Article / 29 August 2016 at 14:30 GMT

FX Board: Greenback's gain is a loss for EUR, CHF, GBP

Head of FX Strategy / Saxo Bank
  • USD crosses the day's major players as greenback rallies
  • EURUSD reverses through key 1.1200 pivot zone
  • Strong US data could send EURUSD to 1.10

New York
At a crossroads: Friday's Fed speech was taken as bullish on the US economy and policy normalisation, but this week's jobs data are key to continuing the rally. Photo: iStock

By John J Hardy

Key developments in FX today

  • The dollar stayed on the strong side after Friday ended in a USD surge, forming a pronounced bullish USD reversal in most pairs. The greenback's strength today was most pronounced versus the European majors, with GBPUSD crushed back below 1.3100 and EURUSD below the 1.1200/50 pivot zone. USDCHF, however, has seen the most violent turnaround since early Friday level as EURCHF has been back teasing the top of the range.
  • From here, the USD technical outlook looks good, but the market has often lacked conviction in recent weeks and uncooperative data could once again frustrate the market's attempt to sustain a directional move in the USD.
  • There was little to go on besides the USD story, though some non-USD JPY crosses did show signs of turning lower after sprinting higher to new local highs today (EURJPY and GBPJPY, for example); it's too early to tell whether this is significant. 


EURUSD has reversed lower through the key 1.1200-plus pivot zone and may be staring down the 1.1000 area quite soon on supportive US data later this week, with local action potentially corralled by the 61.8% Fibo retracement and 200-day moving average down near the 1.1100 area.


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Source: Saxo Bank 


USDCHF has posted an impressive reversal from last week's lows, with both USD strength and CHF weakness independently evident. The next big area to the upside north of the 0.9800-plus congestion area is the 0.9950/1.0000-plus zone that has held the action back since February.

Source: Saxo Bank 

Bears are happier with the AUDUSD chart with Friday's reversal and breakdown through 0.7600/0.7575, but will want follow-up action quickly to the downside as the prior choppy rally regime was an ugly experience for both bears and bulls.

Source: Saxo Bank  

— Edited by Michael McKenna

John J Hardy is head of FX strategy at Saxo Bank

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FX Board for Monday, August 29, 2016


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