The US dollar continues to ride high this morning following yesterday's battering of the single currency at the hands of a dovish European Central Bank governor.
Article / 19 May 2017 at 14:42 GMT

FX Board: Market tries to get back on its old tracks — #SaxoStrats

Head of FX Strategy / Saxo Bank

By John J Hardy 

Key developments in FX Today
  • The market continued to try to pick up the pieces after risk sentiment bottomed out early yesterday in the wake of Wednesday's one-off, large (only large relative to recent ridiculously low-volatility standards) deleveraging move. JPY crosses are providing the most amplitude to risk sentiment, led by EURJPY, due to the recent positive spin on the EU economy's prospects.
  • Elsewhere, sterling has pushed higher versus the USD again and back above the 1.3000 level, but at the same time is back in the danger zone against the strong euro in the 0.8600 area, which looks like an upside trigger zone if the action can't stay below.
  • Most of the other major currencies failed to impress with notable moves, but the USD was generally weak, even against the commodity dollars.

EURUSD marched to strong new highs as the euro seems to enjoy the most strength when risk sentiment improves as the pro-euro story has become a pro-cyclical one. The next resistance levels are somewhat poorly etched, but arguably a bit above 1.1300 and then not until the 1.1500 level and nominal highs above from 2016.

Source: Saxo Bank 

EURGBP is back in the danger zone around 0.8600 after finding strong resistance in this area earlier this week - not a promising sign for the bears. A rally through this zone could see the pair quickly threatening the old 0.8800 area and even beyond.
Source: Saxo Bank 
Yesterday, AUDUSD bears hopes were raised by a relatively compelling shooting star candlestick that materialized at new local highs and as the pair entered the key 0.7450-0.7500 zone. But this failed to impress upon the action today, keeping the situation for bears fraught, as a pull through this zone would sideline expectations for downtrend continuation for now.
Source: Saxo Bank 

— Edited by Jack Davies 
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FX Board for Friday, May 19, 2017


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