Oil pops, USD/CAD falls further

USD/CAD at the lows of the day

USD/CAD hit a six-week high yesterday but it's turned around in a hurry today -- like a bunch of currencies.

The main driver is US dollar weakness and a reverse of some of yesterday's month-end flows but oil has helped it break below 1.3080. Crude is now back to flat on the day at $65.30 from a low of $64.65.

On the USD/CAD chart, you need to get down to 1.3000 to really generate any momentum but this reversal is a nice start.



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GBP/JPY buyers look to extend move above 100-hour moving average

GBP/JPY is holding a break above the 100-hour MA


That means that the near-term bearish bias in the pair has now turned to neutral but I'd wait for a break back above this week's high of 144.41 for further confirmation of that. The pound is the best performing major currency on the day as it recovers some poise after bouncing off support levels across multiple charts and this is one of them.


As cable found support from the 1.2700 handle, GBP/JPY also leaned on support from the 76.4 retracement level @ 143.39 earlier this week before bouncing higher as we're seeing now. There's still a lack of a meaningful break back towards the upside but for buyers, finding a base is always a good thing.

If price starts to challenge the 200-hour MA @ 144.95, I'll be more inclined to believe that we could see an extension back higher in the pair. Otherwise, this is still merely a correction on the way lower for the pound.



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Chart in focus: EUR/USD short from 1.1400

EUR/USD short looks good with more pressure on the Euro

Yesterday's Q3 eurozone GDP data showed a slowdown for the eurozone.Draghi had spoon about a slow down in momentum for the eurozone rather than a downturn, but as Justin pointed out, this shows the weakest quarter in 4 years. The ECB was on autopilot last week, but at what point will there normalisation outlook be revised. Yesterday's GDP data begins to raise that question. Furthermore, the GDP data out of Italy was poor too with a flat 0.0% reading vs an expected 0.2%. After this miss Italy's government came out insisting that they would still be sticking to their 2.4% budget deficit submission. 


The growing disparity between the US and the eurozone makes a EUR/USD attractive look short. I favour a short entry at the big round number of 1.1400 with stops at 1.1425. Target is flexible depending on price action, but just above 1.1350 as a first target makes sense at recent support levels.



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USD/JPY eyes the 113.00 handle ahead of US trading

USD/JPY marches higher on the session


There hasn't been anything that is able to put a dent in the move higher in the pair today and right now we're seeing price climb above the 22 October high of 112.89. The next resistance level to look out for will be offers at 113.00 followed by the July high at 113.17.

E-minis are holding up well trading 0.6% higher and that's still helping to keep the pair bid among other things. Sentiment still relies heavily on the US cash equity market though and I'd wait on that before confirming whether or not a break above 113.00 will be able to hold.

But for now, buyers are well in control and with the dollar pushing higher against the likes of the euro and pound on the day, it's looking to be a solid end to the month for the bulls despite jitters in the equities space.



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EUR/USD threatens further downside after Eurozone growth misses estimates

EUR/USD falls to a low of 1.1354 on the session now


Although the sluggish Q3 growth is very much expected, the fact that it confirms the need for a reassessment of Eurozone growth conditions is certainly something that traders will slowly price in more over time. It's no knee-jerk sharp reaction to the data by any means so far but this is something that will slowly build into euro sentiment as more hard data starts to support the case of a further slowdown.

It all started in Q1 when the ECB brushed off the slow growth to 'extraordinary' conditions and then it lasted to Q2 where they said it should be temporary. But now that it has started to creep into Q3 and possibly Q4, the outlook isn't all too great for the Eurozone economy. And that will have traders slowly pricing out further a potential move by the ECB to normalise policy by the end of 2019.

For EUR/USD price action at the current time though, we're seeing a move lower that threatens to break yesterday's low of 1.1361 with some support seen from Thursday's low of 1.1356 as well. Hold breaks below those levels and we will be on the cards to test Friday's low of 1.1336.

The euro may still be holding onto gains against the yen and the pound so far today, but make no doubt about it, the continuation of sluggish growth will eventually take its toll and weigh down the single currency further as currently this is beginning to threaten the ECB's plans of normalising monetary policy next year.



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EUR/GBP rises to near one-month high as the pound slips

EUR/GBP climbs to a high of 0.8907, highest level since 3 October


It's been a slow and steady march higher for EUR/GBP as the pound continues to suffer setback after setback. There isn't any fresh headlines on the day but whispers of a possible general election in the UK to come in May 2019 hasn't really been helping to inspire confidence in a time when UK politics is searching for calm heads to prevail.

