Kruger Insights Monday – January 6, 2014 by FirstMacro

BinaryOptionsNow | Published on January 6, 2014 at 1:25 pm

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By: Joel Kruger

Not To Be Taken Lightly – The Euro has been under pressure over the past several days against the buck and it is becoming increasingly evident that markets are taking the recent topside failure by multi-month trend-line resistance quite seriously. The previous weekly close below 1.3625 has strengthened the bearish case, and we should see additional weakness over the coming sessions towards next key support by the November low at 1.3295. Any rallies should now be well capped ahead of 1.3700, while only back over 1.3900 would give reason for concern. Meanwhile, USD/JPY is finally showing signs of exhaustion, and I am once again hoping that we will see a meaningful correction that has failed to play out just yet. Any dips in this pair have been very well supported, and I would prefer to see one sizable pullback into the 100.00 area in order to feel comfortable with the establishment of a fresh long position. However, despite some anticipated short-term weakness in USD/JPY, overall, the outlook for the US Dollar is broadly constructive. I will be looking for the buck to see meaningful gains in early 2014, with the commodity bloc and emerging market currencies expected to be most exposed against the US Dollar on the anticipated shift in interest rate dynamics.

kruger insights january 6, 2014

Position Squaring – But for the time being, my only key exposure in 2014 is short US equities. I had built into an S&P short position in the final hours of 2013 and am now holding the position from 1847. At this point, it is far too early to make any serious call, but should we manage a break and close back under 1820, this position will start to look very attractive. At a minimum, I believe this market should see a 20% decline before it can even consider a legitimate push higher. I have also decided to tie up some loose ends from my 2012 book, and have squared away my Kiwi exposures. Net net, the NZD/USD short and AUD/NZD long are a wash, and though I am still quite bearish Kiwi on both fronts, I prefer the clean slate and will just focus on my S&P short right now. Fundamentally, not a lot going on at the moment, although some hawkish Fed speak from Lacker and Plosser should not go unnoticed. This seems to be influencing some of the price action in the early week. Let us also not forget that markets should start to finally pick back up, with the holidays officially behind us and everyone returning to their desks for the first full week of trade in 2014.

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