Time To Fade The Trade

TUESDAY'S THE DAY - I have been waiting to sell into this USDJPY rally over the past few sessions and believe we could get that shot today. With the market finally trying to establish above 125.00 following the 122.00 breakout, the timing could be ripe for a sizable corrective pullback. Technically, the daily chart is now well overextended, while fundamentally, with so much US Dollar bullishness priced in on account of sooner Fed rate hike expectations, I think there is room for some movement the other way, as market participants look to play to the cautious side and level out ahead of what could be an influential Friday monthly employment report out of the US. I can't tell you the exact level I will sell USDJPY just yet, but I can say, as per my commentary last week, I will be looking for those three conditions to be met.

ONE WAY OR THE OTHER - Keep a close watch on the Australian Dollar today as well. At the time of this update, the RBA has not come out with its latest policy decision. I imagine by the time most of you are reading this, the RBA will already have come and gone. It seems to me in the lead up, we should expect a more dovish policy decision, with economic data cooling in recent weeks, China slowing down some more, and inflation still rather subdued. Technically, with AUDUSD hovering just over the critical multi-year low from earlier this year at 0.7533, it would only be fitting to see this level taken out before the market figures which way it wants to break next. So I am going to call a fresh low on Tuesday below 0.7533, with the possibility for some profit taking on US Dollar longs and a bit of a corrective rally into the close. No trades here, but I suspect Aussie will be a standout currency on Tuesday, one way or the other.

Lookout for some wild and volatile Tuesday trade. Via @joelkruger

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