Chart Chart Chart

FX Breakout Monitor: AUD tries to get something going

Forex 3 minutes to read
Picture of John Hardy
John Hardy

Head of FX Strategy

Summary:  Sterling droops on dovish dissenters at the BoE today, but the breakout picture not yet compelling. Elsewhere, the reaction to the purported US-China trade negotiation breakthrough was rather modest and shows weak transmission into currencies. Still, the AUD and JPY have reacted as one would expect and EURAUD is a standout pair in recent weeks.


The link below takes you to the latest FX Breakout Monitor, a concise PDF overview of all current and recent price breakouts for the short and medium term for major FX pairs and spot silver and gold.

Today's FX Breakout Monitor

The hoped for US-China trade-deal is getting priced more like a done deal at this point, as bonds swooned and US equity futures ripped to new historic highs in the wake of this morning’s announcement from Chinese official sources that the US and China have agreed to lift. The reaction in currencies markets was clear if rather constrained – the JPY was sharply weaker and the USD was initially weaker but firmed later.

So as we watch the follow-on reaction to this latest round of trade-related “news” unfold, it is interesting to note the divergent trajectories of two USD pairs: AUDUSD (still close to the upside breakout level after never achieving a follow-on rally after the breaks higher from last week) and USDJPY, which is still mulling an upside break for the greenback as US yields poke on new highs for the cycle here. Continued trade-deal hopes, risk sentiment melt-up and rising yields could see the USD moving in different directions in these crosses. Avoiding the USD, AUD also looks interesting versus the Euro, as EURAUD saw a successful break lower last week that is trying to follow through lower here below the 49-day low as well (see chart).

Elsewhere, momentum traders may have generally low conviction after such a high percentage of recent signals have failed, but the breakdown in EURSEK over the last couple of sessions – now extending to a 49-day low intraday today, looks interesting as well.

Today’s Breakout Highlight: EURAUD
AUD strength has been prominent in recent sessions and US-China trade headlines looks supportive here for further AUD resilience. EURAUD has taken a distinct turn for the worse in recent sessions and broke lower already last week locally, with a larger break of the 49-day low close quite clearly etched on the chart as well, should the smaller currencies continue to perform well against the euro here on ongoing optimism.

07_11_2019_JJH_Breakoutr_01
Source: Saxo Group

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.