US Dollar Index Short-Covering Rally Targets 95.755 – 96.020

The U.S. Dollar is edging higher against a basket of major currencies early Tuesday as U.S. Treasury yields hit a new two-year high on their return from a long weekend break. The strength in the greenback was fueled as the short-end of the yield curve hit new pandemic highs, which is supportive for the U.S. currency.

At 08:27 GMT, March U.S. Dollar Index futures are trading 95.295, up 0.134 or +0.14%. On Friday, the Invesco DB US Dollar Index Bullish Fund ETF (UUP) settled at $25.49, up $0.06 or +0.24%.

Two-year yields rose above 1% for the first time since February 2020 at the open in Asia, as trading returned after a U.S. holiday, and five-year yields rose 3.6 bps to 1.5960%, the highest since January 2020.

Yields have been rising this year, with traders expecting the Federal Reserve to begin hiking interest rates as soon as March, but the dollar index, which measures the greenback against six peers has lost 0.52% year to date.

This suggests investors have fully-priced in the Fed’s expected rate hikes. Given this outlook and the current downtrend, the index is likely going through a correction, which means we can expect to see new short-sellers once it reaches resistance.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, momentum has been trending higher since the formation of the closing price reversal bottom on Friday.

A trade through 94.610 will negate the closing price reversal bottom and signal a resumption of the downtrend. A move through 96.475 will change the main trend to up.

The main range is 93.200 to 96.895. Its retracement zone at 95.050 to 94.610 is support. It stopped the selling at 94.610 on January 14.

The next two minor resistance levels is a pair of 50% levels at 95.360 and 95.545.

The short-term range is 96.895 to 94.610. Its retracement zone at 95.755 to 96.020 is the primary upside target. Since the main trend is down, we’re looking for sellers to come in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Tuesday is likely to be determined by trader reaction to 95.360.

Bullish Scenario

A sustained move over 95.360 will indicate the presence of buyers. This could fuel a labored rally into a series of retracement levels at 95.545, 95.755 and 96.020.

Since the main trend is down, look for sellers to return on a test of 95.755 to 96.020. They will be trying to produce a potentially bearish secondary lower top.

Bearish Scenario

A sustained move under 95.355 will signal the presence of sellers. This could trigger a retest of 95.050 to 94.610.

If 94.610 fails to hold as support then look for an acceleration to the downside with 93.810 the first downside target, followed by 93.200.

For a look at all of today’s economic events, check out our economic calendar.

Speculators Rotate Towards Crude Oil and Natgas

A week that saw continued stock market weakness and rising bond, albeit at a much reduced pace after Jerome Powell pledged to do what’s necessary to reduced inflation while at the same time prolonging the economic expansion. The dollar traded weaker ahead of last Wednesday’s, thereby supporting a strong rally in commodities led by energy and industrial metals.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The Bloomberg Commodity Index jumped 2.2% during the reporting week to January 11 with a 6.3% gain in energy and 1.2% in industrial metals offsetting weakness across the agriculture sector which with the exception of coffee and cocoa saw broad losses led by sugar and hogs. Responding to these developments, money managers accumulated fresh longs across the energy sector, not least in crude oil, while cutting back on exposure across all other sectors.

In crude oil, the combined net long in Brent and WTI jumped by the most since November 2020 to reach 538k lots or 538 million barrels, still well below the most recent peak at 737k lots from last June. A US cold blast helped send natural gas up by 14% and the net long up by 30% to 163k lots.

In the other sectors of metals and agriculture, speculators opted to reduce their exposure with the few exceptions being soybeans, cocoa and coffee. Rangebound HG copper as an example saw its net long reduced by 15% to 22.2k lots, primarily due to increased short selling, some of which were probably stopped out during the failed breakout attempt above $4.47 towards the end of last week. Gold and silver both saw net selling , while the platinum short jumped 86%.

In agriculture, speculators increased their long positions in all three soybeans contract, the corn long was cut by 6% while the CBOT wheat short jumped by 40% to an 18-month high. In softs, the sugar long continued to be cut, this time by 61.6k lots to 76.5k lots, and since hitting a cycle peak last August the net long has now been reduced by 72% to a near 18 month low. Cocoa flipped back to a small net long, the coffee long rose 4% while the cotton long was cut by a similar percentage.

Market comments from today’s Market Quick Take:

Crude oil (OILUSFEB22 & OILUKMAR22) trades mixed with Brent crude oil briefly challenging the double-top at $86.75, a seven-year high, before having a rethink as China GDP and retail sales slowed amid ongoing measures to curb the spreading of the omicron variant.

The prompt spreads in WTI and Brent remain elevated at 63 and 74 cents per barrel, thereby signaling rising tightness. Later this week monthly Oil Market Reports from OPEC on Tuesday and IEA on Wednesday will shed some further light on the current situation. Speculators, a little late to the recent rally, boosted bullish oil bets in WTI and Brent bets by the most in 14 months last week.

Copper (COPPERMAR22) slid the most in seven weeks on Friday as weaker-than-expected U.S. economic data (see below) together with weakness in China added to concerns that global growth may slowing amid rising inflation and the spreading virus. High Grade’s drop back below $4.50 triggered some stop loss selling from recently established longs before stabilizing overnight after China, the world’s top consumer, cut rates to support its economy. The worry over tight supplies, however, has not gone away and should cushion any short-term weakness.

Gold (XAUUSD) remains resilient despite Friday’s renewed surge in bond yields as the market continues to price in the prospect of rising US interest rates, potentially at a more aggressive pace than previously expected. Support continues to build in the $1800-area while a break above $1830 could see it target $1850 ahead of the November peak at $1877.

