FX Breakout Monitor: USD limping post-FOMC, SEK rally continues

Forex 5 minutes to read

John Hardy

Head of FX Strategy

Summary:  The US dollar is showing more profound signs of weakness, though the bigger break-down levels in key pairs like EURUSD, USDJPY and AUDUSD lie a bit lower for the greenback. The USD outlook in general looks pivotal here ahead of year-end and over the question of the December 15 round of US tariffs against China.


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.

Below is a snapshot of the full list of currency pairs we track for the breakout monitor. The USD reaction to the FOMC meeting late yesterday and prospects for the reaction to the UK election tonight, as well as news – for better or worse – about the fate of the US-China trade negotiations, gives us hope that the extreme low volatility levels may be fading and that we can see better momentum trades develop after a long period of slim pickings for momentum and trend traders.

Source: Bloomberg and Saxo Group

Sterling strength has backed off again after a surprisingly aggressive run just ahead of today’s UK election and the results coming in this evening – offering a test for sterling traders’ conviction on any outcome – i.e., whether a Tory majority outcome is already in the price or how much downside risk there is for sterling if the Tories barely squeak through or, likely worst of all for sterling longs, if we see a hung parliament result.

Note that EURUSD, AUDUSD and GBPUSD all closed at new highs for the cycle yesterday, but the first two of these still need a bit more to establish the longer-term 49-day breakout status – something we’ll be watching closely over the next few session as these level are close. The trading environment in general early next week should help us establish whether momentum is developing here in USD downside and otherwise as we will have to know by then the fate of the December 15 US tariffs on China and have at least a status check on ongoing trade negotiations. Our assumption is that détente is USD negative, but the proof either way will be in the price.

Today’s Breakout Highlight: AUDUSD
A number of USD pairs have witnessed a further breakdown here, and prominent among those is AUDUSD, where not only is the USD weak, but AUD has received a bit of a boost on strong commodity prices like copper and iron ore and on some spin that . A détente in the US-China trade row would likely be a must for a significant extension higher here – but regardless, watch the coming couple of sessions and the 0.6900+ area for whether this break unfolds as this would also break the dominant chart feature of the descending channel.

Source: Saxo Group
Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.