The US dollar reigns supreme across the board, with the recent worries about trade wars apparently being shrugged off amid stable to higher US yields and strong risk appetite in major equity markets.
Article / 15 February 2017 at 15:47 GMT

FX Board: Dollar bumps into key EURUSD, USDJPY levels — #SaxoStrats

Head of FX Strategy / Saxo Bank
Commuters make their way through Grand Central, New York and strong data out of the US indicates the economy is motoring and dollar is rising accordingly Photo: Shutterstock

By John J Hardy

Key developments in FX Today:

  • EURUSD hit a major Fibo level and USDJPY bumped up into the 200-day moving average territory today after strong US data, but as of this writing, the move was showing signs of faltering ahead of another day of testimony from US Fed Chair janet Yellen today, See charts below and the latest Notes of Interest on the attached FX Board PDF for more.

  • The sterling rally attempt has fizzled today, with GBPUSD dipping into a key pivot zone and needing to recovery strongly into the close to avoid a test lower. Elsewhere, EURGBP broke to new local lows yesterday but was strongly supported by the 200-day moving average. See chart below.

EURUSD buttressed

EURUSD made it all the way to the 1.0530 area where the 61.8% Fibo came into view and provided support despite the strong US data and bump in US interest rates. Today's lows and down to 1.0500 are a key area for determining whether we will trigger a full-scale test of the lows for the cycle below 1.0350.

Today's closing EURUSD level vital to determine whether we'll get a test of cycle lows
 Source: SaxoTraderGO

USDJPY frothing

USDJPY pulled as high as the 200-day moving average today before faltering a bit. That level and perhaps the Ichimoku cloud top, currently above 116.00, are critical for whether the pair can bull back up to the highs for the cycle. Meanwhile, the 114.00 area to the downside looks like a top of a local capitulation zone if this rally doesn't hold.

USDJPY looking towards 116.0 for path higher
 Source: SaxoTraderGO

EURGBP push stymied

EURGBP did manage to poke to new local lows Tuesday, but UK data hasn't inspired and the pair returned higher today despite a round trip back lower after yesterday's brief rally. The local resistance/trigger higher looks like 0.8525-50, above which stops are likely clustered.

Until then, the bears will hold out hopes for a push back through the local lows and thus a capitulation lower through the neckline of the local, nested head-and-shoulders formation and then the bigger and more well-defined one down in the 0.8350-00 zone.

EURGBP nestled in a zone
Source: SaxoTraderGO

GBPUSD wobble

Cable has wobbled today and found itself in the downside support zone below 1.2400 briefly after triggering stops below 1.2450 on weak UK data today. The pair needs to find support here to avoid a test lower still - watching today's close on that account.

GBPUSD close critical to possible downside development
Source: SaxoTraderGO

XAUUSD wavering

Spot gold had a look at the $1,219/oz support level today - an important one on the way up - and this will be key for maintaining a view higher, otherwise, a break would likely quickly lead to a focus on $1,200/oz or even $1,180/oz. 
 Source: SaxoTraderGO

— Edited by Martin O'Rourke

John J Hardy is Saxo Bank's head of forex strategy
Download document

FX Board for Wednesday, February 15, 2017

helicongrowth helicongrowth
And a bout of $ weakness towards the end of the day, coincidentally or not starting when Trump started spouting about tax........despite v robust US data.


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