Forex

In forex, the major flow was selling of JPY, where the net short increased by 25.3k lot or the equivalent of $2.7bn. Additional selling of AUD (-2.1k lots) took the net short to a fresh record short at 91.5k lots. The EUR position flipped back to a net long after speculators bought 7.6k lots while the GBP short was reduced by 26%. Overall, the dollar long against ten IMM currency futures and the Doller Index rose by a small 1% to $23.5 billion.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

What Happened to Forex Majors in 2021

For instance, a strong US dollar steamrolled everything in the developing world. But factors that significantly affected the behavior of individual currencies go beyond Covid. To get a full picture of forex major’s performance we shall look at each currency solely.

Let’s start with the biggest and most used currency in the world, the US dollar.

The US Dollar (USD) Performance

The USD recorded its best performance in 2021 in over five years. In December, the dollar index was up 7% supported by an improving US economy. A hawkish run by the FED due to persistent inflation also contributed to the growth. The fed is set to raise interest rates by March 2022, quite earlier than most economies. The Canadian dollar, which has recorded the highest growth against the USD, is set to raise the interest rates as early as January. In November the Dollar index hit the highest point since July 2020.

How EURO Faired in 2021

The Euro was quite strong in 2021, especially against the sterling. However, it lost some value towards the year and weakened against other major currencies. In November, a currency pair EUR/USD that is often regarded as the most stable currency pair in the world recorded a 2.6% dip in a month and a 7.8% year to date dip against the US dollar. This loss of value was occasioned by a resurgence in the covid 19 cases, political uncertainty and ECB divergence from other central banks.

As infection increases, eurozone countries such as the Netherlands and Germany reimplemented covid containment measures which raised concerns of the growth recovery. ECB dovishness also contributed significantly to the Euro weakness.

At the same time, the euro was affected by dwindling trade. For example, the total trade surplus fell to 7 billion in September of 2021 from 24 billion Euros in September 2020. In 2021, the euro recorded as much as 1% loss indicating the biggest percentage daily loss for over 12 months while the US dollar enjoyed as much as 1% daily gain for a similar period.

The Japanese Yen

The Japanese yen recorded the worst performance against the US dollar. In 2021, the Yen experienced a massive loss of value falling to a four-year low with the downtrend increasing after September. The Yen weakness saw the USD/JPY trade at around 155 level. The massive loss of value was occasioned by a strong dollar growth caused by inflation concerns and a high US treasury yield.

The Bank of Japan has taken measures to force the pair down. However, policy divergence between the Bank of Japan and the Federal Reserve will become more pronounced if BOJ retains the -0.1% rate. Remember, the federal reserve is planning to raise the interest rates in early 2022. The central bank is relying on ultra-loose monetary policy.

Initially, a weak Yen was seen as a blessing in disguise in the export-dominated Japanese economy. However, as it dropped to low levels last seen in 2017, it became a concern since the effects of importing raw materials were felt in the household’s purchasing power.

But the dwindling value has been ongoing for quite a while. According to Reuters, the Yen has lost about 50% against the US dollar in the last decade which has seen the price of brand name items such as smartphones and luxury watches increase. The price of new model iPhones has tripled over the same period while salaries have reached more or less the same.

Governor Haruhiko Kuroda said that the impact on exports and corporate profits of Japanese company subsidiaries is positive. Japan recently elected a new prime minister Fumio Kishida who has laid down a new economic policy that seeks to redistribute wealth fairly, arguing that the previous regime Abenomics has only made the rich richer. He also has a university endowment fund worth 10 trillion yen.

What’s more, Japan depends on imported energy which is getting costlier every day. There are chances the yen could continue to weaken in 2022 with Covid fueling the case. The planned increase of interest rates and Japanese CB retaining the interest rate has seen more traders shorting the Yen.

The Great Britain Pound

In March and early June, the pound against dollar increased to all-time highs of $1.40 against the US Dollar before falling to lows of $1.30. The last time the pound was weak the UK was contemplating Brexit. But that is now behind us.

The currency took a beating after prime minister Boris Johnson announced the wave of omicron overwhelming the health system towards the end of 2021. The UK pound was enjoying an upbeat moment during the beginning of 2021, as the country finalized Brexit in December 2020. A swift vaccination plan boosted the currency value.

But as other countries worked on their vaccination efforts, the UK was faced with a new set of challenges including the rise in inflation coupled with supply chain crisis a surge of covid cases. In December the central bank of England increased the interest rates by 1.25% taking the pound to a year low making the country the first G7 country to increase rates.

After the finalization of Brexit on the eve of Christmas England was caught in a third lockdown. This damped investor confidence as the country pushed new measures to prevent spread and death cases. The country accelerated the vaccination program bringing a feeling of optimism. The success of the program saw the sterling rise to $1.40 the highest since April 2018 as BOE ruled out possibly raising interest rates.

The safety issues of the vaccine did not dampen the mood. In fact, reopening the shop and restaurants pushed the currency to three-year highs. With massive stimulus programs and holding, interest rates at low the pound seemed unstoppable.

The delta variant dented the celebratory mood as it became clear the global recovery would derail. The investor turned to a safe haven like the dollar. Despite the concerns of rising inflation, BoE increased the interest rates by 0.1% in November defying expectations. Another restriction plan in December nailed the last nail in the pound dropping to the lowest in 2021. In fact, the bank voted to increase the rates by 0.25%.

The pound weakness could continue as investors are observing a brewing political instability after members of the cabinet including the prime minister were accused of flaunting the covid rules during the Christmas celebrations. Also, there are tensions after Brexit concerning the Northern Ireland protocol. The talks between Britain and the EU as a transition period nears could help GBP regain some value.

