08 June 2016 at 14:19 GMT
- Dollar weakness continues, precious metals bid
- Kiwi boosted by soft USD, threat of non-dovish RBNZ
- Silver support at $16/oz holds the line
The kiwi is getting a solid bid ahead of tonight's RBNZ meeting. Photo: iStock
By John J Hardy
Key developments in FX today
- The market traded in generally narrow ranges with a general theme of USD weakness as EURUSD is up challenging the 1.1400 level, USDJPY dipped back below 107.00, and the commodity currencies were generally bid higher (particularly the kiwi as bears fret the risk of insufficient dovishness from the Reserve Bank of New Zealand at tonight's meeting).
- Precious metals were the big movers on the day as the recent strong commodities theme and weaker USD suddenly saw gold and especially silver charging higher.
- See more notes in the attached FX Board in addition to the charts below.
EURUSD is pulling to the last major Fibonacci level just above 1.1400 here, with a pull through this area possibly threatening the old 1.1500 range high, which is also the last notable Fibonacci area.
Until then, the bearish case is tentatively intact if the lower Fibo retracement near 1.1420 holds.
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Source: Saxo Bank
NZDUSD has suffered a squeeze on shorts after the recent bearish reversal failed to see the pair pushing lower. The risk is of a continuation if the highs of the year can't hold the pair back in the wake of tonight's RBNZ meeting.
The next resistance above looks like perhaps 0.7180.
A rip-roaring rally on the recent resurgence in the commodity complex and after the structurally critical 16.00 area survived a recent assuault. The upside swing area if this is to blossom into a full test of the 18.00-plus highs is the 17.15-plus area – the 61.8% Fibo retracement.
Bears will want the 17.00/25 area to repulse further rally attempts and then a full reversal of today's action to argue for lower levels.
— Edited by Michael McKenna
John J Hardy is head of FX strategy at Saxo Bank