Major Currencies Overview
Dollar bears were mostly in control even in a relatively quiet week, which saw most pairs taking cues from the ECB policy statement.
There’s not much in the way of top-tier data from Uncle Sam, except for the U.S. retail sales report due before the markets close early. Read more.
The Loonie had a mixed performance for the week as it was pushed around by counter currency action on the lack of Canadian data.
A handful of major reports like CPI and retail sales are lined up from Canada this time, which could mean potential volatility and direction. Read more.
EUR & CHF
The euro tossed and turned leading up to and during the ECB statement, as well as the EU decision to extend Brexit once more. Meanwhile, the franc moved steadily lower for the week.
The euro zone PMI readings could be the main catalysts for the shared currency this week as traders are keen to find out if the slowdown will persist. Read more.
Sterling kept its head afloat against most of its peers thanks to the EU Brexit extension until October 31, but was still vulnerable to some losses.
This week has a bunch of top-tier reports due: jobs data, inflation reports, a speech by Carney, and retail sales. But will Brexit developments still dominate? Read more.
It was a rally and reverse situation for the lower-yielding yen, which gave up most of its gains by the middle of the week when risk sentiment turned.
There are no major reports due from Japan this time, which could leave yen traders reeling from last week’s BOJ hints. Of course, any major changes in market sentiment might also spur risk-related flows. Read more.
The Aussie held on to its place in the top spot for another week as Australian and Chinese data showed improvements and the RBA sounded upbeat.
The RBA minutes are due soon and Australia will also be releasing its employment data, which might determine if the Aussie’s reign could be extended. Read more.
The Kiwi was off to a choppy start before gaining legs on its rallies and ending in third place, next to the Aussie and euro.
Another set of Chinese reports are due, along with New Zealand’s quarterly CPI, which should provide more context for the RBNZ’s shift in tone recently. Read more.
Charts to Watch:
Reversal alert! This pair just formed a double bottom on its 1-hour time frame, and the neckline breakout suggests that a short-term rally might follow.
The chart pattern spans .6720 to around .6770, so the climb could last by at least 50 pips. However, stochastic is heading down from the overbought zone to indicate that buyers are taking a break and allowing sellers to take over. In that case, another dip to the bottoms might be due.
Here’s one for those who like to go with the flow! EUR/CHF looks ready for another test of its descending channel resistance visible on the 4-hour time frame.
At the same time, stochastic has been indicating overbought conditions for a while, so bulls might be feeling exhausted at this point. Turning lower an moving south could confirm that the channel top at 1.1400 is bound to hold and that the pair could set its sights back on the bottom at 1.1150.
So far so good on this retest as the area of interest visible on the daily time frame of GBP/CHF is holdin’ like a boss. This lines up with the 38.2% Fibonacci retracement level and the 1.3000 major psychological support, too!
Stochastic is turning higher to show that buyers are starting to gain the upper hand, possibly taking the pair back up to the swing high at 1.3425 and beyond. A larger retracement might still draw buying pressure at the 50% Fib or 1.2850 or the 61.8% level at 1.2720.