Evening forex report
The USD staged a modest pullback vs.the European and commodity currencies in London morning trading, with European bourses ticking a touch higher which seems to be driving a bit of profit notching in the USD. Reversal of trend? Well… The AUD ‘blinked’ at an interesting level, the NZD pullback is worth watchin as well, while the yen is balking at the 100 zone (sort of…). EUR/CHF as the ‘poor mans’ USD ? Big bear trend and the USD/CHF risk is clearly on 1.00 giving way for 0.95 and lower, but if (big IF) the EUR/CHF chart is actually forming an inverse head and shoulders on the daily plot, then new cycle lows below 1.5620 should be avoided, and a push above the 1.5880 zone (neckline) will leave 1.6140 to play for. Early days and a potential inverse head and shoulders is more likely to be a bear flag, given the trend, but the USD is really cheap across the board – true, it could get cheaper but… Cable blinked at $2.04 after all, see if $2.01 gives way for $1.99 and lower. The AUD could be forming a potential double top, while the NZD backed away from the highs as well. The SGD pushed back through the 1995 lows near 1.3830 after breaking down, all suggesting that some investors are taking USD’s back on board. Again, the trend is soft and next week should see the Fed cut rates by 50bp to 75bp and probably leave the door open for more cuts ahead – even if the CPI data comes out on the high side today. But, this should be well and truly priced in by now, see if USD bottom fishers start to step up on a ‘buy the fact’ play. If USD res. levels (yesterday’s USD highs?) hold just now then the trend risk will be on the USD continuing to fall away, one way trading to resume. In the yen watch the Y101.40 area on top for 103.70 and higher, support at Y99.80 seems to be building, 95.70 is at risk on a 76.4% retrace of the rally from Y79.80 to Y147.60+ . In the cross trades, the turn in the AUD/USD is worrying and downside risk for 0.9130/00 is actually high. In this, taking AUD/CAD longs off the table on the view that a push back to 0.91 is a high risk event. CPI later today should be interesting, see if the Fed can duck a bullet and get a neutral number, avoiding the ‘what about inflation risk?’ questions for a few more weeks…
Advertisment