The Swiss Franc

As the coronavirus waves were causing devastation in other states, the Franc was gaining strength. Investors worried about the recovery of the global economy turned to the franc, a traditionally considered safe-haven asset. Although some analysts argued that the strengthening of the franc had an invisible hand of the Swiss National Bank (SNB), the strengthening of the currency against common currencies was boosted by the supply chain crisis and shortage of raw materials, and rising inflation. In fact, it was moving in lockstep with the US Dollar.

This explained why the currency jumped to a high level against the Japanese yen since 2015. It is considered a good hedge thanks to the central bank policy and less exposure to pressures of prevailing prices. The Swiss National Bank has a strict inflation mandate to strengthen the franc against imported inflation. The Central Bank currency intervention in the spot market is a strong resistance pillar. Experts argue SNB bought in the past which explains its strong resilience against the dollar. While CHF is a safe haven and rises during a bearish market it weakened against the yen, pound, and US dollar in November.

The Australian Dollar (Aussie)

The Aussie was largely bearish in 2021. It rebounded after touching a year-to-date low in August and went on to outperform most major currencies in October. However, the price tumbled after the price of iron ore, its major export experienced headwinds. The weakening was aggravated by a surge in dollar value, reserved bank delay in tapering its asset purchases, widening spread of the 10-year bond, and slow down in Chinese economic activities.

Iron ore Australia’s main export to China fell 14% in one day in November due to the closure of steel mills. The fall of AUD was also contributed by the bounce of USD as the market anticipated that the Fed could start a pullback policy in 2021.

Essentially, the Australian dollar weakness against the New Zealand dollar, US dollar, and the pound in 2021 was largely due to commodity price and interest rates. The Australian reserve bank kept the rates at 0.1% while interest rates were rising in other countries. AUD tends to follow commodities’ rise and fall. When Iron ore price increases due to Chinese demand at the beginning of the year, the AUD rises significantly. Commodity prices fell in the second half with AUD also tumbling. But Aussie has recovered well in 2022.

Final Words

2021 saw many economies open up after 2020 lockdowns and restrictions. However, numerous factors saw different currencies react differently. While each country was hit by the covid pandemic, the US dollar showed resilience performing better than major currencies. Ordinarily, a stronger dollar would see it rise against other pairs, other factors held constant. Some currencies, like the euro and yen, actually dipped to the low levels seen several years ago. The good news is that weak currencies are rebounding after the central bank’s intervention. But this does not inhibit the continued growth of the dollar. Let’s wait and see what 2022 has in store for traders.

Dollar Index Strengthens Over 95.050, Weakens Under 94.610

The U.S. Dollar plunged to a two-month low against a basket of currencies on Wednesday after the December consumer inflation report came in as expected. Investors interpreted the data as bearish since coming out in line with expectations failed to increase the urgency for the Federal Reserve to tighten monetary policy sooner than expected.

On Wednesday, March U.S. Dollar Index futures settled at 94.950, up 0.049 or +0.05%. The Invesco DB US Dollar Index Bullish Fund ETF (UUP) finished at $25.43, down $0.17 or -0.68%.

The consumer price index (CPI) increased 0.5% last month after advancing 0.8% in November, the Labor Department said on Wednesday. In the 12 months through December, the CPI surged 7.0%, the biggest year-on-year increase since June 1982. Economists polled by Reuters had forecast the CPI gaining 0.4% and shooting up 7.0% on a year-on-year basis.

Sellers hit the greenback because traders had already priced in a March rate hike by the Federal Reserve and the CPI data did nothing to strengthen those hawkish expectations.

Additionally, Fed Chair Jerome Powell on Tuesday gave no clear indication that the Fed was in a rush to speed up plans for tightening monetary policy.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 94.890 will signal a resumption of the downtrend. A move through 96.475 will change the main trend to up.

The main range is 93.200 to 96.895. The index closed inside its retracement zone at 95.050 to 94.610. This zone is controlling the near-term direction of the index.

On the upside, potential resistance is a pair of 50% levels at 95.360 and 95.685, followed by a short-term retracement zone at 95.895 to 96.130.

Daily Swing Chart Technical Forecast

The direction of the March U.S. Dollar Index on Thursday is likely to be determined by trader reaction to 94.830.

Bullish Scenario

A sustained move over 94.830 will indicate the presence of buyers. This could trigger a surge into the key 50% level at 95.050. Overtaking this level could trigger a surge into the first resistance at 95.360.

Bearish Scenario

A sustained move under 94.830 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to extend into 94.610.

Taking out 94.610 with conviction could trigger an acceleration to the downside with 93.810 the next major downside target.

For a look at all of today’s economic events, check out our economic calendar.

Speculators Initial Reaction to Stock and Bond Market Rout

This COT report highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, January 4. A week where a rout in tech shares dragged US stocks from all-time highs on worries about higher interest rates amid a rout in US bonds. The commodity sector traded higher, primarily supported by the industrial metal and soft sector, with the best individual performances being crude oil, soybeans, coffee and cotton.

In terms of market action around New Year the Nasdaq lost 1.3% while the higher concentration of value stocks saw the S&P 500 trade close to unchanged. The dollar held steady while US ten-year yields jumped 17 basis points to 1.65%.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The commodity sector traded higher, primarily supported by the industrial metal and soft sector, with the best individual performances being crude oil, soybeans, coffee and cotton. Somewhat offsetting these were losses in natural gas, palladium, wheat and sugar.

Speculators reaction to these developments were relatively muted, most likely due to the time of year with books barely reopened before the reporting week ended last Tuesday. Overall the energy sector saw buying led by Brent crude oil and gasoline. Metals were mixed with gold selling being offset by silver buying, the platinum short  was halved while copper length rose by 27%.

