Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
You can access both of our platforms from a single Saxo account.
FX Breakout Monitor: EUR firm across the board
John J. Hardy
Head of FX Strategy
Summary: The euro has firmed across the board after last week’s ECB meeting and looks set for a few days of relative strength.
Click here for the full FX Breakout Monitor report.
The US dollar continues to limp around without much conviction. It's still weak against the euro after Friday’s weak jobs report, but it has rebounded slightly elsewhere. Clearly there is an enormous amount at stake for the market over the June 19 Federal Open Market Committee meeting after the market’s aggressive repricing of Fed policy expectations in recent weeks.
The euro, meanwhile, continues to flourish in relative terms, maintaining altitude against the US dollar, and rallying fairly hard against the JPY and CHF.
As we wait for key US developments over the coming week (and really through the G20 summit near the end of this month, due to the possibility of a Trump-Xi meeting on the sidelines) we focus a bit more on the crosses, where we see a weak AUD and NZD and the euro poking at new highs in places.
Breakout signal tracker
We add a EURAUD long to the signal tracker after the pair closed at a new high for the cycle yesterday and could be set for further gains on the breakout.
The US dollar continues to limp around without much conviction. It's still weak against the euro after Friday’s weak jobs report, but it has rebounded slightly elsewhere. Clearly there is an enormous amount at stake for the market over the June 19 Federal Open Market Committee meeting after the market’s aggressive repricing of Fed policy expectations in recent weeks.
The euro, meanwhile, continues to flourish in relative terms, maintaining altitude against the US dollar, and rallying fairly hard against the JPY and CHF.
As we wait for key US developments over the coming week (and really through the G20 summit near the end of this month, due to the possibility of a Trump-Xi meeting on the sidelines) we focus a bit more on the crosses, where we see a weak AUD and NZD and the euro poking at new highs in places.
Breakout signal tracker
We add a EURAUD long to the signal tracker after the pair closed at a new high for the cycle yesterday and could be set for further gains on the breakout.
Today’s FX Breakout monitor
Page 1: EURUSD has managed to hold above 1.1300, but the USD picture is a bit mixed elsewhere. Note the euro threatening new local highs versus GBP and JPY and posting a new high close for both 19-days and 49-days in EURAUD (more in chart below). Elsewhere, CAD is on quite the rampage after strong employment data on Friday with AUDCAD pushing near 2019 lows.
Page 1: EURUSD has managed to hold above 1.1300, but the USD picture is a bit mixed elsewhere. Note the euro threatening new local highs versus GBP and JPY and posting a new high close for both 19-days and 49-days in EURAUD (more in chart below). Elsewhere, CAD is on quite the rampage after strong employment data on Friday with AUDCAD pushing near 2019 lows.
Page 2: USDSEK and USDNOK are trying to poke to new local lows here, but the technical situation has been very rangebound for months in these pairs – effectively an upside-down EURUSD.
Elsewhere, gold and silver have pulled away from the aggressive move last week though the next break higher, if it arrives, gets even more compelling technically if it holds the $1,350/oz area in gold and 15.00+ on silver on a daily close.
Elsewhere, gold and silver have pulled away from the aggressive move last week though the next break higher, if it arrives, gets even more compelling technically if it holds the $1,350/oz area in gold and 15.00+ on silver on a daily close.
Chart: EURAUD (weekly)
EURAUD is looking an area of long term interest around 1.6250+ that stretches back months and really years – almost 10 years – as we add the breakout signal to the upside to our signal tracker. Note that we have zoomed out to a weekly chart here to show the scale of the breakout potentially unfolding here. EURNZD (not tracked in our monitor) also merits a look.
EURAUD is looking an area of long term interest around 1.6250+ that stretches back months and really years – almost 10 years – as we add the breakout signal to the upside to our signal tracker. Note that we have zoomed out to a weekly chart here to show the scale of the breakout potentially unfolding here. EURNZD (not tracked in our monitor) also merits a look.
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.
ATR: Average 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.
Breakouts: 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.
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.
ATR: Average 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.
Breakouts: 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.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
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.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
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.
-
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.
-
The rise of populism: Far-right parties will influence the future
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
-
Investing in China: Navigating Q1 amid economic challenges
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
Disclaimer