FX Breakout Monitor: EUR wilts as USD pokes higher still

Forex 3 minutes to read

John Hardy

Head of FX Strategy, Saxo Bank Group

Summary:  The euro weakness is taking it to new lows in a few crosses, including in EURUSD and EURJPY, even if volatility is a bit sluggish, to say the least. Elsewhere, the US dollar is poking close to or beyond breakout levels as it recently avoided a larger scale breakdown that seemed to threaten, keeping momentum traders guessing.


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

The euro weakness of late stands out as a prominent development, though it has been a bit of a slow affair and implied volatility in the options for EURUSD is nearing all-time record low levels for all tenors. The euro is also on the verge of new local breakouts to the downside versus the JPY and CHF, with the former a bit more interesting on recent surprise volatility in the Japanese government bond market, where yields have spiked higher recently. EURGBP has also had a go at new local lows as Nigel Farage’s Brexit moved away from directly challenging the Tories in the December election by announcing Brexit party candidates would not run in clear Tory districts.

US President Trump is out speaking not long after we are posting this and could jar the market with comments, for better or worse, on the US-China trade deal negotiations. US Fed Chair Powell is set to speak tomorrow, so we could have the makings for a bit more volatility picking up, especially as the US dollar rally after the recent sell-off is nearing the tilting point for a larger move if it persists.

The global bond sell-off has cast a cloud over precious metals, where breakouts lower unfolded late last week and are two of the few breakouts to extend into profitable territory for a time in this generally choppy market for momentum traders.

Today’s Breakout Highlight: EURUSD
EURUSD is poking to new lows starting with Friday’s new 19-day low close, the first short-term breakout to the downside since. Arguably, as the move goes against the previous large rally wave, the bears have more to prove, but a failure of the 1.1000 level and therewith a round number and the 61.8% Fibo area, could set the pair on a course to a full test of the sub-1.0900 lows – a surprising more than 2 ATR away from current levels, due to very compressed trading ranges of late.

Source: Saxo Group

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.