The agriculture sector saw strong demand for soybeans in response to Brazil crop worries while ample supply saw the CBOT wheat short rise by 69% to a six-month high. In softs, selling of sugar took the net long to a 17-month low while the 7% increase in the cotton long lifted the long/short ratio to a very unhealthy 151 longs per each short.

Latest comments from today’s Market Quick Take:

Crude oil (OILUKMAR22 & OILUSFEB22) trades steady with focus on robust demand and so far, a limited fallout from the omicron surge, together with the prospect for OPEC+ struggling to deliver the promised production hikes as several producers have started to hit their limit, some due to lack of investments.

Countering the short-term threat of even higher prices are easing supply disruptions in both Libya and Kazakhstan, but overall, demand remains robust as signaled in the six-month futures spread in Brent which has more than doubled since the December, omicron demand worry low point. Focus this week on EIA’s STEO and US CPI, as well as omicron developments, especially in China where the zero-tolerance approach may hurt demand through lockdowns.

Gold (XAUUSD) had a relatively strong first week of trading with the massive 30 bp surge in US ten-year real yields to a six-month high at –0.78% being partly offset by a softer dollar and stocks as well as geopolitical risks, and rising inflation as seen through higher wage pressures in Friday’s US job report.

Yields have climbed further overnight with the market starting to price in four Fed rate hikes in 2022, starting as early as March. Silver (XAGUSD) meanwhile continues to find support around $22 ahead of the key double bottom at $21.42 while resistance can be found at $22.65. Gold remains challenged as long it stays below the triple top at $1830 and so far, $1783 has prevented an even deeper selloff.

Forex

In forex, the speculative flows were mixed resulting in the combined dollar long against ten IMM currency futures and the Dollar index holding steady at $23.2 billion, with buying of EUR, CHF and GBP being offset by selling of JPY and AUD.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

USD/CHF Climbs Higher After the False Bearish Breakout From the Triangle

At the beginning it was fine, because swings were pretty significant, but the giant symmetric triangle was narrowing and the latest price changes were almost invisible. For example, look at the orange rectangle. No direction whatsoever.

USD/CHF daily chart

The situation changed a bit recently. At the end of last year sellers managed to take initiative and the price broke the lower line of the triangle. Normally, that should give us a proper, long-term sell signal. I mean it did, but it happened to be a fake one (red rectangle).

How is that helping us? Well, false breakouts can be great trading opportunities in themselves. Yes, initially you are caught in a movement in the wrong direction but the comeback gives you a chance to close your losing trade and open one in the opposite direction. Usually, false breakouts give amazing signals to the other side. So, in theory, when we had breakout to the downside, now we should see a few bullish days or even weeks.

With the price being back inside of the triangle. The next direction should be the upper line of this pattern, which leaves us a lot of space to jump into a bullish trade. As long as the price stays above the lower line of the triangle. The sentiment is positive.

For a look at all of today’s economic events, check out our economic calendar.

3 Major Market Themes (and Potential Winners) for 2022

Last year, risk assets didn’t seem to have a care in the world.

Roaring inflation? No worries.

Central banks pulling back stimulus? So what?

Delta and Omicron variants? Life goes on.

Despite all of those seemingly worrying events, risk appetite demonstrated a remarkable resilience to overcome anything that was thrown in its path. Just look at how the S&P 500 posted 70 new record highs on the way to claiming a 27% advance for 2021.

Still, markets could yet face a year of reckoning in 2022.

Here are three main themes that investors and traders would have to contend with and also the potential winners to look out for:

  1. Stubborn Inflation

In recent months, the prices of goods and services in major economies have skyrocketed (as of Nov 2021):

  • US: fastest inflation since 1982
  • UK: fastest inflation since 2011
  • Europe: record high inflation!

Surging consumer prices are also a major consideration for investors who must choose which asset class could best protect their wealth and purchasing power against the erosive effects of inflation.

Potential winner: Gold

This precious metal is traditionally seen as a way to preserve one’s wealth (hedge) against inflation. However, gold also has an inverse relationship with the US dollar and US Treasury yields (i.e. when the dollar goes down, gold goes up, and vice versa).

In short, gold could have a stellar 2022 if inflation continues surging and the dollar/Treasury yields are kept in check.

Gold daily chart

2) Fed rate hikes

The US Federal Reserve is the most important central bank in the world. And one of their main jobs is making sure that consumer prices don’t rise too much too fast.

The main way they can keep inflation in check is by raising interest rates.

As things stand, the Fed has indicated that they could hike rates 3 times in 2022.

Potential winner: US dollar

Historically, higher US interest rates typically means a stronger greenback. This is because higher interest rates also usually mean higher yields for US Treasuries, prompting global investors to send more of their money towards US assets.

This relationship is set to play out once more in 2022, unless the Fed has to hold back on rate hikes for fear of triggering a recession.

US Dollar Index, daily chart

3) New Covid variant?

We’re entering the third year in this battle against Covid-19. So far, the global economy seems resilient enough to weather the Delta and Omicron variants.

But what if we see a new variant of concern that winds back the pandemic clock?

Pi is the next letter in the Greek Alphabet after omicron. Unless the WHO decides to skip a couple of letters again (like they did before deciding on Omicron), the world will be hoping that the ‘life of pi’ won’t bring us back to lockdowns that shutters the world economy once more.

However, if this tragic turn of events does become reality in 2022 …

Potential winner: Swiss Franc

The Swiss Franc (CHF) is considered a safe haven currency, meaning to say that investors flock to it during times of heightened fear. Recall how CHF was one of the best-performing G10 currencies against the US dollar in 2020, and the Swiss franc also had an annual gain versus all other emerging-market currencies that year.

