Gbp/Usd：holding a 12-month 89% inverse correlation to VIX moves

The impact of 3% losses across the European and American traded markets in the previous session have locked Friday trade into very tight ranges, with speculative interest accepting the fact that fair value is in place in the near-term. Asian equities had to adjust lower in reaction to the price decimation but those moves were unable to impact equity futures values in other markets.

The major pairs are sitting within the trading ranges of the week, with a net gain across all of about 20 pips on the day. Eur/Usd is using the 100 Day SMA area at 1.2780 as support, but is really struggling to generate interest in a break towards 1.2950. Six sessions of sideways moves now has the pair entrenched between 1.2950 and 1.2650. The only way this will break is following massive moves in equity markets.

Gbp/Usd has a daily range 200 pips with a neutral momentum read. The pair is holding a 12-month 89% inverse correlation to VIX moves. This is a mixed looking pair in regard to speculative interest and sustainable price action. A 200 pip range between 1.5750 and 1.5550 is in play.

Aud/Usd resembles a heartbeat monitor in the near term, with the 200 Day SMA at 0.8950 holding things up as resistance, and is forming a near-term bearish structure. The pair is caught in the 2007/8 price range with exactly the same weekly chart set-up that tested 0.9950 before dropping 40% in value 4 months at that time.

Usd/Cad gained value in reaction to the move out of commodities, but the CPI reads at 07:00 ET will have to be absorbed. A massive head-and-shoulder short technical pattern is unfolding on the Weekly chart, indicating a potential move to 0.8950 if oil markets hold above 75.00 and equity trade finds support.

Chf and Jpy both remain at the violent beck and call of U.S. Treasury yields, and will track the dollar in response to Treasury yields collapsing. Traders may be looking for a near-term long reversal off any failed short tests of 1.0300 on Usd/Chf, after a month of sporadic daily chart consolidation. A mid-term move to 2007 lows at 0.9450 may follow an increase in Treasury yield values.

Eur/Jpy and Gbp/Jpy will move hard when Usd/Jpy finds momentum in the same direction as Eur/Usd and Gbp/Usd. A powerful reversal appeared at the 90.00 region on Usd/Jpy that looks to be the benchmark area for. A bearish trend is in place, with 86.00 a pivotal upside area.