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EURUSD falls to a new low

  
Analysis, Forex

Price moves below its 200 hour MA ahead of the ECB decision.

The EURUSD has moved to a new session low on the day.  The low just reached 1.12081. Headlines that Germany is ready to ditch balanced-budget to combat coronavirus is so far not giving the EUR a boost. The ECB decision will be out shortly where they are expecting to cut rates and potentially announce more QE and liquidity measures.
The price of the EURUSD remains below its 200 hour moving average. That is close risk for the pair now. The lows from March 6 and March 20 at 1.1273-78 are also risk for shorts. The topside channel trend line comes in at 1.13035. Staying below those levels still more bearish technically, and keeps the sellers more in control.
Price moves below its 200 hour MA ahead of the ECB decision.

On the downside the 1.1183 area is the next target, followed by the downward sloping channel trendline at 1.1170.  Below that the 50% retracement of the move up from the February 21 low comes in at 1.11368 and the 200 day moving average comes in at 1.10995.

CFTC commitments of traders: EURUSD shorts are trimmed but still against the price trend this week

  
Analysis, Forex
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Forex futures positioning data for the week ending March 3, 2020

  • EUR short 87K vs 114K short last week. Shorts decreased by 27K
  • GBP long 35K vs 30K long last week. Longs increased by 5K
  • JPY short 42K vs 56K short last week. Shorts decreased by 14k
  • CHF short 3K vs 1K long last week. Shorts increased by 4K
  • AUD short 52k vs 44K short last week. Shorts increased by 8K
  • NZD short 17K vs 15K short last week. Shorts increased by 2K
  • CAD long 11k vs 15K long last week. Longs increased by 4K

Highlights:

  • The EUR remains the largest speculative position and it is still short, but there was a relatively large liquidation of 27K.  The EURUSD bottomed on February 20. The price has been up 9 of the last 11 trading days.  The squeeze higher seems to have led to some liquidation of the short positions. Traders are still offsides given the recent sharp move back higher.
  • The JPY has been getting stronger as stocks and rates tumbled.  The USDJPY is trading at the lowest level since August 27 (higher JPY).  Speculative positions remain short JPY (long USD), and losing money.  Like the EUR, the position has been trimmed but traders remain short the JPY (long the USD) and against the price trend this week.
  • The AUD has moved higher off the low from last Friday. Speculative positions in the AUD saw an increase of 8K in the net short position. The short is losing against the rising value of the AUD this week.
  • The speculative position in the GBP (Long 35K) is benefiting this week as the GBPUSD has marched higher last Friday’s low.

Forex futures positioning data for the week ending March 3, 2020

US Treasury 10-year yields fall below 0.70%, down by 20 bps on the day

  
Analysis, Forex
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The yields capitulation continues

USGG10YR
US Treasuries are seeing an unrelenting bid on the day as 10-year yields start to fall below 0.70% now. The movement today is something else with yields falling by over 20 bps on the session. 30-year yields are under 1.30% in a similar move.

This is keeping the pressure on USD/JPY as price now falls further to a low of 105.33.

US 10-year yields slip back under 1% on the day

  
Analysis, Forex

USD/JPY keeping at lows as yields stay pressured

USD/JPY D1 05-03

The tug of war continues in the market over the past two days but in general, it isn’t looking to be a pretty picture for risk in trading today. European equities are creeping lower still with US futures down by more than 1%, while Treasury yields are slipping again.
The major currencies space is still looking rather tepid for the most part, with yen pairs being the only responsive ones. USD/JPY is now down to a session low of 107.08 as such.

EUR/USD looks to surpass key technical hurdles, nears 1.1100 level

  
Analysis, Forex

EUR/USD touches a session high of 1.1092

EUR/USD D1 02-03

The pair is continuing its unrelenting move higher over the past week or so as price now surpasses the 100-day MA (red line) @ 1.1056 and is looking to challenge the 200-day MA (blue line) @ 1.1098.
Break above that latter and the bias in the pair will turn to be more bullish and that could set up potential move back towards 1.1200 and the January high of 1.1239 next.
Month-end flows and unwinding in carry trades (euro as a funding currency) were among the many reasons helping the euro to climb in the past week but a new theme is also emerging in that the dollar is losing attractiveness amid the deterioration in yields.
That and the better market mood today is weighing on the greenback a little but so far, the technical momentum still isn’t really stopping for EUR/USD.
Watch out for a crack above 1.1100 as that may trigger a quick run higher towards 1.1200.

USD/JPY to 120? Here are a 2 reasons.

  
Analysis, Forex

A couple of analysts on the yen, despite the ‘flight to safety’ see a case for it to weaken.

  • S&P ratings say if economic growth in Japan slows further than expected (vs. the US) yen to weaken as a ‘shock absorber’ with BOJ monetary policy setting rates already so low.
  • AMP (in Australia) says if the virus outbreak in Japan worsens and the US remains relatively free of the outbreak USD/JPY could test 120
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