Chart

FX Breakout Monitor: USD limping post-FOMC, SEK rally continues

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

Global Head of Macro Strategy

Summary:  The US dollar is showing more profound signs of weakness, though the bigger break-down levels in key pairs like EURUSD, USDJPY and AUDUSD lie a bit lower for the greenback. The USD outlook in general looks pivotal here ahead of year-end and over the question of the December 15 round of US tariffs against China.


Today’s Breakout monitor

The FX Breakout Monitor is 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.

Below is a snapshot of the full list of currency pairs we track for the breakout monitor. The USD reaction to the FOMC meeting late yesterday and prospects for the reaction to the UK election tonight, as well as news – for better or worse – about the fate of the US-China trade negotiations, gives us hope that the extreme low volatility levels may be fading and that we can see better momentum trades develop after a long period of slim pickings for momentum and trend traders.

12_12_2019_JJH_Breakoutr_02
Source: Bloomberg and Saxo Group

Sterling strength has backed off again after a surprisingly aggressive run just ahead of today’s UK election and the results coming in this evening – offering a test for sterling traders’ conviction on any outcome – i.e., whether a Tory majority outcome is already in the price or how much downside risk there is for sterling if the Tories barely squeak through or, likely worst of all for sterling longs, if we see a hung parliament result.

Note that EURUSD, AUDUSD and GBPUSD all closed at new highs for the cycle yesterday, but the first two of these still need a bit more to establish the longer-term 49-day breakout status – something we’ll be watching closely over the next few session as these level are close. The trading environment in general early next week should help us establish whether momentum is developing here in USD downside and otherwise as we will have to know by then the fate of the December 15 US tariffs on China and have at least a status check on ongoing trade negotiations. Our assumption is that détente is USD negative, but the proof either way will be in the price.

Today’s Breakout Highlight: AUDUSD
A number of USD pairs have witnessed a further breakdown here, and prominent among those is AUDUSD, where not only is the USD weak, but AUD has received a bit of a boost on strong commodity prices like copper and iron ore and on some spin that . A détente in the US-China trade row would likely be a must for a significant extension higher here – but regardless, watch the coming couple of sessions and the 0.6900+ area for whether this break unfolds as this would also break the dominant chart feature of the descending channel.

12_12_2019_JJH_Breakoutr_01
Source: Saxo Group

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.