This text is from blog famous currency strategist Joel Kruger .
SOMETHING FOR EVERYONE – While technical traders have been less stubborn, and find comfort in the medium-term trend which continues to project more broad based USD strength, fundamental traders have been much less easy going, requiring some form of a justification for each wave lower in currencies and risk off trade. The most recent explanation has come out of the Eurozone, where market participants have been disappointed by another inconclusive meeting where the IMF and EZ FinMins have failed to agree on a way for Greece to cut its debt to sustainable levels.
See daily forex technical analysis made by Joel Kruger:
DISCONNECT IN AUSTRALIA – Also seen contributing to the downbeat vibes have been the latest Aussie business confidence and business conditions readings which continue to show signs of deterioration. Aussie confidence slipped back into negative territory, while business conditions slumped to their lowest level in three years. The data further highlights the apparent disconnect between the central bank and Aussie businesses, and I contend that the RBA will once again be forced to accomodate before the year is out. Throw in a very bearish outlook on China, and at some point over the course of the next few weeks, I am projecting a major bout of relative underperformance in the Australian Dollar. Trades like short AUD/USD and long EUR/AUD are expected to yield substantial returns in 2013, despite the negative yield differentials.
FADING THE NON-USD “SAFE HAVENS” – Moving on, I remain comfortably long USD/JPY despite the latest pullback and will continue to look to build into this position on dips. The outlook for the major pair is highly constructive, and although bullish developments have been slow going, we should soon see an acceleration to the topside which exposes the 2012 high at 84.20. Ultimately, any setbacks in this pair should be very well supported above 78.50 on a weekly close basis. Another market worth a look is EUR/CHF, where the cross has recently dipped back below 1.2050, inching ever closer to the highly publicized SNB 1.2000 barrier. It seems as though the central bank has demonstrated a less aggressive stance on its 1.2000 defense in recent days, but at the same time, the commitment to defend the level is still in place. I would be on the lookout for any comments over the coming sessions that reaffirm the strong commitment to defend 1.2000. This could very well serve as the necessary catalyst to open a fresh wave of upside in the cross.
