Range bound suggestions continue

EUR/USD

European euro implieds dipped by 22.5 points to further the decline that was witnessed last week with the volatility of the move accurately reflected in the widening bands. Short term implieds declined further below longer terms, as the spread approached the lower barrier. However, currently in neutral, the differential continues to suggest ranging conditions in the upward channel presented in the underlying. A near term surge in implieds can be expected as the anticipated U.S. trade balance data poses a fundamental catalyst, ultimately adding to the notion of a range bound environment.

GBP/USD

The spread declined on the week and dipped into negative territory compared to a near zero value in the previous period. Widening by 12.5 points, short term implieds declined the third highest of all the major vols bringing the spread to neutrality. Similar to the euro single currency, near term volatility may in fact surge on a fundamental catalyst and further be indicative of a ranging environment. Currently, the underlying looks to be contained between 1.7800 and 1.7100 figures.

USD/JPY

Implied volatility comparatively spiked higher as a breakout scenario followed through after a breach of the 116 support floor. Changing the most of all the majors, short term components soared on the week as longer term components followed suit, albeit at a much smaller pace. Currently residing above the band, and at a level not seen since August of last year, the spike may be indicative of a shift in the trend. Further confirmation is needed, nonetheless, through a break of the 114-113.50 support area.

SUMMARY

Likely to Continue to Range Trade
- USD/CAD

Neutral
- EUR/USD
- GBP/USD
- USD/CHF
- USD/JPY
- AUD/USD

Likely to Breakout
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Richard Lee is a Currency Analyst at Forex Capital Markets. Employing both fundamental models and technical analysis applications, Richard contributes regularly to DailyFX, Yahoo Finance and Comtex. Prior to joining the research team, Richard was one of the senior instructors for the FX Power Course, teaching thousands of traders the basics of currency trading, technical analysis and how to implement trading strategies. He has extensive experience in trading the spot currency markets, options and futures. Richard previously traded FX, equity and equity derivatives for four years as well as work for a private equity consortium before joining FXCM.