Summary: The USD has been pushed over the edge since the FOMC meeting in several major USD pairs, including EURUSD already on Friday. Elsewhere, sterling is stumbling badly again and SEK threatens to join and NOK are on the move.
Click here for a PDF version of today's Breakout Monitor
The market let rip with a powerful bout of USD selling in the wake of last week’s Federal Open Market Committee meeting, and EURUSD joined the list of major USD pairs breaking against the greenback’s favour. We add a EURUSD long to our breakout signal tracker list, as the move feels a bit different qualitatively from prior USD moves, and despite the fact that so many prior signals have led nowhere. The only stragglers in breaking higher versus the USD within the G10 are now the struggling sterling, and the Aussie and Kiwi, which have some catching up to do after having been beaten down by a cycle of dovish central bank moves.
Breakout signal tracker
We add a EURUSD long signal today after Friday saw the pair close at a new 19-day and 49-day high, placing the stop rather wide in ATR terms as recent price activity suggests trading ranges may be expanding here.
Today’s FX Breakout monitor
Page 1: EURUSD has made a clear break higher as of the Friday close. USDJPY perhaps having a hard time putting together a string of new lows as long US rates have backed up slightly here and as asset markets have largely taken to celebrating the Fed’s perceived dovishness. Note EURGBP poking at local cycle highs again today as sterling struggles. Elsewhere, we’re staggered by AUDNZD’s inability to break either way recently.
Page 2: the easy Fed has EM all-abuzz, with a firmer response in the CNY after the FOMC likely helping the USDSGD and USDTHB to deepen their sell-offs, while only USDMXN and USDTRY are lagging a bit in showing USD weakness (remember the very heavy carry on TRY which is a strong tail wind for USDTRY shorts). Besides the ongoing run higher for gold, we would highlight EURSEK near pivotal levels near 10.60 as we discuss in the chart below.
EURUSD has poked above the 19-day and 49-day highs today with the prior attempts at breaking both of these levels having failed to generate any directional interest both to the upside and to the downside since late last November. Here’s to hoping that the move sticks this time – trend traders have suffered too long here!
The technical setup for a breakout to the downside here is rather interesting with the prior pivot and support line at stake just below 10.60. As well, EURNOK recently established precedent by breaking lower. We’ll watch this one over the next couple of days. The two short SEK trades from late April/early May were far and away the best performing of those signals we added to the signal tracker.
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.
ATR: Average 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. Breakouts: 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.
With oil at $150, Saudis buy Champions League franchise
Emboldened by surging crude oil prices, Saudi Arabia makes waves on the international stage, as Crown Prince Mohammed bin Salman manages to create a World Champions League, after buying the UEFA Champion League franchise.
World hit by major health crisis as obesity drugs make people stop exercising
As the world embraces GLP-1 obesity wonder drugs, the people next in line to get a prescription stop caring about dieting and exercising, figuring that the drug will later solve all of their weight-related health problems.
With the US budget deficit spiraling above 10% of the GDP, the government is desperate to foster demand for US Treasuries. Under intense pressure from the White House, Congress makes income from government bonds tax-free.
Generative AI deepfake triggers a national security crisis
After a criminal group deploys the most deceptive AI deepfake ever seen, generative AI becomes a national security threat. With public distrust soaring, governments crack down with harsh new laws, puncturing the AI hype.
Deficit countries form ‘Rome Club’ to negotiate trade terms
To fix the divergence in the global trade and financial system, the largest deficit countries unite to negotiate new world trade terms. For surplus countries, the reset of the global economic model is a painful adjustment.
Robert F. Kennedy Jr wins the 2024 US presidential election
As discontent with Biden and Trump rises to fever pitch, Robert F. Kennedy Jr sees his support rising inexorably in the polls. On November 5, Kennedy wins the US presidential election, ushering in a new era in US politics.
Japan’s ‘lucky 7%’ GDP growth rate forces BoJ to abandon yield curve control
Stepping up Japan's economic transformation in 2024, PM Kishida brings in a host of populist policies to boost domestic demand. As the GDP growth rate hits 7%, the BoJ is forced to abandons its yield curve control policy.
Luxury demand plunges as EU goes Robin Hood, introducing wealth tax
As people wake up to how little tax Europe’s billionaires are actually paying, the EU Commission implements a wealth tax of 2%. The tax sends shockwaves through Europe's luxury industry, with luxury giant LVMH plunging 40%.
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/.
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.
Your browser cannot display this website correctly.
Our website is optimised to be browsed by a system running iOS 9.X and on desktop IE 10 or newer. If you are using an older system or browser, the website may look strange. To improve your experience on our site, please update your browser or system.