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January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

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Talking Points:

US Dollar tends to start off years strong.

Seasonal factors favor European currency weakness, commodity currency strength.

SP 500 going for fourth consecutive positive January.

A new year has begun and that means new funds are put to work in capital markets across the globe. A look at data over the past 20 years reveals that the beginning of the year (January to March) tends to be a bullish time for the US Dollar. However, in two of the past three years, the USDOLLAR Index has lost ground in January.

While seasonality, like any form of analysis, doesn’t guarantee a clear look into the future, it is another useful way to monitor market conditions when establishing trades. Feeling like US stocks have rallied too far, too fast? Seasonal factors tell us that January might not be the ideal time to short the SP 500.

See the full rundown of seasonal patterns broken down by currency pairs below, and to receive reports from this analyst, sign up for Christopher’s distribution list.

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_Picture_1.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Forex Seasonality in the Euro

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1028.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

January has been the worst month on average over the past 20 years for the Euro, averaging -1.59%. That being said, the EURUSD has rallied each of the past three Januaries (2011-2013). The conflicting nature of the shorter-term and longer-term seasonal factors supports our neutral Euro forecast for early-January.

Forex Seasonality in the British Pound

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1029.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The GBPUSD has started off the year lower on average the past 20 years, with January seeing a loss of -1.11%. (February isn’t better, which has averaged -1.21% over the same time horizon.) The GBPUSD dropped last January and has fallen four of the past six Januaries. Modest weakness is favored.

Forex Seasonality in the Japanese Yen

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1030.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The early part of the year tends to be bearish for the Japanese Yen (bullish USDJPY), as gains have occurred in each of the first three months on average over the past 20 years. The best January performance of the last 20 years occurred last year, when the USDJPY rallied by +6.07%. The bigger picture would favor further Japanese Yen weakness.

Forex Seasonality in the Australian Dollar

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1031.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The Australian Dollar has shown little tendency for a clear pattern, either bullish or bearish, to start the new year. January 2013 barely produced a moved higher (+0.12%); January 2012 was stronger (+4.96%); and three years of weakness preceeded that (-6.79% in 2009; -0.66% in 2010; and -1.22% in 2011).

Forex Seasonality in the USDOLLAR

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1032.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

As an amalgamation of the Australian Dollar, British Pound, Euro, and Japanese Yen, the USDOLLAR Index serves as a proxy for the US Dollar more broadly. Historically, January is the third best month of the year for the USDOLLAR.

Forex Seasonality in the New Zealand Dollar

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1033.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The New Zealand Dollar has seen little continuity in trend over the past several Januaries (much like the Australian Dollar), and price action in the first few months of the year tends to be inconsequential in NZDUSD. Our seasonality forecast is neutral.

Forex Seasonality in the Canadian Dollar

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1034.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The USDCAD has gained in five of the past six years, including each of the past three. However, seasonal factors favor modest weakness in January, and a mixed performance in the early part of the year. We view these seasonal factors as neutral.

Forex Seasonality in the Swiss Franc

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1035.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Seasonality favors a stronger USDCHF in January. Although gains have been rather absent since 2010 (2011: +0.02%), January has produced gains in the USDCHF in 13 of the past 20 years. January is the best month of the year for USDCHF, averaging +1.99% over the past 20 years. January’s price action ‘checks’ that seen in December, which has averaged -1.85%.

Seasonality in the US SP 500 Index

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1036.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Has January been the best month of the year for US stocks, on average, over the last 20 years? No, that title goes to March, which has averaged a gain of +15.53 points. January has only been the fifth best month of the year, averaging +7.01 points by comparison. Considering that we’re in the midst of the strongest portion of the year for stocks (October to April) and that the SP 500 has produced strengthening gains each of the past three years, we view seasonal factors as bullish.

Seasonality in Gold (XAUUSD)

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1037.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Historically January has been the third strongest month of the year for Gold, amassing gains of +$14.37 on average since 1993. The past four years gains and losses have alternated in January. We view these seasonal factors as neutral overall.

— Written by Christopher Vecchio, Currency Analyst

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

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

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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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

Continue Reading

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

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Euro Bias Mixed Heading into October, Q4'17

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

Continue Reading

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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British Pound Reversal Potential Persists Heading into New Quarter

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

Continue Reading

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Analys från DailyFX

January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Published

on

Talking Points:

US Dollar tends to start off years strong.

Seasonal factors favor European currency weakness, commodity currency strength.

SP 500 going for fourth consecutive positive January.

