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A technical look at the major currency pairs heading into the new trading week

  
Analysis, Forex

What are the technical’s saying for the major currencies.

EURUSD: The EURUSD extended the week’s trading range in the NY afternoon (taking out the low from Tuesday at 1.12402. The break took the price to the 38.2% of the move up from the May 25 low.  That level comes in at 1.12105.
What are the technical's saying for the major currencies.
The high for the week reached 1.1421.
The price decline on Thursday and Friday, took the price back below the 100 hour MA at 1.1325 and the 200 hour MA at 1.12927.  Into the new trading week, staying below each of those levels would keep the sellers in play.
What is in the favor of the buyers is that the correction this week could only get to the 38.2% retracement.  That is just a plain vanilla correction. It will take a move below that level to give sellers more confidence and more control.
USDJPY: The USDJPY trended to the downside with the high for the week on Monday, and the double bottom low yesterday and today (today was a pip higher but close enough).

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CFTC commitments of traders. EUR longs at highest since May 22, 2018

  
Analysis, Forex

Forex futures positioning data for the week ending June 9, 2020.

  • Prior week
  • EUR long 96K vs 81K long last week. Longs increased by 15K.
  • GBP short 24K vs 36K short last week. Shorts trimmed by 12K.
  • JPY long 17K vs 33K long last week. Longs trimmed by 16K.
  • CHF long 2K vs 9K long last week. Longs trimmed by 7K.
  • AUD short 37k vs 41K short last week. Shorts trimmed by 4K
  • NZD short 11K  vs 13K short last week. Shorts trimmed by 2K
  • CAD short 25k vs 33K short last week. Shorts trimmed by 8K

Highlights:

  • EUR longs at the highest level since May 22, 2018

Forex futures positioning data for the week ending June 9, 2020.

Deutsche Bank forecast EUR/USD to 1.20

  
Analysis, Forex

DB looking for a ‘2nd stage’ USD decline

  • focus will once again turn to specific growth outcomes across countries
  • US management of virus crisi has been “suboptimal”, and there are large fiscal cliffs ahead
  • could push EUR/USD to $1.20
DB “would frame dollar weakness around two stages Stage 1: the removal of the dollar risk premium, EUR/USD to 1.15. This has been the most important driver of the dollar so far”
  • “Stage 2: the end of dollar exceptionalism”
Via Bloomberg

Cable fights its way to 1.28 for the first time since March 11

  
Analysis, Forex

Cable continues the retracement

Cable continues the retracement
The US dollar is soft ahead of the Fed and gold is higher. That’s a signal the market is looking for something dovish from the FOMC even if the equity market is feeling the jitters.
Cable has been somewhat of a laggard in the dollar trade, owing to the regular Brexit tomfoolery. To start the week, the pound struggled to get above 1.2750 but has broken through today and continued up to 1.2800 and sits just below now.
The pound is a mid-performer and it’s all about the weak dollar today. Expect to chop around here while we wait for Powell & Co at 2 pm ET.

CAD is overvalued. Buy USD/CAD on dips

  
Analysis, Forex

USD/CAD is down 45 pips to 1.3376 today

USD/CAD is down 45 pips to 1.3376 today

 

‘The CAD was among the best-performing G10 currencies in recent days, supported by robust risk sentiment and resilient commodity prices. Moreover, at its June meeting, the BoC presented a less negative outlook for the Canadian economy while reining in some of its monetary stimulus. The CAD outlook may not remain too rosy for too long, however. Indeed, a planned OPEC meeting to extend the recent production cuts has been delayed due to difficulties enforcing compliance with the output reduction by all member-states,”

“The CAD is starting to look expensive vs the USD. Indeed, both our short-term and long-term fair value models are suggesting that we are now in overvalued territory for the CAD, suggesting that USD/CAD is buy on dips here,”

USDJPY corrects toward lower trend line/swing area

  
Analysis, Forex

Rising 100 hour MA at 109.029.

The USDJPY has corrected toward a lower trend line at 109.157 area. Just below that, a swing high from Thursday and swing lows from Friday at 109.159.  Below that is the rising 100 hour MA at 109.029.  The price has not been below the 100 hour MA since June 2.
Rising 100 hour MA at 109.029.
The price last week moved steadily higher (stocks and yields moved higher helping to support the pair) with an acceleration on Friday above a topside trend line to the high at 109.843.  However, momentum stalled (could not be sustained), and the price action today took the price back below the topside trend line (and has stayed below today).  Now the pair is testing a lower support target.
Do the buyers come in, or does the probe lower continue with a retest of the 100 hour MA.   That is the intraday question now as price trades at lows.

USD/CAD falls to fresh post-pandemic low

  
Analysis, Forex

Canadian dollar continues to climb

Canadian dollar continues to climb
USD/CAD has fallen to a fresh low on the day as the commodity currencies surge.
This is a market that’s suddenly feeling much better about the virus and not so great about the US dollar. With AUD and NZD you can make the case that the domestic economies are in good shape on the virus, that’s not so much the case for the loonie. Cases are still much lower than in the US but not at the point where people can live relatively fear-free like New Zealand.

The Australian dollar is sending a negative signal

  
Analysis, Forex

Sharp drop in North American trade

The Australia dollar completed the coronavirus comeback yesterday as it completely recouped the March-April decline to trade back to where it was in mid-February.
What next?
Today the mood is AUD/USD isn’t so rosy, the pair has fallen 80 pips in the past couple hours after making a margin new high but failing to extend. Part of that is broad US dollar strength but the weakness is accelerating and that’s a negative signal for the risk trade.
There’s still some rope left in yesterday’s rally but we have crossed the 61.8% retracement of that move.
Sharp drop in North American trade

NZD “remains at the mercy of global risk sentiment near term”

  
Analysis, Forex

An updated NZD view from Westpac, they nail it with that headline comments.

  • Remains at the mercy of global risk sentiment near term
  • potential for gains to 0.6400 during the next few weeks
  • Further out, though, economic data releases over the next few months will be dire, potentially denting sentiment further. There’s potential to revisit 0.5900 during the next few months.

The #AUD has completed the coronavirus comeback

  
Analysis, Forex

AUD/USD is back to where it was in mid-February

AUD/USD is back to where it was in mid-February
The Australian dollar has now erased all the coronavirus declines and has rebounded to where it was on February 19.
One of the reasons the Australian dollar has been so strong is that it has essentially defeated the virus domestically. Local cases are minuscule and people there rightfully feel safe.
A month ago, I asked: Where would you want to be right now? The answer is in Australia or New Zealand. That’s where money wants to be as well and you can see it flowing in today, despite all the tensions with China.
What next? The March 8 intraday high of 0.6685 is a big level to watch. AUD/USD needs to get above it to truly erase the virus declines. If it can get there then a path to 0.7000 is entirely viable.
As with all risk trades right now, you need to ignore the obvious economic pain of the virus and take a leap of faith into cheap money and deficit spending.
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