Major Currencies Overview
The Greenback was off to a shaky start as risk-on vibes kicked into high gear when the U.S. and China struck a trade truce. Fears of a recession on the yield curve inversion also dragged it down.
A number of top-tier reports namely PPI, CPI, and retail sales are due in the days ahead, so the focus might be on U.S. fundamentals and odds of further Fed tightening. Read more.
The not-so-upbeat BOC announcement brought in more bearish for the Loonie but it managed to scrape some gains from upbeat jobs data and the OPEC output deal later on.
There are no major reports lined up from Canada this week, which suggests that it might keep taking cues from the commodity as well as market sentiment. Read more.
EUR & CHF
Several factors pushed and pulled the euro around last week while the franc snagged the top spot for cashing in on safe-haven flows.
Medium-tier leading indicators from top euro zone economies are due throughout the week, but the spotlight would likely be on the ECB monetary policy decision and the SNB statement. Read more.
Brexit continues to make matters complicated for pound pairs as PM May’s uphill climb in getting the transition deal through contrasted with hopes for reversing the referendum altogether.
The same could be the case this week, and price action might prove even more volatile as the U.K. parliament has its “meaningful vote” coming up midweek. Read more.
Just like the lower-yielding franc, the yen was also a big beneficiary of safe-haven flows for the most part of the week since it managed to take advantage of U.S. recession fears as well.
A number of medium-tier economic reports are lined up from Japan, but it’s likely that risk sentiment and global bond yields might be the driving factors for yen pairs. Read more.
The Aussie was unable to follow through on the other week’s stellar performance as trade jitters and risk-off flows weighed on the commodity currency.
There’s not much in the way of top-tier data from the Land Down Under this week, but several medium-tier reports from its top trade buddy China could provide direction for the Aussie. Read more.
The Kiwi also slumped back to the losers’ bench last week as risk aversion took its toll on the higher-yielding currency. Still, it managed to feed off the dollar’s weakness in a few instances.
There are no major reports from New Zealand in the days ahead, which suggests that it could take cues from risk sentiment and dollar price action again. Read more.
Charts to Watch:
Reversal alert! USD/CHF has formed a sketchy head and shoulders pattern and appears to have broken below the neckline already. This confirms that a selloff is in the cards, possibly lasting by the same height as the chart formation. Just be careful, though, since stochastic is indicating oversold conditions or that buyers might take over soon.
If you’re one to go with the flow, you might wanna keep an eye out for an uptrend pullback on this pair. Price just bounced off the top of its ascending channel on the 4-hour time frame and could be due to test the Fib levels or support around the 1.5000 handle.
The mid-channel area of interest at the 1.5100 mark appears to be keeping gains in check, but stochastic has some ground to cover before indicating oversold conditions and a return in bullish pressure.
Last but certainly not least is this textbook trend correction setup on the 4-hour chart of NZD/USD. Price is down to the bottom of the ascending channel, which lines up with a former resistance level that might now hold as support. At the same time, stochastic is hovering around oversold levels to signal that sellers are tired and that buyers might take over.