Major Currencies Overview
First up, here’s a rundown of how the major pairs performed in the past week:
Despite another surge in risk aversion, the Greenback took hits in the previous week as the Fed surprised with an emergency rate cut.
A combination of risk-off flows, a rate cut from the BOC, and sliding crude oil prices dragged the Loonie into bearish territory last week.
In the absence of top-tier data from Canada this time, most of these bearish factors could stay in play and keep churning out losses for the currency. Read more.
EUR & CHF
Both lower-yielding European currencies were able to benefit from the flight to safety stemming from worsening coronavirus numbers last week.
The ECB decision is coming up this week, but the central bank could simply sit on its hands for now. Other than that and a few mid-tier reports, market sentiment might still be the factor to keep tabs on. Read more.
Sterling ended the previous week as a net loser as Brexit-related issues also soured the mood, along with expectations of further BOE easing down the line.
There are no major reports that could prop up the pound this time, so market sentiment stemming from coronavirus updates could still push GBP pairs around. Read more.
The yen was able to bank on risk-off flows for the most part of the previous week as traders focused on the growing number of coronavirus cases and fatalities outside of mainland China.
A handful of manufacturing-related reports are due from Japan next, but it’s likely that sentiment might still be the bigger market mover in the days ahead. Read more.
Even with risk-off flows in play, the Aussie managed to end net positive as economic data from the Land Down Under was mostly upbeat.
Chinese CPI and PPI figures are up for release, along with Australia’s NAB business confidence index. But can these be enough to shore up the Aussie again? Read more.
The Kiwi had a mixed run but closed out as a net loser, with the flight to safety weighing heavily on the higher-yielding commodity currency.
A speech by RBNZ Governor Orr is coming up, followed by the release of the Business NZ manufacturing index. Just make sure you keep tabs on risk appetite to see if the Kiwi can take flight! Read more.
Charts to Watch:
First up is this simple break-and-retest setup on the daily time frame of CHF/JPY. Price is testing the former resistance around the 110.00 major psychological mark, which is around the 200 SMA dynamic inflection point.
If this continues to keep losses in check, the pair could recover to the swing high and beyond. The 100 SMA is above the 200 SMA after all, indicating that bulls have the upper hand.
However, stochastic has a bit of ground to cover before reflecting oversold conditions or exhaustion among sellers. With that, a deeper slide could be underway before buyers return.
Missed the double bottom neckline break on EUR/GBP? There might still be time to hop in on the climb!
The reversal chart pattern spans roughly 300 pips, so the resulting uptrend could be of at least the same height. The 100 SMA just crossed above the 200 SMA to signal that buyers are just getting started.
Also, stochastic is pointing north to confirm that bullish momentum is in play and could stay on until overbought conditions are met.
Here’s another long-term momentum play you wouldn’t want to miss!EUR/CHF is trending lower inside a descending channel on its daily time frame and has just breached the mid-channel area of interest. This means that bears must be setting their sights at the very bottom of the channel next!
The 100 SMA is safely below the 200 SMA to confirm that the downtrend is more likely to carry on than to reverse while stochastic is heading south, so price could keep following suit.