FX Breakout Monitor: Scandies weakness one of few momentum trades going

Today’s Breakout monitor

Sterling went full circle today – first rallying after yesterday’s meltdown, but only to circle right back to where it came from and remind us of the danger of trading headlines until we know the final shape of Brexit. GBPUSD has poked below the 19-low close at 1.2219 today.

Elsewhere, the revival of trade hopes after comments from China on hoping for a limited trade deal buoyed risk appetite and reversed some of yesterday’s developments, including the weakness in EM and the strength in the JPY, showing how headline prone this market may prove over US-China trade deal/no-deal headlines through the end of this week. (Trade negotiations set to get underway tomorrow.).

The move in Scandies continues to impress, with EURSEK carving out new highs for the cycle and EURNOK poised at a level matching its highest daily close for the cycle above 10.05.

Today’s Breakout Highlight: AUDNZD
The recent AUDNZD rally has been consolidating for so long that the pair managed a new 19-day low close yesterday, though the setup for a breakout is not terribly compelling, given the lack of a clear downside pivot level. Still, given the recent outpacing of the RBA over the RBNZ in sending a dovish signal to markets, there could be room for a further drop to the next areas of support, whether a Fibonacci retracement or back toward the 200-day moving average, currently below 1.0550.