FX Breakout Monitor: JPY, CHF, EM are the high-beta movers FX Breakout Monitor: JPY, CHF, EM are the high-beta movers FX Breakout Monitor: JPY, CHF, EM are the high-beta movers

FX Breakout Monitor: JPY, CHF, EM are the high-beta movers

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  JPY and CHF crosses have consolidated some of their losses today after the swoon late last week and into early trading today.

Click here for the full FX Breakout Monitor report.

Friday’s session saw a meltdown in JPY and CHF crosses and in select EM currencies on safe-haven seeking after the Trump administration announced new tariffs on Mexican imports amidst accusations linked to migrants crossing the US-Mexico border. The general negative risk sentiment and strong JPY and CHF continued into early trading in today’s Asian session but has yielded to a hard bounce in risk appetite, leaving JPY and (to a degree) CHF consolidating in places and EM currencies – especially Asian EM FX – enjoying a very strong turn today.

The direction changes are not the stuff momentum traders’ dreams are made of, but JPY crosses are still generally at the low end of recent ranges.

The US dollar was generally weak though we’re still far from being able to detect a sustained directional move. Tonight’s Reserve Bank of Australia meeting is the next test for AUD pairs, as the Aussie has consolidated some of its recent weakness even as a rate cut is universally expected at the meeting. Guidance on whether the cut is seen as a one off or the first in a series will be crucial.

Breakout signal tracker

We pull down the stop on our EURJPY short signal to breakeven after the signal went strongly into profit on Friday and in early trading today, though the latest price action already threatens a stop-out on the euro’s resurgence. 
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: the EURUSD trading range has become some compressed that we are already fairly close (less than 30 pips, though it doesn’t look as close in ATR terms as the ATR has collapsed to an unbelievable 49 pips) to an upside break after today’s modest rally – tough to invest much confidence in directional breaks there for now until bigger levels like 1.1100 and perhaps 1.1300 break to the upside.

The next test for EUR pairs is this Thursday’s European Central Bank meeting. USDJPY broke free of a major level on Friday at 109.30; EURGBP is looking higher again after a hesitant move on Friday (more on this below).
Source: Saxo Bank
Page 2: Gold jumped to attention on Friday and has registered both a 19-day and now 49-day high close if it closes north of 1309, though there are still a couple of range levels for a bigger break (see below). Elsewhere, USD/Asia looks heavy in places and USDSEK is trying to reverse the uptrend – a bit more wood to chop there in the bigger picture. 
Source: Saxo Bank

EURUSD is not far now from a 19-day high close, but the price action is so compressed that arguably we need a break above 1.1300 and even higher to impress to the upside, while the downside level is more clearly etched around 1.1100 – the difficulty there being multiple failures to stick lower on the previous attempts to break to new lows.
Source: Saxo Bank

Sterling pushed back against the attempt to take it over the edge on Friday, but was back to the weak side today as EURGBP poked back above 0.8850. The UK May Manufacturing PMI came in at a weak 49.4 today, its weakest level since around the Brexit vote back in 2016. The UK Services PMI release on Wednesday should carry more weight.
Source: Saxo Bank

Spot gold has leapt higher as real yields come under heavy pressure on the collapse in major bond yields late last week and on safe-haven seeking. The rally has seen the chart clear the closest couple of pivot levels, with the focus now on the last remaining pivots just above $1,320 and then $1,340/oz. The $1,350-75/oz area is of major consequence stretching back to 2014.
Source: Saxo Bank
REFERENCE: FX Breakout Monitor overview explanations

The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.

Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.

ATRAverage True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).

High Closes / Low Closes: These columns show the highest and lowest prior 19- and 49-day daily closing levels.  

 The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout. 

NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.