USD Looks Set to Move Higher
The USD looks set to move higher in recent sessions. Buying pressure builds steadily. This reflects renewed dollar strength. Traders watch for continuation across majors.
In the current media speculation surrounding the impact of the PBOC decision to revalue/devalue the yuan, particularly on how this may (or may not) affect the FED's decision about raising interest rates, it is easy to forget two things. First, the fundamental news releases which too will add their own layer of volatility, and second Greece, which today is back centre stage as the Greek parliament meets today in emergency session to ratify the latest bail out deal.
Key Releases
Today's key releases are primarily in the US with retail sales, core retail sales and the unemployment claims due. And of these it is the retail sales numbers which the market will be focused on primarily because they may give some guidance as to the FED's thinking about interest rates.
Meantime in this morning's...
Have been reading that carnage is expected and word is EUR/USD has already dropped to 1.1029 - although my MT4 hasn't started as yet, so we will have to wait & see. Meantime here are some levels for some of the euro pairs :
EUR/USD - was already bearish & shorts at CFTC increased last week. Putting the 1.1029 aside for the time being - 1.1052 is the first level of support & if breached 1.0819 comes into play where a high volume node on the VPOC awaits.
EUR/JPY - Has been in congestion for a number of days having failed to breach the 140.78 price point & now looking to turn bearish. The immediate level below is at 137.57 with any move through here then likely to test the 136.69 region. The VPOC continues to remain in the 134.94 region for the time being and should this be taken out then a longer term bearish trend will ensue.
EUR/AUD -...
The RBNZ certainly livened things up overnight - I don't remember seeing quite so many gaps or such strong moves delivered by one currency! NZD is pretty illiquid at the best of times, so any volatility will magnify any moves.
With the NZD it's a case of the central bank making it very clear further rate cuts are on their way & with the US finding some bullish sentiment this morning - NZD/USD looks set for a further fall. So far this morning the pair has managed to find some support at the 0.70 region, but a quick look at the weekly and monthly chart reveals the extent of this bearish sentiment. with the month chart in particular, where the price is now at the 200 ma.
The VPOC ( volume point of control) is now well above the current price action and adding further weight to the bearish sentiment. In addition, with several LVN (low volume nodes) we are likely to...
The overnight fall in the Nikkei 225 of 1.76% has resulted in an impressive two bar reversal (aka a shooting star) on the daily chart for the USD/JPY - so no surprise to see the pair move lower in this morning's trading session.
What is perhaps more significant is this move in the JPY is not consistent across the JPY pairs we follow on our matrix, and in particular the EUR/JPY and GBP/JPY. The latter is a pair I am looking to short on a longer term basis, but patience is required not least because I want to see the JPY begin to move away from the bottom (oversold) on the currency strength indicator. This also highlights a key aspect of forex trading, namely individual currencies can stay overbought or oversold for much longer than we expect. Much, of course, will depend on risk sentiment, and in particular whether the current downwards trend in equities continues, and if so then we...
EUR/USD Turns Bearish Moving Through the VPOC
EUR/USD turns bearish moving through the VPOC. This key level acted as support. Price broke lower with conviction. Volume price analysis (VPA) confirmed the shift to downside momentum.
The EUR/USD continues to look bearish as it sits on support between 1.0885 & 1.0890 & just below the VPOC the yellow line on the volume point of control indicator. This level has now been breached on good volume and should take the pair to 1.0863. In addition the trend monitor has also transitioned from blue to red and with the US unemployment data coming up shortly, this could provide further downwards momentum if the numbers are on target or better than expected.
The forecast this time around is 271k against a previous of 274k and whilst this is an important number it is the backwash from Janet Yellen's US dollar positive comments which continue to drive the US dollar higher, coupled as always with ongoing concerns over the...
GBP Gets a Boost from Retail Sales
GBP gets a boost from strong retail sales data. Positive figures signal consumer spending strength. This supports economic growth expectations. Traders see it as bullish for the pound.
UK retail sales have given GBP a real boost higher & it's occupying six top spots on the currency matrix. Number was a great improvement & market has temporarily forgotten the negative CPI number.
What's interesting is at 8.00 am at the London open, there was a huge buy of cable off an important order board level at 1.5520 with retail sales then just adding the momentum.
Cable is also benefiting from USD pull back from its recent bullish move higher. The 4hr currency strength indicator is particularly revealing as the USD has been overbought for some time, but is now moving lower. The move higher in the London session has now tested the VPOC level on the daily chart, and we are waiting to see if this afternoon's...
Without wishing to downgrade this evening's FOMC minutes, which will no doubt result in the usual volatile market moves, stop hunting & general shenanigans, the main FED event takes places on Friday at 6.00 pm London time. This is when Janet Yellen is due to give an important speech about the US economic outlook, and so one to watch.
Meantime USD strength has continued overnight across the majors and into this morning, with German PPI helping to give the eurodollar a shove lower. Other items of note this morning include the MPC (Monetary Policy Committee) of the BOE playing their standard formation (football parlance) of 0-0-9. In other words 9 defenders, no midfield & no strikers.
For FED watchers FOMC Member Evans has been speaking in Munich and has been simply repeating his call for a delay in raising interest rates. No moves expected as he is re-iterating his well known stance as a dove. This is why we need to know where...
USD buying has continued into US session, and despite it being a holiday in Canada the USD/CAD has done really well. Question now is how far is USD likely to move higher. The key level is 11,750 on the USDX index which is the support platform which was breached last week & of which we may see a re-test.
Focus overnight is back to AUD & NZD, with a monetary policy statement from the RBA for the first, & inflation expectation for the second. Both AUD/USD and NZD/USD have had a bearish day, although Aussie dollar less so. In addition, whilst we can expect a reaction in both these pairs, we can also expect some interesting moves in the AUD/NZD cross which today has had an 80 pip move to the upside.
Since last Tuesday the pair has traded in a relatively narrow range, 1.0865 to the top & 1.0776 to the bottom, and I do believe the overnight news may be...
More Selling of the US Dollar
More selling of the US dollar continues across pairs. Bearish pressure builds steadily. This reflects shifting sentiment. Traders watch for continuation or exhaustion.
Despite it being a holiday across most of Europe for Ascension Day - it's quite lively out there at the moment. We've also just had an unscheduled comments from Mark Carney (not shown on Forex Factory), but came up on Forex Live feed. Greek Fin Min Varoufakis also speaking & even mentioning the word 'reform'.
Meanwhile on the charts it's been more selling of USD which is propelling euro & gbp higher with volatility candles on faster time frames. For cable 1.5788 is a key level being tested up to and including the daily chart. Have reading how a lot of traders are looking to short cable since it went over 1.5550, but it's just not co-operating & the principle reason is the USD which continues to be sold off.
It's only in the EUR/GBP...
Aussie Dollar and the AUD/NZD the Ones to Watch
The Aussie dollar and AUD/NZD are the ones to watch right now. AUD shows relative strength. This cross pair highlights relational dynamics. Traders spot opportunities in commodity currencies.
Here in UK election day is almost here & we can expect reactions as soon as the exit polls start posting as well as the actual results. Heaven only knows what is going to happen. So far GBP has been fairly well behaved - moving more as a result of USD & EUR.
Meanwhile in Asia - AUD has employment data to contend with. On 4hr CSI we have seen the AUD pull back & is also showing the NZD as hugely oversold, but as mentioned many times before a currency can stay stubbornly over stretched for a considerable time. And in the case of the Kiwi where it is still falling on the weekly and daily charts it is likely to stay down on the...