In a major risk-off event, or a new variant of concern that upends the global economic recovery, expect safe haven currencies including the CHF to be well sought after.

USD/CHF Weekly Chart

Of course, the outlook for financial markets is too vast to be limited to just three themes. So here are five other events to keep an eye on that could rock various asset classes:

  • Brexit risks: GBP, FTSE 100
  • Contagion risks from China’s troubled property sector: CNH, Hang Seng index
  • US President Biden’s spending plans: US dollar, US stocks
  • 2022 US midterm elections (November): US dollar, US stocks
  • Geopolitical tensions between major economies: Safe havens – gold, CHF, USD

Whatever 2022 may spring on the world, it also promises plenty of opportunities for traders and investors.

Hence, it remains vital that market participants stay sharp and keep tabs on major themes that could sway asset prices over this calendar year.

By Han Tan Chief Market Analyst at Exinity Group

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Dollar Drops Before Christmas

Indices climbed higher after another V-shaped reversal.

The dollar Index bounced off the lower line of the pennant. Sideways movement continues but the end is near.

The GBPUSD bounced nicely from the 38,2% Fibonacci. Finally!

The same goes for the NZDUSD. The triple bottom formation looks complete.

The USDCHF completely lost momentum. Watching paint dry is actually more interesting than trading the USDCHF.

The EURNZD continued the reversal to the downside after the false breakout pattern from the beginning of the week.

The CHFJPY finally escaped from the weeks-long sideways trend. The breakout is to the upside.

The CADCHF reversed and created a false breakout pattern and is ready for a further rise.

Silver defended its 22 USD level. A great success butt there’s still a lot of work for buyers to do.

Dollar Continues Moving Sideways

DAX performs a V-shaped reversal but the optimism stops today on a crucial resistance; 15440 points.

Brent Oil bounces off a crucial dynamic support.

Dollar Index extends the pennant formation awaiting the breakout.

EURUSD enters the rectangle pattern continuing the sideways movement.

After choppy movements, GBPUSD finds itself still trading above the 38,2% Fibonacci.

The same with NZDUSD, which is doing everything to stay above the 38,2% Fibo.

USDCHF continues trading inside of the symmetric triangle pattern.

EURNZD jumps above important horizontal resistance and today, testing it as a support.

CADCHF breaks an absolutely crucial long-term support. That’s a strong sell!

For a look at all of today’s economic events, check out our economic calendar.

Specs in Wind Down Mode as Multiple Uncertainties Reign

A week that encapsulated a market in wind down mode and preoccupied with the risk of hawkish FOMC meeting on December 15 and the rising threat of another virus-driven market disruption.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The weekly COT update is taking break and will return January 4.

This summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, December 14. A week that encapsulated a market preoccupied with the risk of hawkish FOMC meeting on December 15 and the rising threat of another virus-driven market disruption. Responding to these developments stock markets weakened, the dollar rose and bond yields drifted lower. Commodities traded lower as well with broad weakness seen across all sectors.

Commodities 

Ahead of last Wednesday’s FOMC meeting, and raised concerns the Federal Reserve would deliver a hawkish tilt, money managers opted to cut further their exposure across the five metals contracts. The selling was led by gold and silver while the net-short in palladium rose to a record high at 3,209 lots. Additional selling in HG copper reduced the net long to just 12k lots, an 18-month low.

In energy, the combined WTI and Brent crude oil long continued to be reduced, and following two months of almost continued selling the net length has seen a 38% reduction to 400k lots, a 13-month low. The latest change primarily driven by a 14.7k lots reduction in the WTI long driven by equal measures of long liquidation and fresh short selling.

The agriculture sector speculative length received a 41k lots boost to 948k lots with net buying of corn, sugar and cocoa more than offsetting selling in soybean oil and Chicago wheat, the latter seeing a return to a net short for the sixth time this year.

Forex

In forex, the focus among speculators was for a second week primarily geared towards reducing exposure, both long and short, thereby potentially reducing the signal value. Overall, the combined dollar long against ten IMM currency futures and the Dollar index was reduced for a second week, but this time only by 2% to $22.7 billion. Flows were mixed with selling of EUR, GBP and NZD being more than offset by demand for CHF, JPY and MXN.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

U.S. Dollar Index (DX) Futures Technical Analysis – Next Move Hinges Upon Reaction to 96.355 – 96.200

The U.S. Dollar climbed against a basket of major currencies on Friday as traders retreated from riskier currencies amid talk of interest rate hikes by central bankers and concerns about the spread of Omicron cases.

The index was under pressure for a second session early Friday before making a dramatic rebound in the afternoon. The intraday reversal helped the index recoup all of the value it had lost on Thursday following a series of central bank policy statements.

On Friday, March U.S. Dollar Index futures settled at 96.548, up 0.533 or +0.55%. The Invesco DB US Dollar Index Bullish Fund finished at $25.91, up $0.18 or +0.70%.

Index components, the Euro and British Pound fell 0.6% and 0.5% respectively, after having booked gains the two previous days. Commodity-linked currencies, including the Australian and Canadian Dollars, also lost value as crude oil prices fell 2% on worries that Omicron variant will dampen demand. The dollar was flat against the Japanese Yen.

Daily March U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 96.895 will negate the closing price reversal top and signal a resumption of the uptrend. A move through 95.500 will change the main trend to down.

The minor trend is down. A trade through 95.810 will change the minor trend to down. This will confirm the shift in momentum.

The minor range is 96.895 to 95.810. The index is trading on the strong side of its pivot at 96.355, making it support.

The short-term range is 95.500 to 96.895. Its 50% level at 96.200 is additional support.

