US and Canadian mkts closed today

The triangle on the daily chart of USD/CHF is getting smaller and smaller, implying a breakout is imminent soon, but whether it is able to do so this week is still questionable due to lack of major US economic releases, besides ISM non-manufacturing and the Beige Book report this week. Next support for USD/CHF should be around 1.2222, which is on the up trendline on the daily chart. The Forex market is beginning to stink of staleness, and neither bulls or bears are too eager to gain control; however, we could see new positioning this week that could drive market actions as traders return from their summer holidays.

EUR/USD will need fresh euro bulls to push past 1.2880, then the 1.2911-1.2940 area. Eurozone Producer Price Index at 0900 GMT today.

Australia faces a data-heavy week, with a Reserve Bank of Australia meeting scheduled Tuesday, 2Q GDP set for release Wednesday and an employment survey due out Thursday. As mentioned before, AUD/USD looks primed for an upside breakout from the daily chart, and the economic releases from Down Under may prove to be stimuli for that.

Interesting to note that in the futures market, yen shorts have increased again, with the highest number in the past year. Goes to show that more and more people are jumping onto yen carry trades, as the prospect of further rate hikes in Japan dims. Will there be more people clamouring to get onto this bandwagon? While USD/JPY and other yen carry trades are looking delicious, EUR/USD and USD/CHF may diverge from that direction. Be on the lookout for a potential reversal in USD/JPY if fresh buyers run out.

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