background image

FX Breakout Monitor: Post FOMC USD breakout yet to convince

Forex 5 minutes to read
Picture of John Hardy
John J. Hardy

Global Head of Macro 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.


For a PDF copy of this edition, click here.


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.
breakout monitor
Source: Saxo Bank
Page 2: More unadulterated enthusiasm for EM here versus the US dollar in USDMXN and USDRUB, where recent breaks have led to a solid directional move. The Norges bank rate hike today thoroughly contrasting with dovish central banks elsewhere and supporting an extension of NOK strength across the board.
breakout monitor
Source: Saxo Bank
Chart: EURUSD

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.
eurusd
Source: Saxo Bank
Chart: NZDUSD

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. 
nzdusd
Source: Saxo Bank

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

Content disclaimer

None of the information provided on this website constitutes an offer, solicitation, or endorsement to buy or sell any financial instrument, nor is it financial, investment, or trading advice. Saxo Bank A/S and its entities within the Saxo Bank Group provide execution-only services, with all trades and investments based on self-directed decisions. Analysis, research, and educational content is for informational purposes only and should not be considered advice nor a recommendation.

Saxo’s content may reflect the personal views of the author, which are subject to change without notice. Mentions of specific financial products are for illustrative purposes only and may serve to clarify financial literacy topics. Content classified as investment research is marketing material and does not meet legal requirements for independent research.

Before making any investment decisions, you should assess your own financial situation, needs, and objectives, and consider seeking independent professional advice. Saxo does not guarantee the accuracy or completeness of any information provided and assumes no liability for any errors, omissions, losses, or damages resulting from the use of this information.

Please refer to our full disclaimer and notification on non-independent investment research for more details.

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

Contact Saxo

Select region

International
International

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

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