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As we discuss below, the Monday EURUSD breakout is still in play despite yesterday’s backup. The weaker USD yesterday was apparently inspired by positive US-China trade negotiation headlines and the possibility that a fresh US government shutdown would be avoided. But the return of USD buying today (and it never really went away in USDJPY) suggests that the dollar remains bid and we keep an eye on further USD upside potential.
Elsewhere, the JPY weakness has extended again, most obviously in USDJPY, but several other JPY crosses are near resistance. It will likely require a further extension of the remarkable risk rally to drive additional JPY cross breakouts – seeing is believing.
We also saw two mini-trainwrecks overnight as the Reserve Bank of New Zealand and Riksbank both came out less dovish than expected and drove a significant backup in the NZD and SEK, respectively. Breakout signal tracker
We add a EURUSD short to our breakout signal tracker after it closed at a 19-day low on Monday – we post the trade at the current market level of 1.1290 and employ a 1.1 ATR initial stop.