Major Currencies Overview
The Greenback’s price action was a mess for the most part of the previous week before it kicked higher on stronger-than-expected NFP numbers.
The same case could be seen in the days ahead as the top-tier reports, namely the CPI and retail sales figures, won’t be printed until the latter part of this week. Read more.
Mixed signals from the Canadian camp and Trump’s tweets when it came to NAFTA weighed on the Loonie, even though the BOC had a slightly more hawkish tone.
Without much to chew on in terms of economic releases this week, the Loonie might have another NAFTA-sensitive run in the next few days. Read more.
EUR & CHF
The euro was off to a very positive start thanks to developments in Italy but it wound up shedding those gains by the end of the week. The franc, on the other hand, had a stellar performance as it took advantage of market uncertainties.
The ECB decision might be front and center this week as traders continue to hold out for hawkish hints, even though the central bank pretty much laid out its policy plans earlier on. Read more.
Pound traders may have been watching Brexit talks a wee bit too closely as bulls even reacted to fake news. Nonetheless, the mood is a tad more positive these days, allowing sterling to close out with net gains.
The focus could shift back to fundamentals and monetary policy this time, with the U.K. GDP and BOE rate decision lined up. Read more.
The lower-yielding yen remained a beneficiary of safe-haven flows for most of the week and some hesitation on dollar longs.
There are no top-tier events in Japan this week, which suggests that the currency could keep taking cues from bond yields and risk sentiment. Read more.
The Aussie was still in the losers’ circle for yet another week as trade tensions between the U.S. and China remained heated and the currency appeared to move in tandem with the yuan.
The Australian jobs report is the only economic report due from Land Down Under, which suggests that trade updates could still wind up pushing the Aussie around. Read more.
For yet another week, the Kiwi kept its buddy the Aussie company among the losers as risk sentiment also dragged the higher-yielding currency down.
Without any major catalysts from New Zealand this week, the Kiwi could be poised for another run that’s extra sensitive to risk flows and the Aussie’s direction. Read more.
Charts to Watch:
First up is this short-term reversal pattern showing up on the 1-hour time frame of EUR/USD. The pair is already testing the neckline of its head and shoulders, and a breakdown could spur a downtrend that’s around 200 pips or the same size as the chart pattern. I’d watch out for the ECB decision when trading this one!
Next is this potential break-and-retest play on the 4-hour chart of USD/CAD. The pair is correcting from its upside breakout, possibly gearing up for a bounce from the 50% Fib around the 1.3050 minor psychological mark.
However, stochastic is already turning higher to suggest that buyers are returning and the pair might be ready to climb back to the swing high and beyond from here.
If you’re looking for another potential euro play, then you might wanna keep tabs on this EUR/JPY descending triangle pattern. Price just got rejected on its test of resistance and might be setting its sights back down on the triangle support around the 125.50 minor psychological mark. Stochastic has some room to head south but is closing in on the oversold area, though.