EUR/USD faces major support at 1.0600 Commerzbank
Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted the significant support that lies ahead for the pair at 1.0600.“EUR/USD has reached 1.0682, the 30 year uptrend directly below here lies the 2015-2016 uptrend at 1.0600. This is major support and it should hold the initial test. We note the TD perfected set up and this adds weight to the idea that this will hold. Initial resistance is the 1.0821 March low and the 1.0851 October low ahead of the 20 day ma at 1.0920”.“Only above1.0920 would alleviate extreme downside pressure for a retest of the 1.1123/25 August and September lows, but even this would not negate our negative bias”.
GBP/USD bounces off lows, near 1.2430 ahead of data
After bottoming out near 1.2410 in early trade, GBP/USD is now looking to extend the rebound to the 1.2430 region.The pair is extending its weekly decline one more session for the time being after being rejected from last week’s tops near 1.2680.The so far lack of direction in the greenback is somewhat limiting the downside in spot, although it remains under pressure ahead of the release of UK’s Retail Sales and following lower-than-expected inflation figures during October.Market consensus sees headline sales to have expanded at a monthly 0.4% during last month, reverting September’s flat reading.Across the Atlantic, inflation figures tracked by the CPI will grab all the attention, seconded by Housing Starts, Building Permits, the Philly Fed index and the weekly report on the labour market.In addition, Fed speakers including New York Fed W.Dudley (permanent voter, neutral), L.Brainard (permanent voter, dovish), Chicago Fed C.Evans (2017 voter, dovish) and the testimony by Chair J.Yellen on the ‘Economic Outlook’ before the Joint Economic Committee of Congress should keep the focus on the buck.As of writing the pair is losing 0.06% at 1.2436 a breach of 1.2378 (low Nov.15) would aim for 1.2360 (20-day sma) and finally 1.2349 (low Nov.9). On the upside, the next hurdle lines up at 1.2668 (55-day sma) followed by 1.2675 (high Nov.11) and then 1.2875 (100-day sma).
USD/CHF digesting recent strong gains beyond parity
The USD/CHF pair was seen consolidating recent gains to 8-month high and has been confined within a narrow band around parity mark.Currently trading with mild positive bias around 1.0020 region, market seems to be digesting the pair's post-election sharp up-surge of over 450-pips from mid-0.9500s. Meanwhile, the pair's upward trajectory has started showing signs of exhaustion, indicating that the US Dollar rally might have gone ahead of fundamentals. However, the recent rally has been supported by expectations of an imminent Fed rate-hike action, with CME group's FedWatch Tool pricing-in over 90% probability of a Fed move in December. Hence, today's US CPI print and Fed Chair Janet Yellen's testimony would be the next big trigger that would help investors determine the next leg of directional move for the major.Today's US economic docket also features the release of building permits, housing starts and Philly Fed Manufacturing Index and might provide some impetus for short-term traders.Immediate upside resistance is pegged near 1.0050 level above which the pair is likely to dart towards March swing high resistance near 1.0085-90 region before surpassing 1.0100 handle to test 1.0120-25 resistance. On the downside, 1.00 psychological mark now becomes immediate support, which if broken might trigger a short-term corrective slide initially towards 0.9985-80 region and eventually towards the next important support near 0.9955-50 zone.
AUD/USD should print 4 month lows around 0.7375/0.7400
Sean Callow, Research Analyst at Westpac, suggests that it will be very difficult for AUD/USD to benefit sustainably from mostly solid domestic fundamentals and still elevated commodity prices while Asian markets are in turmoil.“All key Asian currencies are down vs USD over the past week, despite various official efforts to curb capital outflows. We probably need a sharp rally in US Treasuries to even stabilize Asia, let alone spark a recovery. This would however not assuage fears over trade tensions in a Trump administration.”“Leveraged fund AUD positioning on CME last week was the longest since the May rate cut, so further unwinding is likely in the week ahead. But at least another RBA rate cut is not a serious prospect in Dec, even after a mostly soft Oct jobs report.”“AUD/USD should print 4 month lows around 0.7375/0.7400 in coming sessions but commodity support should limit further losses short term.”
USD/JPY hits fresh session peak
After an initial dip to mid-108.00s, the USD/JPY pair managed to recover early lost ground and is now building on to its momentum back above 109.00 handle.Currently trading at fresh session peak near 109.25 level, the pair got an initial boost from the latest BOJ headlines that the central bank offers to buy unlimited amount of JGBs with remaining maturities of 1 to 3 years at a fixed yield of 0.020%. This would be the first action after the new policy framework, targeting longer-term yields, and clearly reflects central bank's concerns over recent surge in global bond yields.Meanwhile, the greenback continues to find support from market expectations for a December Fed rate-hike, with CME group's FedWatch Tool pricing in over 90% probability of such an action, and has been a key factor limiting any corrective slide for the major. Focus now shifts to US macro releases that include - consumer inflation, housing data (building permits and housing starts) and Philly Fed Manufacturing Index, which might further reinforce market expectations and confirm the near-term up-trend of the major. From current levels, momentum above 109.50 level is likely to confront resistance near 109.75 (yesterday's high) above which the pair seems all set to reclaim 110.00 psychological mark. On the downside, weakness below 108.80, leading to a subsequent break through session low support near 108.55 level, is likely to extend the corrective slide towards 107.80-75 strong support.
EUR/GBP: Brexit repriced again but high uncertainty set to prevail Danske Bank
Morten Helt, Senior Analyst at Danske Bank, notes that the GBP has rallied significantly since Donald Trump won the US presidential election, as the possibility of a closer economic relationship between the UK and US in the future justifies a lower Brexit risk premium priced on the GBP.“Moreover, the High Court’s ruling on Brexit implies that a ‘softer’ Brexit has become more likely. Thus, we have revised down our forecasts to 0.86 (previously 0.90) in 1M and 0.88 in 3M (previously 0.91). In the near term, we could see a further GBP rally given the heavy short GBP positioning butexpectthecrosstosettleinthe0.83-0.88rangeinthenearterm. However, weak UK fundamentals still justify a weak GBP to offset the negative consequences of Brexit and we expect renewed pressure on GBP over the three to six months in the run-up to when the UK government is likely to trigger Article 50. We target EUR/GBP at 0.90 in 6M (previously 0.92). Longer term, we expect EUR/GBP to stabilise to some extent, on attractive valuations and reduced uncertainty as more details about Brexit become available. We target EUR/GBPat0.90 in 12M.”
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