Analys från DailyFX
Euro Advances Moderately as Traders Look to ’Half’ US Session
Talking Points:
– US bond markets are closed on Monday for Veteran’s Day; stock markets remain open.
– Light calendar this week offers little by way of data on Monday.
– Euro rebounding modestly across the board, faces $1.3400 against US Dollar.
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INTRADAY PERFORMANCE UPDATE: 10:50 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.09% (+0.60% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
Price action around the US Dollar is overall constrained on Monday, with slight advances developing for the Euro and the Swiss Franc (likely on short-term oversold conditions), while the higher yielding currencies have lagged. The Australian Dollar is down by -0.29% versus the buck, and the Kiwi is up a paltry +0.01%. If the environment was more prone to risk, we’d expect these commodity currencies to be leading, not trailing.
The slowdown in momentum among risk assets isn’t a coincidence – there is a ‘half’ trading session in the US today. That is to say, equity markets will be open but bond markets will be closed. Interest rate sensitive assets across the globe are likely to move slower than they would otherwise, until rates come back online for the Tuesday trading session.
With the US Dollar lacking the spark for a continuation higher – a follow through on higher yields (impossible with bonds closed) – the Euro has also seen its footing firm on stronger peripheral European debt. The Italian 2-year note yield has decreased to 1.229% (-3.3-bps) while the Spanish 2-year note yield has decreased to 1.389% (-0.6-bps). Similarly, the Italian 10-yaer note yield has decreased to 4.117% (-1.7-bps) while the Spanish 10-year yield has decreased to 4.082% (-2.3-bps).
EURUSD H4 Chart: September 11 to Present
Despite the better than expected US NFPs on Friday, the EURUSD managed an Inside Day and has formed a Symmetrical Triangle on the H4 timeframes and lower. While we favor a break lower after the EURUSD settled below two key levels of support last week – the uptrend off of the July and September lows, and horizontal support dating back to September 18 – time is a factor and failure to move lower could result in a profit taking/short covering rally higher in the early part of the week.
Accordingly, $1.3415/45 to the upside should be noted as a zone of key resistance, and time carved out above this region would suggest a more concerted rebound is possible. Concurrently, a drop through 1.3340 would set up another test of 1.3290/3300, paving the way for 1.3250 and 1.3100/20.
Read more: Euro Hobbled by ECB, NFPs – Will 3Q GDP Reports Confirm Fears?
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
There are no data on the North American calendar (CAD, USD) for Monday, November 11, 2013.
See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.
— Written by Christopher Vecchio, Currency Analyst
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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