Analys från DailyFX
’Septaper’ On? US Dollar Leads as Asian-Pacific FX Slides to Start Week
INTRADAY PERFORMANCE UPDATE: 09:50 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): +0.28% (-1.10% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The six-day losing streak that had befallen the US Dollar all of the last week and then some could end today thanks to renewed speculation that the Federal Reserve may taper QE3 at its September meeting, as well as a bit of key disappointing data out of Japan. Overall, the US Dollar is up by a mere +0.28% on the day and was +0.38% off the lows at the time this report was written.
With a strong calendar for the week ahead, traders may have begun positioning for outperformance by the US Dollar to start the week. Certainly, if US economic data picks back up, the QE3 taper trade may come back in full force, as it was active in April, May, and June: short commodities, especially Gold and Silver; short US Treasuries on account of higher expected yields; choppy but bullish equity markets; and a stronger US Dollar.
Thus far, while early-week positioning may be suggestive of a stronger US Dollar in the days to come, the buck was certainly aided by the soft 2Q’13 Japanese GDP report, which throws a wrench into any fiscal reform efforts by the Shinzo Abe-led Japanese government.
Certainly, with growth coming in well-below expectations, any measure that might dampen consumption going forward – say, a sales tax hike – could weaken the economy even further and thus warrant another round of stimulus from the Bank of Japan, which would be bearish for the Yen. We are indeed looking for the Yen to moderate this week, as Quantitative Strategist David Rodriguez notes.
USDJPY 1-min Chart: Monday, August 12, 2013 Intraday
With a light economic calendar today in Europe and North America, trading should begin the week more ‘technically’ or ‘longer-term,’ in the sense that there are few expected near-term catalysts that might drive volatility. Accordingly, interest around the European currencies should pick back up tomorrow with July UK Consumer Price Index, which is increasingly important in the wake of the Bank of England’s new “forward guidance” policy.
Read more: Euro Struggling amid Stronger Data May Be a Warning Sign
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
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.
TECHNICAL ANALYSIS – CHART OF THE DAY
USDJPY – While the USDJPY has slid below channel support (July 8 and July 19 highs, parallel drawn to the July 12 low), there may be signs of near-term basing and an attempt to retake the channel. On the H4 chart, a Bullish Falling Wedge has formed, and indicators on the daily chart – RSI basing above 40 and the Slow Stochastics (5,3,3) turning bullish in oversold territory – confirm that a turn may be coming. I’m looking USDJPY long above ¥95.70/80 into 98.00 for now; though a break of 98.00 would confirm the reversal and point for a rebound towards 99.50 and 100.00.
— 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
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
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
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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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