And if we start with the yen, this reflects the strong moves we witnessed across the yen complex towards the end of last week with resistance at 9200 coming into play as the index builds a platform of support in the 8950 area. This heavy selling of the yen was mirrored in equity markets with equally strong buying. In early trading and with some US markets closed for the Columbus Day holiday sentiment has reversed as signalled with yen buying on the index.
Moving to the US dollar, this continues to struggle at the 12,460 area and to date, this has been tested three times in the last few weeks with last week’s price action the most recent, as the US dollar moved equally dramatically on Thursday and Friday with two widespread down candles. Here the floor of potential support is building in the 12,360 region, and until this level is breached we are likely to see further consolidation between these two levels.
And so to the euro which remains range-bound between 128 and 126.50, but with a bearish tone and until these levels are breached, likely to continue trading in this area and driven by politics, ECB easing, a weak economic outlook, and Brexit!
Finally to the British pound which surged on Thursday and Friday on optimism for a Brexit deal, but as always with such moves which we refer to as a ‘souffle’ – whilst they are quick to rise, these moves tend to deflate quickly, hence the name, as realism sets in and optimism fades.