FX Breakout Monitor: USD soft on strong CNY and trade deal hopes FX Breakout Monitor: USD soft on strong CNY and trade deal hopes FX Breakout Monitor: USD soft on strong CNY and trade deal hopes

FX Breakout Monitor: USD soft on strong CNY and trade deal hopes

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  Trump tweets touting terrific US-China trade deal to come and a nixing of the March 1 negotiating period deadline have turbocharged risk appetite again and taken USD to the lower end of the trading range again, threatening a break down if the momentum continues – something it hasn’t done in either direction in most cases.

For a PDF copy of this edition, click here.

The USDCNY has pushed down to the lowest levels since last summer as the US-China trade negotiations apparently are entering a promising home stretch, if we are to believe US President Trump’s tweets. This has pushed the USD a bit weaker again, particularly against the more risk-correlated commodity dollars. Elsewhere, JPY crosses are eyeing resistance and even breakout levels on the latest surge in risk appetite.

Breakout signal tracker

We were stopped out of the EURUSD signal back on the 20th as the US dollar has been generally unable to establish impulsive directional movement for any length of time over the last several months in most of the key USD pairs. We are increasingly cautious on breakout prospects until the logjam of recent ranges breaks with more conviction and volatility picks back up – particularly in the wake of whatever deal emerges from US-China trade negotiations.
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: after the failure of the downside breakout signal in EURUSD, that key USD pair is mid-range. USDJPY is not far from another upside break signal, but the USD is generally weak, with the JPY weaker still and actually beginning to break lower in places (EURJPY eyeing a potential break higher on close today, as is GBPJPY (see below). But a bit more volatility and range expansion would be helpful as weak trading ranges are in evidence almost across the board (as indicated by the dark blue shading of the current ATR). The pronounced NZD strength has NZDUSD close to a break level higher.  EURGBP is perched near the 19-day low close as we discuss below.
Source: Saxo Bank
Page 2: GBPJPY is showing signs of continuing higher and AUDJPY is having its first look at a possible break higher as well – both of these likely to require a further extension of the tremendous extension higher in risk appetite from the January lows (with uncooperative bond yields the likely driver behind many of these JPY crosses struggling to trend higher). Elsewhere, interesting to note that USD/EM a bit reluctant to follow the CNY’s lead as only USDRUB and possibly USDMXN in play for a potential break lower at the moment.


EURJPY having a look at upside break levels today as the 19-day high close is up around 125.69, although daily trading ranges don’t offer much support for the idea that the market is heavily involved here. Note that the prior break attempt higher faltered rather quickly. 
Source: Saxo Bank

NZDUSD is poking near the range highs, the first DM/USD pair together with GBPUSD and USDCAD to look at local upside break levels. A Reserve BAnk of New Zealand speech is up later today and we don’t have any broad confirmation from elsewhere that the market is taking a strong view on the US dollar, so we’ll watch passively for now here and watch how subsequent price behavior shapes up – USD trends outside of USD/EM have been largely nonexistent so far this year.
Source: Saxo Bank

GBP is looking at the range lows in EURGBP, but could be highly susceptible to Brexit headlines this week – particularly whether parliament takes more initiative from the May government to lessen the risk of a No Deal Brexit scenario. 
Source: Saxo Bank
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 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 Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, 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 Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region


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 are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

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

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.