Major Currencies Overview
Dollar price action was a bit subdued for the most part of the week, but bulls eventually caved as risk appetite improved on U.S.-China trade deal updates.
This week, a number of FOMC members are set to give testimonies, likely sharing more deets on their policy biases. Of course trade developments are likely to cause waves as well. Read more.
The Loonie scored pretty solid gains on crude oil rallies and a pickup in overall sentiment, but it still gave up some ground on counter currency action.
Canada is scheduled to print its inflation reports by midweek, followed by the manufacturing sales report before the end of the week. Do stay on the lookout for major swings in sentiment, too! Read more.
EUR & CHF
Weak data? So what? The shared currency managed to stand its ground in the previous week while the franc struggled to hold on to its gains as risk appetite returned.
There are no major reports from the bloc and the Swiss economy for the next few days, which might leave overall market sentiment in the driver’s seat of price action. Read more.
Sterling skyrocketed to the top spot thanks to a few positive updates related to Brexit, particularly Ireland’s hints that a deal could be possible.
Several top-tier reports like the jobs data and inflation figures are lined up from the U.K. this week, along with speeches by head honcho Carney. Still, all eyes and ears are likely to stay on Brexit. Read more.
The yen found itself at the bottom of the forex pile as it didn’t stand a chance against the strong surge in risk-taking at the end of the week.
The national core CPI release might be worth watching as it could contain some clues on the BOJ’s next plan of action, but it’s likely that sentiment might be the bigger mover. Read more.
The Aussie was off to a rough start as uncertainty loomed over trade talks, but the higher-yielding currency found its bearings as risk appetite improved later on.
There are plenty of factors to watch out for this week, including China’s data dump, the RBA minutes, and Australia’s jobs figures. Read more.
The Kiwi also had a shaky start to the week, but it didn’t seem to have taken advantage of risk appetite as much, probably because of weak low-tier reports.
New Zealand is scheduled to release its quarterly CPI report soon and this could set the tone for RBNZ rate cut expectations. Read more.
Charts to Watch:
Bounce or break? EUR/USD is currently testing the top of its descending channel on the 4-hour time frame, still deciding whether to continue the slide or go for a reversal.
Stochastic is turning lower from the overbought zone to show that sellers are taking over while buyers take a break. This could be enough to take the pair to the channel support around 1.0800 or at least until the mid-channel area of interest.
Cable is also trending lower on its long-term chart, gearing up for a test of the descending channel resistance that lines up with an area of interest.
This is around the 50% Fibonacci retracement level that might be enough to keep gains in check. But with stochastic having some ground to cover before indicating overbought conditions, a bit of buying pressure might still take the pair up to the 61.8% Fib at 1.2838 or higher.
Reversal alert! This pair made a couple of failed attempts to break below the 67.00 handle, creating a double bottom pattern.
Price has yet to break past the neckline around 69.50, possibly setting off a rally that’s roughly 250 pips or the same height as the formation. However, stochastic is turning lower from the overbought region to signal that selling pressure is picking up and could force another test of the bottoms.