USD pushing through more lines in the sand

John Hardy

Head of FX Strategy
John Hardy joined Saxo Bank in 2002 and has been Head of FX Strategy since October 2007. He focuses on delivering strategies and analyses in the currency market as defined by fundamentals, changes in macroeconomic themes, and technical developments.

The USD rally continues to grind away today, taking EURUSD well away from the last local Fibonacci retracement level of note (the 1.1937 area, near the day high), through the 200-day moving average in GBPUSD, and even attacking the big 1.3500 level, down through 0.7500 in AUDUSD and 0.7000 in NZDUSD.

The last major holdout for the moment is USDJPY, where the 110.00 level is not under fire yet, perhaps due to nerves linked to President Trump’s decision on Iran later today. The most compelling scenario, possibly, for USD bulls is one in which Trump says something along the lines that “we are making tremendous progress” but delays a further decision for now which triggers a bit of risk-on and a weaker US Treasury market, driving higher US yields and taking USDJPY back higher as well.

On the flip-side, a risk-unfriendly announcement is more likely to continue to aggravate the emerging market sell-off, as EM look to be a lose/lose either way if either a) yields rise or b) risk appetite drops.

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