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Large options at 1.1800 on the EURUSD (call option bias)

  
Analysis, Forex

Call option tilt

The nearly 3 billion worth of options at the 1.1800 has a call option bias, so watch the level carefully as bulls may try and push away from that level today. Snapshot of the option offering below – there are more on the table but the skew is about 85% call to 15% puts, so the screenshot captures a rough and ready visual representation of the split.
Call option tilt
Price is currently just below the 1.1800 level, so watch the price action around here before the NY cut at 2pm GMT
EURUSD

CFTC commitments of traders: EUR longs climb to a new record

  
Analysis, Forex

Weekly FX speculative positioning data from the CFTC.

  • EUR long 180K vs 157K long last week. Longs increased by 23K
  • GBP short 15K vs 25K short last week. Shorts trimmed by 10K
  • JPY long 31K vs 29K long last week. Longs increased by 2K
  • CHF long 12K vs 8K long last week. Longs increase by 4K
  • AUD short 1K vs 5K short last week. Shorts trimmed by 4K
  • NZD short 1K vs 1K short last week. No big change
  • CAD short 23k vs 13K short last week. Shorts increased by 10K

Highlights

  • EUR longs increase by another 23K after surging by 32K last week.  New record longs for the EUR. The EURUSD traded to the highest level since May 2018 on Wednesday but has backed off over the last 2 days
Weekly FX speculative positioning data from the CFTC.
  • Either shorts were trimmed or longs increased in 6 of the 7 currencies (dollar selling). The only currency where shorts were increase was the Canadian dollar. Shorts increased by 10K in the loonie
  • The total net short position (long USD) was 36K. The total net long position (short USD) was 223K long.  Last week the net short positions totaled 44k. The total net long position was 194K

EUR/USD: A Buy On Dips; USD/JPY: Next Move Lower; GBP/USD: 1.32 Next Critical Levels

  
Analysis, Forex
“For G10, GBP takes center stage in light of a less-dovish-than-expected BoE meeting this morning.The next critical level for GBPUSD is 1.32. USDJPY continues to hold 106, reaffirming our bias that the next move is lower. EURUSD continues to hold below 1.19 but remains a buy on dips in the months ahead,“
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EURUSD climbs towards July high. Buyers take more control today

  
Analysis, Forex

EURUSD high from July 31 reached 1.1908.

The EURUSD is climbing higher with the end of July high price of 1.1908 (call the target 1.1900 to 1.1908) as the next major target. The high price has reached 1.1880 so far.
EURUSD high from July 31 reached 1.1908.
The horse left the bearish barn after moving back above its 100 hour moving average late yesterday and then above its swing area between 1.1801 and 1.18089 in trading today.  Stay above those technical levels kept the buyers in control and ultimately led to those buyers overwhelming the sellers and pushing the price higher.  It would take a move back below those levels to hurt the medium term bullish bias.
Taking a view of the corrective move after the surge higher in July, the price low off the correction reached down toward prior swing lows from July 28 on Monday. The price did also break below the 200 hour moving average on Monday and again on Tuesday, but despite those breaks being the 1st and 2nd since July 10, momentum faded quickly on each. The price also fell below the 38.2% retracement but that break was even more brief.
As a result, the sellers really didn’t take back control. They simply corrected a bullish move and traders have to respect that the buyers are still in control.
That tilt can change. However it would take a move back below the 100 hour moving average now to give sellers some confidence (and then a move below the 200 hour MA).  Without that, sellers are losing. The buyers are winning.

Why to stay bullish EUR/USD this quarter

  
Analysis, Forex
  • Worries over virus developments outside the US have started to surface, so is now the time to get EUR negative again? We doubt that we will witness the large-scale closures seen during the spring and yesterday’s price action suggests that one probably needs to look for US rate rises and/or tech outperformance to get very negative on EUR/USD short term” 
  • “In our base case that Fed delivers on its inflation hints with enhanced forward guidance in September, a reflation narrative is set to keep USD under pressure in Q3 and make a test of new year-highs in EUR/USD the dominating risk into the autumn. If that base case plays out, it would also spell good news for commodity currencies and in particularly the NOK enjoying a large beta to both commodities and European equities. A key downside risk to EUR/USD and commodity currencies is if Trump scraps the trade deal amid the current China software lash and/or election stress” 
Comments from Danske on the euro, this via eFX (For bank trade ideas, check out eFX Plus)

Cable spills below 1.30 as the US dollar strengthens

  
Analysis, Forex

Dollar strength is the story today

Dollar strength is the story today
US dollar obituaries were written last week in a bizarre flurry of speculation after a relatively standard drop in the US dollar. There was far too much conflating the ultra long-term with the short term.
In any case, cable was always going to be most-vulnerable to a correction because of the 11-day one-way run that finally ended on Friday.
Now we’re into a retracement phase where 1.2813 should act as solid support.

CFTC commitments of traders: EUR longs spike by 32K to a record long level

  
Analysis, Forex
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Weekly FX speculative positioning data from the CFTC

 
  • EUR long 157K vs 125K long last week. Longs increased by 32K
  • GBP short 25K vs 15K short last week. Shorts increased by 10K
  • JPY long 29K vs 19K long last week. Longs increased by 10K
  • CHF long 8K vs 7K long last week. Longs increase by 1K
  • AUD short 5K vs 0K long last week. Shorts increased by 5K
  • NZD short 1K vs 2K last week. NZD switches from long to short. 3K change
  • CAD short 13k vs 17K short last week. Shorts trimmed by 4K
Highlights:
The BIG HIGHLIGHT for the week is in the EUR.  The EUR longs spiked up by 32K to 157K in the current week to a record high for long positions. The move higher is corresponding to higher EURUSD prices. The price of the EURUSD has been up for 6 consecutive weeks.  The long position started to move more to the upside during the May 19 week when the position was at 72K.  The EURUSD during that week was down at 1.0800. The price high today reached to 1.1908 before backing off.  Nice trade for the longs.
Of course, a concern for markets that get too long or short, is that there can be a squeeze the other way if prices start to lose trend momentum.   As a result, be careful of too much of a good thing, but let the technicals tell the story. They have been bullish.
Weekly FX speculative positioning data from the CFTC_
The GBP shorts, however, increased by 10K to 25K (still much lower than the EUR longs) while the currency has moved higher.
The JPY longs increased and the USDJPY moved down (higher JPY) into early trading today. However, the price snapped back higher and nearly erased the full move lower this week in a single day.

Japan warned about forex intervention earlier today

  
Analysis, Forex

Finance minister Aso hinted something was coming

Finance minister Aso hinted something was coming
Japan tried some verbal intervention earlier today and it didn’t do much at first but it’s likely responsible for the reversal today, if not outright intervention.
A senior ministry of finance official was on the wires saying ‘forex stability is important’. That’s a code word and he added that they continue to watch forex markets with a sense of urgency.
That was followed up with comments from Taro Aso himself who repeated the same talking points, including that the yen has been rising rapidly and that the strength in the currency didn’t correspond with trade balance shifts.
USD/JPY continued to decline immediately after the comments but might have been caught in month-end flows out of Tokyo. Now we’re seeing a huge reversal. Later, tehre were reports of a meeting between the BOJ, MOF and FSA to discuss markets. That meeting was at 0700 GMT and the rally kicked off just before it began.
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