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EUR/USD touches 1.1900 as dollar eases lower on the session

  
Analysis, Forex

The dollar is keeping weaker across the board so far today

EUR/USD D1 23-11

EUR/USD is once again testing the 1.1900 handle, reaching a high of 1.1906, as the dollar is seen weaker so far in European trading today.
Risk remains in a better spot with European equities posting a modest advance of around 0.5% to 0.7% currently while S&P 500 futures are also higher by 0.6%.
But the movement out of the dollar looks more flow-based than any reaction to risk, with the greenback sitting as the weakest performer among the major currencies.
Even with 10-year Treasury yields up 2.5 bps to 0.849%, USD/JPY is down to 103.70.
Looking back to EUR/USD, buyers will have a key test ahead of the close today in trying to keep above the 1.1900 handle. The 9 November pop on the vaccine news saw the high touch 1.1920 and a push above that will start to bring 1.2000 back into the picture again.
Otherwise, a failure to hold another break above 1.1900 may lead to some exhaustion as the pair continues to consolidate just below that.
Elsewhere, AUD/USD is still settling around 0.7320-30 levels with short-term resistance at 0.7340 still holding. GBP/USD is off earlier highs of 1.3380 to sit around 1.3350-60 levels while NZD/USD is still flirting with a retest of the December 2018 high of 0.6969.

CFTC Commitments of Traders: Yen longs back off

  
Analysis, Forex

Weekly FX positioning data for the week ending November 17, 2020:

  • EUR long 134K vs 133K long last week. Longs increased by 1K
  • GBP short 19K vs 22K short last week. Shorts trimmed by 3K
  • JPY long 30K vs 42K long last week. Longs trimmed by 12K
  • CHF long 15K vs 16K long last week. Longs trimmed by 1K
  • AUD short 6K vs 8K short last week. Shorts trimmed by 2K
  • NZD long 9K vs 8K long last week. Longs increased by 1K
  • CAD short 20k vs 21K short last week. Shorts trimmed by 1K
  •  

The only notable change this week is the drop in yen longs but that’s simply a reversal of last week’s move. Overall, there has been surprisingly little movement since the election, despite all the volatility.

Weekly FX positioning data for the week ending November 17, 2020:

EURUSD moves lower and remains in up and down trading range

  
Analysis, Forex

The high yesterday stalled near the early September high

The EURUSD has moved lower again today, a day after the high for the day stalled near the September 10 high at 1.19165 (the high reached 1.19195 and backed off – see the daily chart below).
The high yesterday stalled near the early September high
The stall near the high is similar to the lows from last week, that stalled near the low from the later part of September in the 1.16016 to 1.1611 area).
So the pair on the daily chart, trades in a red box between 1.1601 and 1.1919. The current price is just above 1.1800.
Technically on the daily chart, the next downside target for the pair is at 1.17518 area.  More important support would be in in the 1.1687 to 1.1710 area. That is home to a swing area (see yellow area) and also the key 100 day MA at 1.16886 (blue line).
Drilling down to the hourly chart below, the pair fell sharply yesterday after falling below the 1.1846-50 area.  The pair fell toward the rising 100 hour MA and bounced however (blue line).
The subsequent corrective rise today move back up to test the 1.1846-50 area, only to find sellers ahead of the level.  The move back down cracked below its 100 hour moving average for the 1st time since November 4 and has been able to stay below (on a closing basis) since that time (there was a brief peek above the level only to find sellers overwhelm the buyers).
The next key target on the downside would be near the 50% retracement 1.17606 (there is a swing area to 1.1768 near that target) and then the 200 hour moving average at 1.1743 (green line).
It would take a move back above its 100 hour moving average at 1.18156 (blue line) to tilt the trading bias more to the upside.
 EURUSD on the hourly

USD/JPY climbs by over 1% as risk rally sinks the yen

  
Analysis, Forex

USD/JPY moves back above 104.00 to near 104.50 currently

USD/JPY H1 09-11

The yen is proving to be the biggest loser as the market continues to party from the election and vaccine euphoria in the past half-hour. The dollar itself is weak across the board but USD/JPY has climbed by over 1% during the time.
The pair has broken back above 104.00 from around 103.70 earlier and is now trading closer towards 104.50 upon breaking its key hourly moving averages.
Hence, buyers are now back in near-term control. So much for the potential for an immediate drag towards 102.00 post-election.
The key thing to watch for the pair as risk remains the main narrative is Treasury yields.
10-year yields have shot up by over 11 bps to near 0.93% and that is lifting yen pairs across the board as we look towards North American trading.
USGG10YR

Japan fin min official says watching FX with a sense of urgency

  
Analysis, Forex

A Ministry of Finance official says will keep watching forex with a sense of urgency.

  • cannot comment on reasons behind FX moves
  • cannot comment on the US election impact
  • cannot comments on the level of FX itself
He can’t comment on so much!

As I have said many times before this is the sort of commentary you get out of Japanese officials when USD/JPY drops in a sharp fashion.

FT with a report on yuan bulls

  
Analysis, Forex

China’s currency has been moving higher against the USD since June.

China's currency has been moving higher against the USD since June.
The Financial Times today have a pice up on analysts bullish on the currency.
  • Analysts anticipate additional gains with arrival of more predictable White House After Joe Biden’s victory was declared on Saturday
  • “I think nearly all the volatility has been driven by the US election. It’s quite clear that a Biden White House would follow a much less aggressive stance on trade”  chief economist at Bank of Singapore
  • Deutsche Bank and Citigroup strategists wrote to clients on Friday to say it was time to re-establish long positions in the renminbi as the fog around the results of the US polls started to clear. 

CFTC commitments of traders: The EUR position is cut again

  
Analysis, Forex

Forex futures positioning for the week ending November 3, 2020.

  • EUR long 140K vs 156K long last week. Longs trimmed by 15K
  • GBP short 11K vs 7K short last week. Shorts increased by 4K
  • JPY long 28K vs 18K long last week. Longs increased by 10K
  • CHF long 15K vs 15K long last week. No change in net position
  • AUD short 1K vs 9K long last week. Shorts increased by 10K
  • NZD long 7K vs 7K long last week. No change in net position
  • CAD short 21k vs 18K short last week. Shorts increased by 3K

The EUR long position continues to be trimmed from the high on September 1 week at 212K (was an all time high position as well).  It currently is at long 140K.  The position has been trimmed for the last 6 weeks.  However, it still remains the largest position by far (the next is the JPY at long 28K).

Other highlights:
  • AUD this went from long to short but only by 1K
  • The CHF and NZD positions remained largely unchanged
  • The  JPY is the next largest position at 28K.
  • The largest short position is the CAD at short 21K.
Forex futures positioning for the week ending November 3, 2020.
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