The intermediate range is 93.810 to 96.895. If the main trend changes to down then its pivot at 95.360 will become the first target.

The main range is 93.200 to 96.895. Its retracement zone at 95.050 to 94.610 is the primary downside target. This zone is controlling the longer-term direction of the index.

Short-Term Outlook

The short-term direction is being controlled by the pivots at 96.355 and 96.200.

Look for the upside bias to continue on a sustained move over 96.355 and for a downside bias to develop on a sustained move under 96.200.

For a look at all of today’s economic events, check out our economic calendar.

GBP/USD and NZD/USD Rise From the Death!

USD loses traction and allows other currencies to catch some breath. On many pairs, this initial reversal is happening in very interesting places.

GBPUSD is bouncing from the lower line of the flag and the 38,2% Fibonacci with a beautiful inverse head and shoulders pattern. The neckline is already broken, so the buy signal is ON.

A similar situation can be seen on the NZDUSD but here, instead of the iH&S, we have the triple bottom formation.

EURUSD is bouncing from the lower line of the pennant.

GBPJPY defends a crucial horizontal support and aims higher.

USDCHF still waits for the breakout from the symmetric triangle pattern. Currently we are in the middle.

AUDCHF aims higher after the price makes a V-shaped reversal after touching the lower line of the flag.

CHFJPY continues another week inside of the rectangle, between the 23,6% and 38,2% Fibonacci.

CADCHF is attacking a long-term horizontal support. A breakout can bring us a proper sell signal.

For a look at all of today’s economic events, check out our economic calendar.

Caution Prevails as Investors Eye Omicron and Fed Meeting

The dollar held its ground despite US Treasury yields slipping in the previous session, while gold prices remained range bound, waiting for a fresh directional catalyst.

European equity futures are mixed this morning with investors clearly on edge ahead of a week dominated by central bank decisions and key economic reports. Any decisions made on monetary policies will set the tone for the rest of 2021 while heavily impacting risk markets.

With the Bank of England, Bank of Japan, European Central Bank, and Swiss National Bank all expected to keep monetary policy unchanged, all eyes will be on the FOMC meeting on Wednesday. Expectations remain elevated over the Fed announcing a faster pace of tapering in the face of rising inflation and using more hawkish language than has been seen in previous statements. If this does become reality, it could weigh on stock markets while boosting the dollar.

Investors eye Fed decision

The Federal Reserve’s December policy meeting remains the main event for markets this week. With US inflation surging to its highest level in nearly 40 years, equity markets still volatile and the Omicron variant fueling economic uncertainty, it will be interesting to see what policymakers at the Fed have to say.

Back in November, the FOMC made an official announcement on tapering. Fast-forward to today and the central bank is set to announce an acceleration of tapering from January 2022, with consensus expecting the pace to double in speed, in order to counter inflation. This has boosted expectations over the Fed hiking interest rates sooner than expected with traders currently pricing in a 73% probability of at least one rate hike by early May 2022 and fully pricing a 25-basis point hike by mid-June 2022.

Much attention will be directed towards the Fed’s new dot plot and updated economic forecasts. Back in September, policymakers were forecasting one rate hike in 2022, followed by three in 2023 and another three in 2024. The new dot plot is expected to show the majority of Fed members now expect two rate hikes in 2022.

Currency spotlight – AUDUSD

The Australian dollar stumbled into Tuesday’s session under pressure as virus cases surged in the country’s most populous state. Daily Covid-19 infections jumped to their highest level in more than two months, fueling concerns over the economic outlook. However, there was some good news as reports showed that business confidence remained well above its long-term average, despite dropping sharply to 12 in November from a downwardly revised 20 in October.

Taking a look at the technical picture, the AUDUSD remains under pressure on the daily charts. Sustained weakness below 0.7180 could encourage a decline towards 0.7080 and 0.7000, respectively.

Commodity spotlight – Gold

Gold could enter the holiday season with a bang due to key central bank meetings, economic data and developments revolving around the Omicron variant. Prices have been trapped within a range over the past few weeks with bulls and bears waiting for a fresh directional catalyst.

This may come in the form of the Federal Reserve meeting or other economic events that could impact risk sentiment. Should the Fed step up the gear on tapering, this is likely to punish gold prices as the dollar appreciates, yields rise and rate hike expectations jump. In the meantime, support can be found at $1765 and resistance around the psychological $1800 level.

By Lukman Otunuga Senior Research Analyst

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Waiting for the Bigger Movement on the USD

DAX ends the flag and tries to aim higher.

Nasdaq is about to test an absolutely crucial horizontal resistance. A bullish breakout will mean a proper buy signal.

Dollar Index is inside of a pennant, waiting for a breakout.

The same with the EURUSD.

GBPUSD bounces from the lower line of the flag and 38,2% Fibonacci but the momentum could have been higher.

USDCHF is still inside of the long-term symmetric triangle, waiting for the breakout like the Dollar Index.

CHFJPY is still locked between two important Fibonacci retracements. The rectangle continues.

CADCHF is also inside of the lock-term triangle. This week may result in a test of its lower line.

For a look at all of today’s economic events, check out our economic calendar.

2022 Global Economic Outlook: Covid-19, Structural Inflation, Monetary Tightening Challenge Global Outlook

Explainer video: Scope Ratings introduces its 2022 Global Sovereign Outlook

Download Scope’s 2022 Sovereign Outlook (report).

Entering 2022, new variants of Covid-19, elevated inflation, and withdrawal of fiscal and monetary support present risk for the robustness of recovery. GDP is seen, nevertheless, continuing to grow above trend over 2022 of 3.5% in the US, 4.4% in the euro area, 3.6% in Japan and 4.6% for the UK, even if, in most cases, normalising to a degree from elevated early-recovery growth of 2021. China is seen growing nearer trend of 5%.

