easily over-shoot a little. - Overall I remain bullish longer-term though I may have to review if USDJPY starts making value below 80.00.

EURUSD.

EURUSD continues to behave largely in line with how I thought it may unfold in the previous post. 1.34/35 is my pivotal area for this. -  My longer-term view on EURUSD is for bearish forces to re-assert themself, with 1.34/35 capping. However a clear break through 1.35 would suggest to me that this may be off the table for now at least and may bring 1.40+ into play longer-term. - I still find it hard to believe that people will be happy being long EURUSD in the bigger picture with so much strife still existing in the Eurozone. (How ironic that as I write that, as I sit long at the moment, but in fairness it is a short-term view with a trailing stop and take profit in the mid 1.34s. - However, it only takes many people getting short-term long and stopping out of shorts, to keep pushing this higher. - 'That is how this thing works'.)

The chart below shows the current EURUSD with a couple of interesting technical aspects. - Further to last week's post, I still believe we are re-testing the recent high and the breakdown of the trend-line, this line acted as resistance yesterday, and may continue to cap though rising quite sharply all the time. On the downside, 1.3290/1.33 appears as if it may be an important pivot, initially providing some support.

EURAUD

I called this a few weeks ago (See here), only to find a reason to talk myself out of my long (See here). 

For now, for me, this horse has bolted, with a good chance we could see 1.3100 area pretty soon.