FX Breakout Monitor: Post FOMC USD breakout yet to convince
Head of FX Strategy
Summary: The US dollar broke down in the wake of the FOMC meeting, but relative to the dovish surprise we got, the move is so far modest. We’ll look to tomorrow’s weekly close for clues. Elsewhere, sterling traders holding collective breath ahead of a critical week ahead.
The very dovish Federal Open Market Committee meeting inspired a knee-jerk USD swoon, but the weakness quickly yielded to a bounce in the greenback’s fortunes today – and if that bounce extends just a bit more it deserves the label of “reversal”, continuing the inability of USD traders to sustain a direction move of any notable duration. We’ll have a look at the quality of the closing levels today and tomorrow for a sense of whether USD bears will have their way or suffer a defeat even despite the dovish Fed.
Elsewhere, further NOK strength today on a hawkish Norges Bank sees further NOK extension higher.
Today’s FX Breakout monitor
Page 1: The US dollar breakdown in ready evidence here – at least versus the NZD, CHF, and EUR yesterday and today, with the USDJPY not far from a break level as well (see below). But the price action looks a bit hesitant after so many directional feints in the USD that have led nowhere this year. EURCHF breaks lower – an interesting move – possibly on Brexit stress worries. If so, headline risks next week could prove brutal in either direction.
While EURUSD pulled above a local channel boundary and a nominal recent high, breakouts in both directions have led nowhere for months – a stronger surge-and-hold is needed for a sense that this will lead somewhere – the next round of resistance is up into 1.1800 if 1.1500 falls.
The NZDUSD chart trying to break higher today, though intraday price action not terribly convincing and really, an unambiguous break above at least the December high close around 0.6930 needed here to excite interest in an upside break.
Quarterly Outlook Q1 2022
Quarterly Outlook Q1 2022: Fuelling the Energy Crisis
- The green transformation is fuelling the energy crisis. Is it time to base our energy future on reality not fantasy?
Energy crisis could turn energy stocks into secular winnerWith long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
Commodities supported by greenflation and tight supplyThe commodity sector recorded its best year since 2000 in 2021. Will the good times will keep rolling in 2022? Ole Hansen thinks so.
The bond bear market will not spare anyoneInvestors will need to prepare for the pain of a bond bear market in 2022. But are there opportunities out there, too?
Mean reversion for big 2021 moves and lots of volatilityDon't expect the Japanese yen or Chinese renminbi to stay at their overstretched valuations for long. Get the FX Outlook now.
The future in energy-intensive proof-of-work looks dimIn the midst of a global energy crisis, electricity-guzzling Bitcoin and Ethereum are set to feel the heat from politicians and investors.
Australian equities poised to benefit from the energy crisisThere may be an energy crisis, but that's fuelling a charge in the ASX. FInd out which stocks could be burning hot this quarter.
The EU’s unwise energy policyThe EU's energy crisis is one of the main drivers of inflation. Is there any relief around the corner, or is the situation critical?