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Chief Investment Strategist
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FX Breakout Monitor: USD still main focus, but JPY deserves attention
John J. Hardy
Global Head of Macro Strategy
Summary: The US dollar has broken higher virtually everywhere, save for in the odd combination of USDJPY and USDMXN, as MXN has been one of the few EM currencies holding out against the strengthening greenback, though that may be changing. As well, the JPY is getting interesting here as it is managing to maintain altitude versus the USD and some JPY crosses are near breaking down.
Today’s Breakout monitor
The FX Breakout Monitor is 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.
A PDF of today’s Breakout Monitor
Below is a snapshot of the full list of currency pairs we track for the breakout monitor. Note that USDCAD closed at a new 49-day high on Friday for the first time in this cycle, and GBPUSD closed at a new 49-day low. These are longer term breakouts of note, although it would be nice to see a sizeable bar showing a bit more USD momentum. Elsewhere, note that USDJPY is just about the only USD pair not participating in the USD bull here and that EURJPY is looking at a new 19-day and 49-day low close today, with GBPJPY not far behind.
While USDMXN was trying to actually break lower as recently as late last week, that picture has certainly changed as the move lower has been sharply rejected and the pair is, as of this writing, less than an ATR from a new 19-day high close. AUDNZD looks interesting for a potential upside break this week as well, given the RBNZ on Wednesday in New Zealand and risk that a dovish tilt sees more NZD selling and drives a breakout there.
Today’s Breakout Highlight: EURJPY
While the recent USD move has dominated momentum traders’ attention across forex, we would also highlight JPY crosses today, especially EURJPY, which is poking below an important 19-day and 49-low close level around 120.00 and likely correlated with further drops in risk appetite – especially safe haven bond yields. Lots of potential to the downside on a break here if equities finally join the bonds and commodities in expressing a more cautious outlook here.
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