Major Currencies Overview
Just when it seemed the dollar was in for a slow week leading up to the Jackson Hole Symposium, volatility picked up in the latter part as trade war troubles returned.
The only economic report due from Uncle Sam today is the preliminary GDP reading, which could leave traders more interested in trade-related developments instead. Read more.
The Loonie had quite the choppy week as traders seemed hesitant to place big bets before any major events. Still, the Canadian currency ended up mostly in the red.
The monthly GDP report is up for release next, but the bigger movers might still be crude oil price action and overall sentiment based on trade updates. Read more.
EUR & CHF
Both the euro and franc were able to bank on the surge in risk-off moves when the U.S. and China started to trade jabs again, even though the euro zone and Swiss economy had troubles of their own.
There are no major reports from Switzerland while the euro zone has the CPI readings to look forward to. Apart from that, good ol’ market sentiment might still be a main driver. Read more.
Even though there were still plenty of setbacks in the Brexit scene, sterling managed to catch a win and keep up the positive momentum after German Chancellor Merkel had upbeat remarks.
However, this didn’t really mean a breakthrough in the negotiations, so pound traders are likely to stay on edge when it comes to Brext updates. Read more.
Yen pairs had a snoozefest for the most part of the week as traders were biting their nails ahead of the top-tier events later on. Thanks to a surge in risk aversion, the lower-yielding currency scored a win on resurfacing trade tensions.
Japan has a data dump scheduled this week, which could throw the spotlight back on fundamentals and BOJ policy expectations. Just don’t forget to keep tabs on sentiment if you’re trading the yen. Read more.
Aussie price action was muted for the most part of the week, before it got kicked lower on U.S.-China trade war headlines later on.
With barely any major reports on deck, the Aussie might continue to stay dependent on changes in market sentiment, particularly coming from worsening trade tensions. Read more.
The Kiwi already started to crawl lower for the most part of the week and got another push down when trade tensions escalated.
Only the ANZ business confidence report is up for release from New Zealand this week, which means that the Kiwi might keep taking cues from market sentiment. Read more.
Charts to Watch:
First up is this descending channel on the 4-hour time frame of Cable, with price already testing the resistance. This happens to coincide with the 50% Fibonacci retracement level, which already seems to be keeping gains in check.
Stochastic is already indicating overbought conditions and turning lower could draw sellers back in. In that case, price could make its way back down to the swing low or the bottom of the channel.
This pair recently busted through the resistance at the .9000 major psychological level but hit a ceiling at the .9325 level. From there, a retest of the area of interest has taken place, and this lines up with the 38.2% Fib level.
If this is enough to hold as support, price could head back up to the swing high and beyond. A larger correction could last until the 50% level closer to .8900 or the 61.8% level at .8800, but stochastic is already dipping into the oversold region.
Last but certainly not least is this simple break-and-retest setup on the short-term chart of EUR/CAD. The pair is already pulling back to the broken descending channel top and area of interest at the 1.4800 handle.
Stochastic is already closing in on the oversold region, which suggests that bearish pressure could fade soon. Turning back up could signal that buyers are back in the game and that the reversal from the downtrend is gaining traction.