KRUGER INSIGHTS TUESDAY, FEBRUARY 18, 2014

By: Joel Kruger

Stone's Throw - Markets are back to to full form today, with US participants returning to action following the long holiday weekend. USD/JPY has been chopping around quite a bit of late, and after coming under some intense pressure at the weekly open, has since regained composure. Still, my short-term bias is for additional weakness, with an expected retest and break of the 100.00 psychological barrier in the sessions ahead. Ultimately, only back over 103.50 would negate this view. Elsewhere, the US equity recovery is near fully complete, with the S&P 500 within a stone's throw away from fresh record highs. Yet I will happily take another shot at fading this rally if the opportunity presents, as I still contend this market to be well overvalued. My only exposure at the moment is a Kiwi short from 0.8316, and I expect NZD/USD to be very well offered on any additional rallies. Look for a break and close back below 0.8300 to confirm this bias and accelerate declines.

A Bit Of A Yawn - Elsewhere, GOLD has been on the move, recently breaking back over the 200-Day SMA for the first time in over a year. While the development is constructive, I wouldn't get too bullish just yet. Daily studies are now overbought, and we would need to see a push back over $1360 to really open the possibility of a bullish shift. As far as the other major currency pairs are concerned, Cable is trading at the top of a multi-month range and could be on the verge of some medium term weakness, while EUR/USD should remain well capped below 1.3800 on a weekly close basis. Only a weekly close back over 1.3800 would give reason for rethink. Overall, nothing too exciting at the moment and not a lot to talk about. I suspect there will be more to talk about on Wednesday. Keep an eye on the S&P and look to see if this market tries to break to a fresh high. Also make sure to keep monitoring EUR/CHF price action. EUR/CHF has proven to be a good barometer for risk sentiment, and any signs of extreme strength or weakness will likely impact the broader markets.