Major Currencies Overview
Expectations for a strong Q3 growth figure kept the dollar afloat for the most part of the previous week, but some of those gains were returned on a disappointing read.
The Canadian dollar had one of its better weeks despite weaker oil prices as traders turned their attention to the BOC hike.
Canada is also due to report its November jobs figures before this week comes to a close, so positioning ahead of this event could be a driving factor. Read more.
EUR & CHF
Italy’s budget troubles continued to keep a lid on the shared currency’s gains, and it didnt help that Draghi expressed some concerns about this and Brexit during the ECB presser.
Leading indicators are due from the euro zone this week while SNB head Jordan has a speech lined up. Other than that, geopolitical risks could stay in play for these currencies. Read more.
Increasing odds of a “no deal” Brexit scenario dragged sterling to the very bottom of the forex pile in the previous week as Brits appear to be bracing themselves for the worst.
Can the BOE decision turn these frowns upside down? Or will Guv’nah Carney also admit that they’re prepping their contingency plans? Read more.
Risk-off flows continued to favor the lower-yielding yen for the most part of the week, allowing it to stay ahead of the forex pack.
Risk sentiment was also the main driving factor for the Aussie, and gold prices weren’t of much help as some political uncertainty emerged early on.
The focus could shift back to fundamentals as the quarterly CPI and monthly retail sales reports are on this week’s docket. Read more.
The higher-yielding Kiwi also found itself down in the dumps as risk aversion was the dominant theme for the previous week and New Zealand’s trade balance even disappointed.
The lack of major reports from New Zealand this time could keep risk sentiment the main driving factor for the Kiwi once again. Read more.
Charts to Watch:
First up is this long-term head and shoulders pattern visible on the daily chart of EUR/USD. Price is hovering around the neckline, possibly waiting for the opportune moment to break below support and usher in a downtrend. This slide might last by the same height as the chart pattern, but stochastic is indicating seller exhaustion at the moment.
Cable also looks prime for a drop as the classic reversal pattern is also showing up on its long-term time frame. A daily candle closing below the 1.2800 handle and head and shoulders neckline could be enough to confirm that a selloff that’s the same height as the chart formation is underway. Just be careful since stochastic is dipping into oversold territory, too.
Looking for short-term plays instead? Here’s a textbook break-and-retest scenario showing up on the 1-hour chart of NZD/USD. Price just recently tumbled below its double top neckline and a pullback to the broken support is taking place. If any of the Fibs hold as resistance now that stochastic is in the overbought region, price could make its way back to the swing low or lower.