News & Data:
A new day and a new low in the EUR/USD. The pair reached 1.0865 overnight and the downtrend just seems unstoppable. The charts suggest no significant support until 1.05 and there are no significant data releases out of the Euro Zone today. EUR/GBP is approaching an important support area at 0.7000-20 and EUR/JPY has closed the day below 130, a very bearish sign, which suggests we might be heading for a test of 124.95 in the near-term. Meanwhile, GBP/USD remains relatively resilient, partly due to the positive cross flows (EUR/GBP selling and GBP/AUD strength). The pair has been able to stay above 1.50 for now, but a clear break above 1.5150 is needed to trigger a larger short squeeze.
USD/JPY fell to 120.80 overnight as it got rejected off 122 resistance twice yesterday. However, the pair remains very well bid overall and significant support is eyed at 120.60. Buying dips is still the preferred strategy. The commodity currencies are under renewed pressure with USD/CAD briefly above 1.27 in the Asian session and AUD/USD breaking below 0.76 support. NZD/USD reached a low of 0.7230 overnight and is now back at 0.7250. The focus is now on the RBNZ rate decision tonight. The bank is expected to leave rates unchanged, but many expect that it will be more dovish in its policy statement with the usual comments about the NZD being at unjustified and unsustainable levels.