Major Currencies Overview
Despite a strong start to the week, trade troubles came back to haunt the U.S. dollar, dragging it down to the bottom of the heap.
This sentiment could last for the most part of this trading week as the only economic catalyst lined up is the CPI release on Thursday. Read more.
Crude oil action and trade war jitters played a game of tug-o-war on the Canadian dollar, keeping it mostly range-bound for the previous week.
The BOC decision might settle the score this week, especially since many are betting on a 0.25% interest rate hike from the central bank. Read more.
EUR & CHF
A few positive political developments kept the shared currency supported, along with signs that the U.S. might soften its stance on E.U. auto imports. The franc, on the other hand, gave up some ground when risk-taking returned.
The focus could shift back to policy this week as ECB head Draghi has a couple of speeches lined up ahead of the release of their meeting minutes. Read more.
Sterling had one of its better weeks as it closed on better footing compared to most of its peers, with the exception of the Kiwi and euro.
There’s not much in the way of top-tier U.K. data this week but pound bulls are off to a running start after some Brexit developments. Read more.
The Japanese yen seemed to be vulnerable to counter currency action, especially since risk sentiment kept turning on a dime last week.
The same behavior could be seen this week since there are no major reports due from Japan and trade tensions continue to dominate headlines. Read more.
The RBA decision turned out to be a dud for most Aussie pairs even as the central bank omitted a key line on currency appreciation.
As in previous weeks, though, AUD direction could continue to take cues from trade-related headlines or gold prices. Read more.
Improved risk sentiment allowed the Kiwi to finish in the top spot last week, even though it was off to a shaky start.
With that, overall market sentiment could continue to direct Kiwi price action in the days ahead since only the medium-tier manufacturing index is on the docket. Read more.
Charts to Watch:
Buyers are defending the bottom of the descending channel on AUD/USD, which suggests that a correction is due before the downtrend resumes. The 50% level lines up neatly with the channel resistance and the area of interest around the .7500 handle. This might be enough to keep gains in check as stochastic approaches the overbought region.
Here’s an update on that broken range support retest from last week. NZD/USD is right inside the area of interest at the Fib levels and .6850 support-turned-resistance, but stochastic has room to climb to signal that a larger pullback is due. If Kiwi bulls are strong enough, price could even land back inside the range to show that the prior move was a fake out.
Last but certainly not least is this ascending triangle consolidation on USD/JPY. Another test of support might be in the cards, but it’s not too late to hop in a potential momentum move towards that area. Stochastic is pointing down after all, so sellers could stay in control. Just keep tabs on U.S. CPI data and trade-related headlines if you’re trading this one.