FX Chart Highlights: USD bears are running for cover to end the week
Head of FX Strategy
Summary: The greenback is breaking back higher tactically against the commodity dollars, possibly on fears that the market has been too confident in the hopes of a US-China trade deal. Regardless, the tactical reversal in the USD outlook will look fairly decisive if the currency closes on a high note after rallying all week.
The US dollar just kept grinding higher today after doing the same all week, and it is interesting to note that it did so both in an environment in which US-China trade deal hopes were picking up into mid-week, and over the last couple of sessions, where at least a strong shadow of doubt was cast over those hopes. The USD upside has been most significant technically versus CAD and NZD this week, but AUDUSD bulls have to be disappointed as well. Below, we once again mostly focus in on USD pairs, but also bring an update for EURSEK, as the pair frustrated momentum traders once again today.
EURUSD – bulls in retreat – last gasp is 1.1000 before cycle lows
After teasing the well-etched top of the range to end last week and start this week, the EURUSD super major has been letting out air all weak and at the time of our writing is a mere few pips away from the last real arguable line of support ahead of the cycle lows below 1.0900 in the 1.1000 area – both a key round number and the approximate location of the 61.8% Fibo retracement. A failure of 1.100 reinvigorates the strength of the mind-numbing, tight, slowly descending channel that has dominated since 2018.
USDCAD – downside threat neutralized?
Today could prove a local watershed development for this pair, which pulled higher through 1.3200 resistance in the wake of a very weak October jobs report on the heels of last week’s dovish guidance shift from the Bank of Canada. Given the miserable, rangebound existence of this pair over the last many months, it hardly inspires visions of greatness for bulls, but does suggest risk topside risk at least to the top of the range again if we hold reasonable above 1.3200 into the close today.
AUDUSD – rolling over again – “perma channel” to survive?
Disappointment all around for AUD bulls as US-China trade deal hopes are suddenly dampened at best and perhaps a little worse since I started writing this article as Trump says that the US hasn’t agree to full tariff roll-back. Even before this latest setback for trade deal hopes, it was disappointing that the recent local break higher of the 0.6900 area failed to blossom into more and the descending channel from back in 2018 has survived again. A hold lower below current level or arguably sub-0.6800 suggests a test of cycle lows again.
EURSEK – oh dear, here we go again
We’ve regularly updated EURSEK one of the more entertaining technical charts out there recently, and after we got a solid move back to the lows and even beyond, it looked promising for the bears, but alas the last bits of the range held and the 200-day moving average put in an appearance as well – a strong tactical disappointment here for the bears and cementing that we are stuck in the range without a new positive catalyst for SEK.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.