background image background image background image

FX Breakout Monitor: USD and safe-haven FX riding high

Forex 5 minutes to read
Picture of John Hardy
John Hardy

Head of FX Strategy

Summary:  Risk-off sentiment is pushing investors into USD, JPY and CHF.


Click here for the full FX Breakout Monitor report.

EURUSD is having a go at the cycle- and 12-month lows again, while the JPY and CHF safe havens have managed to match the broad USD strength today as risk sentiment has weakened anew on trade war fears. CAD has suddenly sapped back weaker after divergent recent strength.

The US dollar rally has intensified and broadened out today, with CAD and the EUR more squarely under the greenback’s thumb today as both EURUSD and USDCAD are looking at important breakout levels. We add a EURUSD short ahead of today’s close, with the risk that we are jumping the gun. Elsewhere, the USDCAD turnaround is easily the most remarkable shift relative to recent price action as CAD traders have woken up to the pressure from both weak risk appetite and weak oil prices after formerly celebrating some strong recent Canadian data and Trump’s cancellation of tariffs. 

Breakout signal tracker

We add a EURUSD short signal to our tracker today at the price as of this writing, though theoretically we should wait for today’s closing level to ensure that the breakout lower has held into the close. If EURUSD closes today back above 1.1150 we may look to take the position off again. Tomorrow the AUDUSD signal for the AUDUSD short position expires and we could replace it with a USDCAD long if the latter closes above 1.3500 today.
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: EURUSD is having a go at a new downside breakout for the cycle – can the third  time prove the charm after the prior two attempts were quickly reversed? We’ll see – the Monday session could prove the key one as we await the results of the EU Parliamentary elections Sunday evening. EURJPY is also poking to new lows for the cycle and could prove compelling for a trend continuation trade if this weak risk sentiment worsens further. Elsewhere, also note USDCAD once again trying to break higher.
Source: Saxo Bank
Page 2: mostly about extensions of recent trends here, but note the USDZAR and USDTHB looking at new cycle highs (the latter especially interesting after a sharp reversal), while USDRUB has bounced sharply after posting a new low yesterday on the weakening of EM and especially oil prices.
Source: Saxo Bank
Chart: EURUSD

EURUSD having a look at new lows for the cycle here and thus also at 12-month lows. We have also marked the prior two breaks to show how the last two break attempts lower failed to lead anywhere – let’s see if the move can develop.
EURUSD
Source: Saxo Bank
Chart: USDCAD

Bulls were burned on the last attempt by this pair to break higher; we’ll reserve judgment and post a signal on our tracker if the pair manages a solid close here solidly above 1.3500.
USDCAD
Source: Saxo Bank
Chart: USDZAR

Emerging market currencies have taken the USD strength reasonably in stride lately, but USDZAR has bounced back today and is looking at the highs for the cycle again – we mark both the 19-day and 49-day highs here.
USDZAR
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.

ATRAverage 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.

Disclaimer

The Saxo Bank 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. This content is not intended to and does not change or expand on the execution-only service. 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

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.