Amid an uneven recovery, we see momentary slowdown over Q4 2021 and Q1 2022 across many economies, if not in some cases temporary output contraction, as countries of Europe reintroduce generally lighter restrictions on basis of renewed rise in Covid-19 cases, including those associated with a new Omicron variant. But we see economic rebound regathering traction by the spring of 2022.

As expected, full economic normalisation has remained vulnerable to renewed introduction of restrictions as transmissible virus variants challenge public-health systems, though we see severity of virus risk for economic recovery continuing to moderate with time as governments adopt more targeted responses, virus becomes more transmissible but less lethal, and businesses and people adapt ways of doing business. Nevertheless, risk to the 2022 outlook appears skewed on the downside.

More persistent inflation, even as it begins to moderate, supports increasing monetary policy divergence

Inflationary pressure is likely to remain more persistent than central bank projections, running above pre-crisis averages even after price changes begin to moderate by next year. This is likely to compel a continued divergence of monetary policy within the globe’s core economies, with associated risk of crystallisation of latent debt and financial-bubble risk as central banks pull back.

This is especially true as regards the UK and the US, where inflation might continue testing 2% mandates, although much less the case for Japan of course, with the euro area somewhere in between with inflation potentially remaining under 2% over the long run.

By end-2022, policy rates of leading central banks are expected to similarly diverge: remaining on hold with respect to the ECB and the Bank of Japan but with rate hikes next year from the Bank of England and Federal Reserve. The ECB is seen halting the Pandemic Emergency Purchase Programme (PEPP) next year but adapting PEPP and/or other asset-purchases facilities to retain room for manoeuvre and smoothen transition in markets.

Higher inflation holds both positive and negative implications for sovereign credit ratings

Higher and more persistent inflation holds both positive and negative credit implications as far as sovereign ratings are concerned. Somewhat higher trend inflation supports higher nominal economic growth, helping reduce public debt ratios via seigniorage, and curtails historical deflation risk of the euro area and Japan. However, rising interest rates push up debt-servicing costs especially for governments carrying heavy debt loads and running budget deficits. Emerging economies, with weakening currencies and subject to capital outflows, are particularly at risk.

Substantive accommodation from central banks has cushioned sovereign credit ratings over this crisis, so any scenario of much more persistent inflation limiting room for monetary-policy manoeuvre is a risk affecting credit outlooks. Bounds in central bank capacity to impede market sell-off due to high inflation compromising monetary space may expose latent risk associated with debt accrued in past years.

Monetary innovation during this crisis has supported credit outlooks

As many central banks tighten monetary policy amid policy divergence, peer central banks that might otherwise prefer looser financial conditions may see themselves compelled to likewise remove some accommodation, otherwise risking currency depreciation. At the same time, with governments dealing with record levels of debt and central banks owning large segments of this debt, “fiscal dominance” may coerce moderation in speed of policy normalisation.

Monetary innovation over this crisis such as flexibility made available in ECB asset purchases supports resilience of sovereign borrowers longer run, assuming such innovations were available for re-deployment in future crises.

Emerging market vulnerabilities entering 2022, while ESG risks becoming increasingly substantive

Emerging market vulnerabilities are a theme entering 2022, amid G4 central bank tapering, geopolitical risk, and a slowdown of China’s economy. Debate heats up furthermore during 2022 around adaptation of fiscal frameworks for a post-crisis age, with potentially far-reaching implications as far as sovereign risk. Environmental, social and governance (ESG) risks are becoming increasingly significant – presenting opportunities and challenges for ratings.

Sovereign borrowers with a Stable Outlook make up presently over 90% of Scope Ratings’ publicly rated sovereign issuers, indicating comparatively lesser likelihood of ratings changes next year as compared with during 2021, although economic risks could present upside and downside ratings risk. Only one country is currently on Negative Outlook: Turkey (rated a sub-investment-grade B).

For a look at all of today’s economic events, check out our economic calendar.

Giacomo Barisone is Managing Director of Sovereign and Public Sector ratings at Scope Ratings GmbH.

 

Crucial Supports Under Pressure

Many instruments approach the end of this week on crucial support and/or resistances. I guess the next week will be full of some juicy movements on many assets.

Gold is still suffering, trying to defend mid-term dynamic support.

Silver is trying to defend the most important horizontal level this year, 22.2 USD/z.

SP500 goes down aiming for the long-term up trendline.

DAX with eyes on the 14200 points – as on Silver, the most important support this year.

USDCHF continues the drop after the false breakout from the symmetric triangle pattern.

EURUSD tries to catch some breath and aims slightly higher.

EURPLN reverses after the intervention from the Polish Central Bank and creates a false breakout pattern.

Mexican Peso with a possible inverse head and shoulders pattern on both pairs: with USD and EUR.

For a look at all of today’s economic events, check out our economic calendar.

Traders Were Hoping for a Stronger Bounce I Guess…

So far, the recovery from Friday’s carnage is, let’s say, pretty mild. The same mild as apparently, the symptoms from the new coronavirus strain are. That information was about to drive today’s reversal but as you can see, traders are not encouraged to buy the dip at this point.

Gold is defending the mid-term up trendline.

SP500 bounced during the Asian session but the European one does not start well.

DAX is giving back almost all gains from the Asian session.

USDJPY continues the downswing after the breakout of the mid-term up trendline.

EURJPY drops after breaking crucial horizontal support.

AUDNZD continues a very technical movement by creating a wedge finishing the correction on the 38,2% Fibonacci.

USDCHF is trading lower after the false breakout from the symmetric triangle.

The Mexican Peso continues the weakening to USD and EUR despite quite a good opening after the weekend.

