SAME OLD TUNE - Stocks have rallied back again and not much going on in currencies. Isn't this a familiar story. At the moment, I have no exposure in equities, but I have been fortunate with my sell on rallies strategy, and will once again look to fade any strength on Tuesday that results in overbought intraday readings near or at record highs. Although USD/JPY managed a nice little recovery from Monday's multi-day low, I wouldn't be expecting any sharp bounces just yet, and am still looking for that long overdue break to a fresh yearly low below 100.75. I'm not gutsy enough to take any positions here, but believe we could see one more sharp decline in this major pair below 100.00, before any consideration is to be given for longer-term bullish resumption.
GOLDEN TENSION - EUR/CHF has also found some nice support in recent sessions, with this market establishing back above 1.2200. But just as with USD/JPY, I still wouldn't be expecting any significant gains from here, and believe the cross rate is still at risk for another downside move back towards and possibly below 1.2100. Another market that is looking interesting right now is GOLD, strangely enough because of just how uninteresting it has been in recent sessions. The contraction in volatility is creating some nervous tension and it feels like we could be on the version of an explosion in one direction or the other. I really have no feel in terms of which way the yellow metal will break, but it is the likelihood of the imminent breakout that makes things interesting.