This text is from blog famous currency strategist Joel Kruger .
UNINHIBITED AND UNRELIABLE – Risk correlated assets have performed well over the past few sessions, although the performance has been seriously mitigated by extremely thin conditions on the back of the US and Japanese market closures. In my experience, the rally in the Euro amidst the razor thin trade is not surprising, as markets have a tendency to push in the direction they had been moving pre-holiday. However, the broader trend is still Euro bearish and risk negative, which I suspect will start to kick back into gear when fuller trading picks up again on Monday. My best recommendation is to use Wednesday’s closing levels (last time we had normal trading volume) as a more realistic frame of reference.
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THE HOLIDAY GAP – I view Thursday and Friday’s holiday price action as a technical gap in the market that will need to be filled as the fuller trade resumes. This means Euro lower and risk correlated assets lower into Monday. On the strategy front, I sold some Euro at 1.2880 on Thursday and will be looking for a move towards 1.2500 over the coming days. I will only exit the position on a daily close back over 1.3000. For the week ahead, I will be looking to build into existing short Aussie and Yen positions against the buck. I currently am short AUD/USD above 1.0400 and will be looking to sell some more either at 1.0500 or 1.0335, whichever comes first. For USD/JPY, I will be hoping that we see a decent corrective pullback, and will be looking to add to my long on a dip into the 80.50 area.