Major Currencies Overview
A combination of weak inflation readings and persistent risk-on vibes dragged the Greenback close to the bottom of the forex pile in the previous week.
Uncle Sam is taking a break from printing economic data this week, which suggests that sentiment could be the main driving factor for dollar pairs, along with trade headlines and Trump’s tweets! Read more.
The Canadian currency capped off one of its better weeks, lifted by rising crude oil prices and NAFTA optimism.
The attention should return to Canada’s fundamentals later on in this week as the CPI and retail sales figures are due. Here’s what you should expect. Read more.
EUR & CHF
The shared currency shrugged off downgraded ECB growth forecasts as bulls focused on Draghi’s more positive tone. On the flip side, the franc was off to a rocky start and was barely able to recoup those losses.
Euro traders are looking forward to a fresh set of industry PMI readings this week as these could underscore ECB expectations while the franc is focused on the upcoming SNB decision. Read more.
Pound traders still seem giddy about Brexit developments as dips have been limited and bulls have been reacting more to positive updates.
U.K. CPI and retail sales are on this week’s docket, but it’s likely that the spotlight would stay on Brexit updates and the odds of avoiding a “no deal” situation. Read more.
The Japanese currency found itself at the very bottom of the forex heap, mostly on risk-on flows and profit-taking from earlier rallies.
This week could see different dynamics, though, as the BOJ will be making its monetary policy decision and there’s also some attention on PM Abe securing his third term. Read more.
Thanks to risk appetite on seemingly easing trade tensions between the U.S. and China, the Aussie managed to make its way to the winners’ circle last week.
But can it stay there? RBA minutes are due this week and this should shed a bit more light on the surprise Westpac hike earlier on, as well as policymakers’ concerns on trade uncertainty. Read more.
The Kiwi appeared to get left behind on the risk-on party as it marked its third consecutive losing week, mainly since it simply took cues from opposing currencies.
Another GDT auction and a handful of medium-tier reports are due this week, along with the Q2 GDP reading, so fundamentals could be responsible for Kiwi direction this time. Read more.
Charts to Watch:
First up is this short-term descending channel visible on the 1-hour chart of USD/CHF. Price has bounced off support and has retraced to the 38.2% Fib which might already be enough to keep gains in check. A larger pullback could last until the 61.8% level at the .9700 mark or the very top of the channel, but just note that stochastic looks ready to head south from here.
Next is this CAD/JPY ascending triangle that Cyclopip had his one good eye on last week. Price hit the top of the formation and looks ready to move back to support as stochastic indicates overbought conditions. A break past the top, on the other hand, could spur a rally that’s the same size as the triangle or roughly 500 pips.
Lastly here’s a textbook break-and-retest situation shaping up for CHF/JPY! The pair recently busted through the 115.00 major psychological resistance and zoomed up to 116.00 before showing signs of rally exhaustion.
The 50% Fib lines up neatly with the former resistance, so buyers might be waiting right there. Note that stochastic is dipping in oversold territory already and turning back up could bring bullish momentum in, leading to a shallow correction.