The pound has moved lower across the board and for EUR/GBP, the pair has moved up and is breaking further away from the 100-day MA (red line) today. That means that price bias is now even more bullish.

The next key resistance level to watch out for will be the daily resistance level close to 0.8928. That coincides with the 38.2 retracement level from the longer-term upswing and has been a key swing region that has halted upside moves in the past.

If that gives way, buyers can look towards resistance at 0.8960-70 next before 0.9000 comes into the picture again.

With the euro also struggling to gain traction, trading the pair now has been a case of trading which of the negative sentiment in the respective currencies is worse. And as Brexit negotiations continue to stall and UK domestic politics in a huge mess, the quid is winning the 'battle of the losers' here.



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USD/JPY rises to session high as E-minis turn positive

USD/JPY touches a high of 112.18


USD/JPY is now looking to hold above 112.00 and break back above the broken trendline support as US equity futures jump on the session. European stocks were trading higher already and that's helped to lift sentiment in the equities space:


E-minis are up by 0.3% currently and that's helping to change the mood across yen pairs on the day. EUR/JPY is also near the highs despite the euro's sluggishness following the reports on German chancellor Merkel. The pair now sits at 127.65 and GBP/JPY is also higher on the day at 143.80 currently.

For USD/JPY, buyers still have much work to do and the first step is to break above the 100-hour MA which currently sits at 112.22. Other resistance levels also lurk nearby and will help to limit upside for the time being but it's all about equities sentiment right now for yen pairs so pay attention to that ahead of US trading.



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Can AUD/USD hold a break above 0.71?

AUD/USD buyers have established a more bullish near-term bias


They've done so by breaking above the 200-hour MA (blue line) @ 0.7094 and are attempting to sustain a break back above the 0.7100 handle. Previous attempts since last Wednesday have seen buyers fall short of maintaining a firm break above the figure handle and it's been a case of selling on any rallies towards the key hourly moving averages.

The new week is starting off a bit tepidly and so far there isn't anything to convince me of a move higher in the aussie just yet aside from short covering on positioning data.


AUD/USD hit lows not seen since February 2016 on Friday but recovered into the close. And that was a good showing of how a squeeze can manifest in the pair rather quickly when the conditions allow for it.

For now, I still don't see a reason for rally sellers to panic just yet. Buyers have been showing exhaustion in keeping price above 0.7100 as long as equities are still tepid and risk isn't rebounding all too much.

Furthermore, the real key test of any upside move will require a break of the October high at 0.7160 in order to break the bearish pattern of lower highs, lower lows. As seen from the hourly chart, there's resistance around the region from 0.7150 as well so that will be a key level for sellers to defend.

Unless there is a break of the pattern, the play is still the same for the aussie until something fundamental changes or we start to see major short squeeze at play. But even for the latter, the risks are very well defined at this point so it isn't something that should send markets jumping.

For now though, as long as equities sentiment - particularly that of US equities - remains tepid then I don't see how the aussie will be able to pull off a solid rally above 0.7100 unless the greenback weakens significantly. We're likely to see some pivoting around the figure handle until US traders come in to offer more direction today.



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NZD/USD upside stalls at test of 200-hour moving average

NZD/USD fails to get above the 200-hour moving average


The kiwi may be leading gains in the currencies space but so far the upside move has failed to gain much needed traction to break higher. NZD/USD broke above the 100-hour MA (red line) earlier but the move to the upside runs into resistance from the 200-hour MA (blue line) and that's proving to be one technical level too much for buyers.

Sellers are leaning on that for the time being, preventing near-term bias from turning more bullish. With equities sentiment still tepid, it's making for a bit of "neither here nor there" moment for the pair as markets continue to look for direction.

US equity futures are trading a little lower on the day - E-minis down 0.3% - but there's no major panic across markets just yet. Mainland Chinese stocks are extending losses into the close and that's never a healthy sign but sentiment isn't that badly beaten up just yet as we start the new week.

For now though, I'd be cautious of any further upside move in the kiwi as long as risk remains tepid as such.



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GBP/USD falls below 1.28, eyes September low

Cable falls to a low of 1.2796 on the day


The pound and euro are starting to slip on the day with yen crosses weighing on the two currencies. As a result, GBP/USD has been brought lower and is now looking for a move back below the 1.2800 handle. Sellers will be eyeing support from the September low @ 1.2786 but given the backdrop of stalled Brexit negotiations and uncertain UK domestic politics, it's not looking good for the pound.

Look out for the US Q3 advance GDP reading today. If the release there is a beat and helps prop up the dollar, expect cable to move to retest the year's lows at 1.2662 once again.



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