FX Breakout Monitor: USD breaking down, GBPUSD leads
Head of FX Strategy
Summary: The US dollar is breaking down in places, led by a strong move through the pivotal 1.3000 level in GBPUSD today, but EURUSD is also poking above local resistance and other USD pairs and precious metals are also showing signs of poking beyond key levels.
The link below takes you to the latest FX Breakout Monitor, 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.
Today’s Breakout monitor
Below is a snap of the full list of currency pairs we track for the breakout monitor. We have seen a couple of sessions here of expanding volatility on US-China trade deal headlines, both good and bad, and we do have key US data later today and tomorrow (November jobs report). But it will take several sessions of expanded trading ranges to dig FX volatility out of the cellar. Note the sea of deep blue in the ATR (average true range) readings for the majority of the pairs in the universe we cover, something that requires that the trading ranges are in the lowest 15% of the last one thousand observations.
Even with the very low volatility, we have a plethora of developments, particularly in USD pairs, as GBPUSD and EURUSD have posted new breakouts, the former also on the 49-day+ level, while EURUSD finally poked above the mid-November intraday highs as well. Other USD pairs joining the charge lower include USDSEK, USDCHF, NZDUSD and spot gold and silver recently, and other USD pairs, including the USDJPY supermajor are champing at the bit.
Elsewhere, sterling’s strength is seeing it breaking higher versus the euro today as well as recently versus CAD, AUD, and the aforementioned USD.
Today’s Breakout Highlight: GBPUSD
The most powerful break today unfolded in GBPUSD on the combination of both a weak USD and a very strong sterling, with flow likely encouraged on the break of the symbolic 1.3000 level, which took the pair to its highest levels since last May. Assuming the UK general election next week unfolds as the consensus expects and hands Boris Johnson’s Tories a clear majority, there may be room for a rally extension into the next resistance levels.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
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Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.