A new year has begun and that means new funds are put to work in capital markets across the globe. A look at data over the past 20 years reveals that the beginning of the year (January to March) tends to be a bullish time for the US Dollar. However, in two of the past three years, the USDOLLAR Index has lost ground in January.

While seasonality, like any form of analysis, doesn’t guarantee a clear look into the future, it is another useful way to monitor market conditions when establishing trades. Feeling like US stocks have rallied too far, too fast? Seasonal factors tell us that January might not be the ideal time to short the SP 500.

See the full rundown of seasonal patterns broken down by currency pairs below, and to receive reports from this analyst, sign up for Christopher’s distribution list.

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_Picture_1.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Forex Seasonality in the Euro

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1028.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

January has been the worst month on average over the past 20 years for the Euro, averaging -1.59%. That being said, the EURUSD has rallied each of the past three Januaries (2011-2013). The conflicting nature of the shorter-term and longer-term seasonal factors supports our neutral Euro forecast for early-January.

Forex Seasonality in the British Pound

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1029.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The GBPUSD has started off the year lower on average the past 20 years, with January seeing a loss of -1.11%. (February isn’t better, which has averaged -1.21% over the same time horizon.) The GBPUSD dropped last January and has fallen four of the past six Januaries. Modest weakness is favored.

Forex Seasonality in the Japanese Yen

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1030.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The early part of the year tends to be bearish for the Japanese Yen (bullish USDJPY), as gains have occurred in each of the first three months on average over the past 20 years. The best January performance of the last 20 years occurred last year, when the USDJPY rallied by +6.07%. The bigger picture would favor further Japanese Yen weakness.

Forex Seasonality in the Australian Dollar

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1031.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The Australian Dollar has shown little tendency for a clear pattern, either bullish or bearish, to start the new year. January 2013 barely produced a moved higher (+0.12%); January 2012 was stronger (+4.96%); and three years of weakness preceeded that (-6.79% in 2009; -0.66% in 2010; and -1.22% in 2011).

Forex Seasonality in the USDOLLAR

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1032.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

As an amalgamation of the Australian Dollar, British Pound, Euro, and Japanese Yen, the USDOLLAR Index serves as a proxy for the US Dollar more broadly. Historically, January is the third best month of the year for the USDOLLAR.

Forex Seasonality in the New Zealand Dollar

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1033.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The New Zealand Dollar has seen little continuity in trend over the past several Januaries (much like the Australian Dollar), and price action in the first few months of the year tends to be inconsequential in NZDUSD. Our seasonality forecast is neutral.

Forex Seasonality in the Canadian Dollar

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1034.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

The USDCAD has gained in five of the past six years, including each of the past three. However, seasonal factors favor modest weakness in January, and a mixed performance in the early part of the year. We view these seasonal factors as neutral.

Forex Seasonality in the Swiss Franc

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1035.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Seasonality favors a stronger USDCHF in January. Although gains have been rather absent since 2010 (2011: +0.02%), January has produced gains in the USDCHF in 13 of the past 20 years. January is the best month of the year for USDCHF, averaging +1.99% over the past 20 years. January’s price action ‘checks’ that seen in December, which has averaged -1.85%.

Seasonality in the US SP 500 Index

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1036.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Has January been the best month of the year for US stocks, on average, over the last 20 years? No, that title goes to March, which has averaged a gain of +15.53 points. January has only been the fifth best month of the year, averaging +7.01 points by comparison. Considering that we’re in the midst of the strongest portion of the year for stocks (October to April) and that the SP 500 has produced strengthening gains each of the past three years, we view seasonal factors as bullish.

Seasonality in Gold (XAUUSD)

January_Seasonality_Favors_US_Dollar_Gains_versus_Japanese_Yen_Swiss_Franc_body_x0000_i1037.png, January Seasonality Favors US Dollar Gains versus Japanese Yen, Swiss Franc

Historically January has been the third strongest month of the year for Gold, amassing gains of +$14.37 on average since 1993. The past four years gains and losses have alternated in January. We view these seasonal factors as neutral overall.

— Written by Christopher Vecchio, Currency Analyst

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

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

on

By

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

Confidence is essential to successful trading, see this new guide – ’Building Confidence in Trading’.

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

EURUSD Weekly Technical Analysis: New Month, More Weakness

—Written by Paul Robinson, Market Analyst

You can receive Paul’s analysis directly via email bysigning up here.

You can follow Paul on Twitter at@PaulRobinonFX.

Continue Reading

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

on

By

Euro Bias Mixed Heading into October, Q4'17

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

Continue Reading

Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

on

By

British Pound Reversal Potential Persists Heading into New Quarter

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

Continue Reading

Trending

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