Major Currencies Overview
First up, here’s a rundown of how the major pairs performed in the past week:
Despite risk-off flows stemming from the coronavirus outbreak for the most part of the week, the Greenback merely chalked up a mixed run as data also came in mixed.
It’s NFP week once again, which could keep the spotlight on U.S. economic releases, particularly leading jobs indicators like the ISM PMIs and ADP report. Read more.
The Loonie was weaker against its lower-yielding peers, scoring gains only against its fellow commodity currencies while risk aversion persisted.
Only the employment report is due from Canada this week, which leaves the Loonie sensitive to risk flows and crude oil action for the most part. Read more.
EUR & CHF
Both the euro and franc were able to rake in risk-off flows as the market attention was still fixed on the coronavirus outbreak.
Only a handful of low-tier releases are lined up from both economies this time, along with a couple of speeches by ECB head Lagarde, so sentiment might still be the main driving factor. Read more.
Sterling managed to hold on to the top spot as the BOE refrained from cutting interest rates, even after the U.K. officially exited from the EU.
There are no major reports due from the U.K. economy this week, so the focus could shift to how businesses are adjusting in the post-Brexit week and what it could mean for policy later on. Read more.
The lower-yielding yen was the second-best performing currency for the week, next only to the pound, as it took advantage of safe-haven flows.
A number of consumer-related reports are on this week’s docket, but it’s likely that the Japanese currency could keep taking cues from overall sentiment. Read more.
The Aussie shrugged off upbeat reports from the Land Down Under as traders dumped higher-yielding currencies, fearing that the coronavirus outbreak could hit the global economy hard.
The focus might return to fundamentals and policy this week as the RBA meets to make its interest rate decision. No changes are eyed for now. Read more.
The Kiwi found itself at the bottom of the forex pile as it was badly hit by risk-off flows stemming from global concerns over the coronavirus outbreak.
Several top-tier releases are lined up over the next few days, giving the higher-yielding currency some chances to recover if data comes in strong. Read more.
Charts to Watch:
Guppy is moving sideways, finding support at the 141.25 range bottom and resistance around 144.35. Price is currently hanging out at the middle of the range, still deciding whether to make it to the top or head back to support.
Stochastic is heading lower, so the pair might follow suit while bearish pressure is in play. Also, the 100 SMA is below the 200 SMA to confirm that the path of least resistance is to the downside.
After breaking below its head and shoulders neckline to signal that a selloff is underway, EUR/USD is retesting the broken support level to gather more selling energy.
This lines up with the 50% Fibonacci retracement level and the 100 SMA dynamic inflection point, which adds to its strength as a ceiling. Bearish momentum could return from here as stochastic reflects overbought conditions, but a larger pullback could still test the 61.8% Fib around 1.1035.
Careful, Aussie bears! This pair is already down to its long-term floor around the .6700 handle, which happens to be around the record lows. Stochastic has been indicating oversold conditions for quite some time, so sellers must be exhausted.
Still, the 100 SMA is below the 200 SMA to indicate that support is more likely to break than to hold. If that happens, this pair might be in for an even steeper slide!