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The late Friday sell-off in the USD reached a sufficient crescendo by the end of the day that the market comes into this week looking at a broader menu of downside USD break risks versus the riskier currencies rather than at new highs versus the EUR and JPY, which was the focus last week (to be fair, the upside USDJPY break levels still not far). It appears that USD bears are hopeful that the Federal Open Market Committee delivers a softening of its guidance on keeping the QT regime on autopilot for the foreseeable future.
Elsewhere we are witness to further pressure on the Swedish krona after Friday’s terrible December retail sales data set things in motion to the downside. Today saw the release of a softer than expected December household lending data that raises concerns that the dramatic shift lower in Swedish house prices in recent months will see Swedish consumers tighten their belts and the gentle removal of accommodation by the Riksbank after years of negative rates is more than the economy or asset prices can bear.
Today’s FX Breakout monitor
Page 1: Note that EURJPY is poised near resistance on the turnaround in risk sentiment late last week – the 125.00 area is critical there. Elsewhere, sterling pairs have taken a breather ahead of the important vote on UK Prime Minister May’s Plan B and a likely series of votes on “amendments” in coming days, one or more of which could be aimed at avoiding a cliff-edge No Deal situation on March 29. Note that NZDUSD actually managed a new 19-day high close – though we are reluctant to follow breaks that occur before we have a look at the FOMC meeting on Wednesday.