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CFTC commitments of traders: Traders reverse speculative positions in GBP to a modest short.

  
Analysis, Forex

CFTC commitments of traders data for the week ending September 29, 2020

  • EUR long 188K vs 191K long last week. Longs trimmed by 3K
  • GBP short 13K vs 3k long last week. Shorts increased by 16K
  • JPY long 25K vs 30K long last week. Longs trimmed by 5K
  • CHF long 13K vs 16K long last week. Longs trimmed by 3K
  • AUD long 9K vs 16K long last week. Longs trimmed by 7K
  • NZD long 3K vs 5K long last week. Longs trimmed by 2K
  • CAD short 19k vs 19K short last week. Unchanged
  • prior report

Highlights:

  • The GBP position swung around from being long to short with a that 16K change in position .
  • The EUR shorts remain the overwhelming largest speculative position at 188K.
  • The NZD is the smallest net speculative position at long 3K
  • The CAD and GBP are the only short positions (long USD positions).

Most pairs remain contained in trading today

  
Analysis, Forex

The GBP pairs had their spat of Brexit headline volatility, but other pairs not, not so much.

The major indices vs. the US dollar open the day with ranges less than 54 points with the exception of the GBPUSD, and that’s where the ranges have remained.  In fact, looking at the major pairs at the start of the NY session the low to high ranges showed:

  • EURUSD 53 pips
  • GBPUSD 157 pips
  • USDJPY 21 pips
  • USDCHF 50 pips
  • USDCAD 46 pips
  • AUDUSD, 54 pips
  • NZDUSD 48 pips
The GBP pairs had their spat of Brexit headline volatility, but other pairs not, not so much.
The ranges now shows:
  • EURUSD, the same 53 pips
  • GBPUSD 158 pips, the range was increased by 1 pip
  • USDJPY 32 pips,. The very narrow range was increased by 11 pips
  • USDCHF, the same 50 pips
  • USDCAD, the same 46 pips
  • AUDUSD, the same 54 pips
  • NZDUSD, the same 48 pips
The ranges and changesThe major crosses are also little changed vs the early NY session.
So trading in the forex remains range bound and confined in ranges that are less than the average ranges (sans the GBP pairs).
Can there be a late day run?
Sure… the “market” does get tired of non trending, and with ranges contained it is not far for a break and run.  What levels are in play for some of the pairs?
  • EURUSD: The EURUSD stalled near the 50% retracement at 1.17641.  A move with momentum above that level should ignite some buyer.   Close resistance at 1.1755 (price is at 1.1743).  On the downside falling below the 1.1713 level would take the price below a lower trend line on the hourly chart.
  • USDJPY: Lower trend line at 105.42. On the topside, the high today stalled near swing highs from September 25, September 29 and a swing high from yesterday between 105.694 to 105.729.  Get above should open up the upside.
  • USDCHF: The low today stalled just ahead of the low from yesterday’s trade at 0.9162 (low today reached 0.91639). Ahead of that level on the downside sits the 50% retracement of the range since September 15 which comes in at 0.9173. Get below each of those levels should solicit more downside momentum. On the topside watch price action above the 0.9202. That was the broken 38.2% retracement of the same range since September 15
  • USDCAD: The USDCAD trades just above its low from September 22 at 1.32827, and swing lows from today which ranged 1.32789 to 1.3283. There our 7 different hourly bar lows that bottomed in at 4-5 pip range today.  Break below should solicit more selling. On the topside the high price today at 1.33214 was just short of the swing low going back to September 24 at 1.33238. A move above that area should solicit more buying.
  • NZDUSD: The 50% retracement of the range since September 18 high comes in at 0.66539.  A break above that level with momentum should solicit more buying. The earlier high for the day took a peek above the level only to fail (high reached 0.6656).
  • AUDUSD: The AUDUSD stalled at the high today against a topside channel trendline. That trend line is now higher (around 0.74165 and moving higher). It would take a move above that level to solicit more buying. On the downside the lower channel trendline comes in at 0.7150. Break and stay below that line (it is rising) would be more bearish and should solicit more selling.

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EURUSD trades to a 7-day high. Tests 50% retracement/swing area

  
Analysis, Forex

50% retracement 1.1764.  Swing area between 1.1767 and 1.17748

The EURUSD is trading at a new seven-day high brain going back to September 22).  The pair today based near a swing area at 1.1713-1.1718 and was able to extend above yesterday’s highs between 1.17508 and 1.1755.  The sellers are taking a break in this area. A move back below the 1.1750 level may give some buyers some cause for pause (and give sellers against resistance some comfort). However, the range for the day is only a modest 54 pips vs. a 77 pip average trading range for the last month or so. So there is room to roam, if the buyers can stay in control.
50% retracement 1.1764.  Swing area between 1.1767 and 1.17748_
The high has reached 1.1768 so far. That is above the 50% retracement of the move down from the September 10 high, and between swing areas between 1.17675 and 1.17748. Get above 1.1775, and it should open up the door for a move toward the 61.8% retracement at the nice round number of 1.1800.

Dollar index to hit 90 or 100 first?

  
Analysis, Forex

DXY at 94.35

I came across a piece on Bloomberg’s Market Live blog making a case for the Dollar Index to hit 90, before 100. Here is the rationale:
1. The recent Dollar strength has been fuelled by US election uncertainties.
2. The rising COVID-19 cases in Europe have been a key part of the EURUSD weakness. Technically the EURUSD is being pushed back down into a large downtrend from 2008.
3. Despite crowded eur longs and USD shorts being a bit cleaner there still remains election risks.
4. The sum conclusion is that once the election tensions fade then the EURUSD will be driven by the fact that the Fed’s stimulus is greater than the ECB’s. Therefore, DXY to move to 90 before 100.
Points 1 and 2  are really two sides of the same coin. EURUSD weakness = DXY strength and vice versa due to their tight negative correlation. US elections are close and tense. The ‘sell everything’ feel has definitely been here with heavy global stock selling.
DXY at 94.35

CFTC commitments of traders: The EUR longs increase and remains near records. CAD the only shorts.

  
Analysis, Forex

CFTC commitments of traders data for the week ending September 22, 2020.

  • EUR long 191K vs 179K long last week. Longs increased by 12K
  • GBP long 3K vs 2k long last week. Longs increased by 1K
  • JPY long 30K vs 23K long last week. Longs increased by 7K
  • CHF long 16K vs 12K long last week. Longs increased by 4K
  • AUD long 16K vs 16K long last week. No change
  • NZD long 5K vs 3K long last week. Longs increased by 2K
  • CAD short 19k vs 17K short last week. Shorts increased by 2K
Highlights:
  • The EUR longs increased by 12K to 191K. That is still off the all time high at 212K, but near the high.
  • The JPY long is the next largest position at long 30K.
  • The short in the CAD is the only short of the major currencies..
CFTC commitments of traders data for the week ending September 22, 2020.

Cable extends fall to fresh two-month low as key support levels start to give way

  
Analysis, Forex

GBP/USD falls to 1.2680, its lowest level since 23 July

GBP/USD D1 23-09
Some modest strength in the dollar is helping to push cable lower, but the pound is still unable to get off the floor for the most part and that is also contributing to the decline in the pair to fresh lows since 23 July now.
Of note, the pair is now breaching key support levels from the confluence of the key daily moving averages @ 1.2724-26 as well as the 61.8 retracement level @ 1.2722.
That is leading to the bias in the pair turning more bearish with the drop under 1.2700 now leaving the pair vulnerable to a potential drop towards 1.2500 next.
The trifecta of bearish factors are also continuing to intensify for the pound.
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