Analys från DailyFX
US Dollar Loses Support as Treasury Yields Retrace from Recent Highs
Talking Points:
– JPY-crosses hit new highs overnight; GBPJPY tags ¥170.00.
– Light calendar day; few significant data in Europe, none in North America.
– Concerted Dollar pullback lends itself to strength in high yielding, EM FX.
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INTRADAY PERFORMANCE UPDATE: 10:30 GMT
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): –0.39% (–0.11% prior 5-days)
ASIA/EUROPE FOREX NEWS WRAP
The US Dollar continues to reel in the wake of the November NFP report, despite the headline beat (+203K versus +185K expected). Market participants have seemingly taken the data as a sign that, yes, the Federal Reserve will taper QE3, but no, there won’t be higher interest rates anytime soon.
US Treasury yields in the belly of the curve have weakened from their peaks (the 10YY is down near 2.830%, from 2.910% on Friday), and have been falling the past few days leading to a weaker US Dollar:
Since late-November, the USDOLLAR (equal weighted index of the USD versus the AUD, EUR, GBP, and JPY) has failed to post two consecutive down days; the November 28 and 29 duo was capped by a Doji, hardly bearish). This pattern has broken today, with a second consecutive down bar as price slips below its 8-, 21-, and 34-EMAs:
USDOLLAR Daily Chart: July 9 to Present
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– The USDOLLAR has lost uptrend support off of the October 23 and November 20 lows.
– Price is thus far respecting daily 34-EMA as support, as it did on November 6 and 7, and then again on November 19 and 20.
– A break below 10580 would open up room for a move lower into 10535 and 10490/500 over the coming sessions.
– Bulls not secure until price above December highs, 10670.
ECONOMIC CALENDAR – UPCOMING NORTH AMERICAN SESSION
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— 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.
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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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