For a look at all of today’s economic events, check out our economic calendar.

Risk Off Is Back. Indices and EM Currencies Drop. Safe Havens Surge

Shocking night and morning for the vast majority of stock bulls. Indices are collapsing and the new strain of the virus is apparently to blame.

In this situation, safe-haven assets like gold for example are gaining traction. Gold is aiming higher after breaking the neckline of a small inverse head and shoulders pattern.

Yen is also gaining, USDJPY is currently performing an attack on the mid-term up trendline.

EURJPY is testing crucial long-term horizontal support on the psychological level of 128.

USDCHF is dropping after the false breakout from the symmetric triangle pattern.

EURUSD is trying a small bullish reversal to test the major horizontal resistance.

USDMXN advances higher after the breakout of an important horizontal resistance.

EURMXN continues the rise after the price escapes from a beautiful wedge pattern. A price action classic!

For a look at all of today’s economic events, check out our economic calendar.

Solid Gold Buying Raising Short Term Concerns

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

This summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, November 16. A week where the market responded to the US inflation shock on November 11 by sending  the dollar up by 2% to fresh high for the cycle while 10-year breakeven yields jumped 20 basis point a decade high. While bond market volatility jumped, stocks held steady with the VIX showing a small decline. The commodity sector was mixed with gains in precious metals and not least grains and soft commodities helping offset weakness across the energy sector.

Commodities

Hedge funds raised their total commodity exposure, measured in lots, across 24 major futures contracts by the most since July. Driven by continued strong price action across the agriculture sector and more recently also precious metals in response to surging inflation. These sectors saw all but one market being bought while the energy sector were mixed with continued selling of crude oil only being partly offset by demand for gasoline and natural gas.

Energy

Crude oil’s four week slide resulted in the biggest weekly reduction since July, and this time, as opposed to recent weeks, it was WTI that led the reduction with a 10% cut to 307k apart from a deteriorating short-term technical outlook also being driven the prospect of a US stockpile release to dampen domestic gasoline prices. Brent meanwhile saw its net long slump to a one-year low at 221.5k lots, and during the past six weeks the net length has now slumped by one-third, a reduction which gathered momentum after the late October failure to break the 2018 high at $86.75, now a double top.

Crude oil comment from our daily Market Quick Take

Crude oil (OILUKJAN22 & OILUSDEC21) opened softer in Asia after Friday’s big drop but has so far managed to find support at $77.85, the previous top from July. The market focus has during the past few weeks shifted from the current tight supply to the risk of a coordinated reserve release, fears about a renewed Covid-driven slowdown in demand and recent oil market reports from the EIA and IEA pointing to a balanced market in early 2022. Having dropped by around 10% from the recent peak, the market may have started to conclude that a SPR release has mostly been price in by now.

Metals

Another week of strong gold buying has now raised the alarm bells given the risk of long liquidation should the yellow metal fail to hold onto its US CPI price boost above $1830. Last week the net long in gold reached a 14-month high at 164k lots and the speed of the accumulation, especially the 70% jump during the past two weeks alone carries, will be raising a red flag for tactical trading strategies looking for pay day on short positions should support give way.

Gold extended Friday’s drop below $1850 overnight, before bouncing ahead of key support in the mentioned $1830-35 area. The risk of a quicker withdrawal of Fed stimulus supporting real yields and the dollar has for now reduced gold’s ability to build on the technical breakout. However, the price softness on Friday helped attract ETF buying with Bloomberg reporting a 10 tons increase, the biggest one-day jump since January 15.

A second week of silver buying lifted the net to a four-week high at 35.9k lots, but still below the May peak at 47.8k lots. Copper’s rangebound trading behavior kept the price and the net long unchanged. The latter due to an even size addition of both new long and short positions.

Agriculture

Broad gains across the grains market lifted the combined long across the six most traded contracts to a six-month high at 560k lots. Buyers returned to soybeans after the net long recently hit a 17-month low, the corn long was the biggest since May while the KCB wheat long at 60.6k lots was the highest since August 2018. Supported by an increasingly worrying supply outlook, coffee speculators lifted their net long by 16% to a five-year high at 55k lots. Cotton and sugar longs also rose while short-covering helped halve the cocoa net short.

More on the reasons behind the current strength in wheat and coffee, and agriculture in general can be found in may recent update: Agriculture rally resumes led by coffee, wheat and sugar

Forex

In a surprise response to the US inflation shock on November 11 speculators ended up making a small reduction in their overall dollar long against ten IMM futures and the Dollar index. Selling of euro in response to the 2.4% drop and a 161% increase in the sterling short to a 17 month high ended up being more than off-set by the buying of all other major currencies, most notably JPY and CHF. The result being a fifth weekly reduction in the dollar long to $21.3 billion, now down by 17% reduction from the near 30-month high reached during October.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

Start trading now

This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

EUR Starts a Correction, NZD Flexes Muscles

Gold stays strong and enjoys a rather flat correction, which indicates a bullish power.

Silver tests the neckline of the iH&S pattern and defends it with a nice upswing, which is also very optimistic.

EURNZD drops after testing the crucial dynamic support as the newest resistance.

AUDNZD drops sharply after the price makes the false breakout above three major resistances.

CHFJPY reaches 38,2% and bounces higher – a classical movement for price action traders.

USDCHF tests the upper line of the symmetric triangle pattern and creates a shooting star on the daily chart, which is rather negative.

EURUSD bounces from the 61,8% Fibonacci with a pin bar, this may be the start of a bullish correction.

EURPLN continues the upswing driven by the bullish breakout from the ascending triangle pattern.

For a look at all of today’s economic events, check out our economic calendar.