Good morning,

Despite weak US housing starts and a disappointing Goldman Sachs earnings report, the US equity markets managed to turn around on the back of some rumours the Fed may embark on a new quantitative easing program by reducing the interest payment on excess reserves from 25bp to zero which was denied later on CNBC.

EURUSD after staying above 1.2925 in Asian Session, rallied up to 1.3029 by London opening and triggered the most of the SL odas except the ones above 1.3040. EURUSD started to trade heavily with no reason after ACB and Mid-East sold above 1.30. Breaking 1.2935 triggered further downside trading and 1.2839 was printed as o/n lows as US housing starts falling beyond the market expectations.

BoC raised the lending rate by 25 bps to 0.75% and USDCAD printed the lows at 1.0423 after trading above 1.0540.

AUDUSD rallied from 0.8715 to 0.8815 and with the collapse of EURUSD tested the post-RBA minutes lows once again before rallying 135 pips.  0.8848 the o/n highs at the moment while 0.8855/65 area holds it firmly as a strong resistance.

IMF comments on Kiwi last week vs. RBA rate decision early this afternoon with market failing to break 0.9245 so far.

Go short AUDNZD ( counting on the double top at 1.3125) at the current stop,1.3080, add more at 1.3115.

Stop loss at 1.3145 vs. tp at 1.2990 and 1.2845 with sell on rallies at 1.2995-1.3005 if 1.2960 trades on the downside.

The Reserve Bank of Australia (RBA) surprisingly decided to  maintain its policy rate at 3.75% today and market was caught on the wrong foot as 20 out of 22 economist were sure of a 25 bps rate hike.

Post-RBA decision AUD was slaughtered on the back of stop-loss and exit orders of long positions against USD, EUR, CAD and JPY. Overnight strength in global equity markets with Oil rallying around 4% brought a retrace to currency universe and with risk appetite bouncing, AUD trading almost 1 big figure better against those currencies above.

I was on the sell side above 0.9200-50 in AUDUSD thinking about any possibility of a rate hike in China or US may put pressure on IR differentials and limit the appreciation of mighty Aussie beyond 0.9350 against USD.  China helped on that argument and now more pressure on IR differentials as RBA may come to the end of its tightening cycle while market is still long of AUDs.

I think market is going to hold it firmly at 0.9020 and AUDUSD will put pressure on 0.8575-0.8565 support( 0.8565 is 200 days SMAVG vs. weekly bearish trend channel bottom at 0.8575) and may try to extend the drop down to 0.8215 which is the 38.2% Fibonacci retrace of 0.6287 to 0.9406 on weekly.

While above is a more wider parameter based trading idea, for those short term punters, sell AUDUSD at 0.8875 and 0.8915 with a SL at 0.8945, target 0.8710 and 0.8565 accordingly.

Strong manufacturing surveys in the US, Eurozone, and UK led investors into buying at the opening overnight and as ISM chairman Ore said the survey pointed to a V-shaped recovery, stocks closed higher overnight and brought a good retrace to risk appetite with USD losing grounds against majors.

A few investment houses publishing risk on trades seems to be attracting fear&greed players to get involved before NFP this Friday which I find a bit risky.

EURUSD seems to be basing around 1.3855-65 area on the back of take-profit appetite and 200 SMAVG weekly level at 1.3868. On intraday charts before RBA decision this morning ( a possible hike with a 78%  chance priced in will boost AUD sentiment and AUD leading the risk trades will be supportive for EURUSD as well ), EURUSD is trading in a very tight range between 1.3920-1.3940 and both on 120 mins and daily charts, a break of 1.3940 suggests a possible topside squeeze up to 1.4025 and 1.4075 accordingly.

A break of 1.3920 support brings another chance of 1.3880-1.3890 squeeze on the downside, where I would prefer to go long on dips with a tight SL at 1.3855 instead of a buy on break at 1.3940 with a stop-loss at 1.3915.