FX Breakout Monitor: USD rising back to the top FX Breakout Monitor: USD rising back to the top FX Breakout Monitor: USD rising back to the top

FX Breakout Monitor: USD rising back to the top

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  A bounce-back from the worst trade tension escalation fears and a whiff of existential fears out of Europe on tough talk from Italy’s Salvini has the US dollar bouncing back, especially versus the hapless Aussie.

It is tough to draw conclusions in this market, but the AUD looks weak despite a modest pullback in the US-China rhetoric on trade as the latest NAB business survey points to a weakness in the Australia labour market, a key for the Reserve Bank of Australia’s policy decision on the timing of an eventual cut.

Elsewhere, sterling is struggling mightily as Theresa May’s days as prime minister may be winding down. The euro has veered away from the upside break level versus the USD as today saw Italy’s Salvini talking tough on the government’s intentions to break the budget rules if that is what it takes to lower unemployment. EURCHF has also been heavily offered. 

Breakout signal tracker

The AUDUSD technical breakdown looks too clear-cut to ignore, so we add a short signal to our Breakout tracker with a stop above 0.7000 and looking to take profit in seven to nine trading days. We would like to add a USDCAD long if the USD continues to get the upper hand in coming sessions. The first key test for all AUD pairs (Trump tweets on trade issues aside) will be Thursday’s Australian jobs data, as the RBA has linked its decision to cut rates on the strength or weakness of the labour market.
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: Note yet another low close in AUDUSD. This time it is looking more relevant as yesterday’s close more clearly poked below all prior low closes. Sterling weakness is now getting sufficiently advanced that EURGBP is poking above breakout levels as of this writing and GBPUSD isn’t far away to a breakdown level below 1.2900. Note as well that EURCHF has broken down badly over the last couple of sessions.
Source: Saxo Bank
Page 2: Here we see few new developments, but the USD is at the upper end of the  range versus a number of the EM currencies (notable USDSGD move yesterday in sympathy with the USDCNY surge especially interesting technically – see below). As well, gold has ripped higher, perhaps linked to the CNY devaluation fears driving safe haven flows.
Source: Saxo Bank

Hard to ignore the AUDUSD breakdown signal, although the USD signal isn’t particularly clear elsewhere. Trade headlines or a strong Australian jobs report could turn the tables on the bears, but for now, the pair is seeing a notable breakdown.
Source: Saxo Bank

Cable is close to a major breakout level to the downside, the lowest prior close around 1.2900 as the clouds once again gather over the Brexit process. EURGBP has also looked at upside breakout levels today.
Source: Saxo Bank

One of the more notable moves in Asian FX was USDSGD punching above the  recent range and above the 200-day moving average as all traders wonder whether the USDCNY ceiling around 7.00 will remain in effect as the US and China face off over trade issues.
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.

Quarterly Outlook 2024 Q3

Sandcastle economics

01 / 05

  • Macro: Sandcastle economics

    Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.

    Read article
  • Bonds: What to do until inflation stabilises

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.

    Read article
  • Equities: Are we blowing bubbles again

    Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.

    Read article
  • FX: Risk-on currencies to surge against havens

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.

    Read article
  • Commodities: Energy and grains in focus as metals pause

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.

    Read article

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.