FX Board: More mischief ahead of Yellen speech Friday
Key developments in FX today
- Euro was pounded for rather heavy losses on the day, particularly against a resurgent sterling, as crowded sterling shorts were squeezed in EURGBP and to a lesser degree in GBPUSD. EURUSD was down testing the top of the pivotal 1.1200/50 area.
- Elsewhere, the Scandies and AUD and NZD also picked up a solid bid against the hapless euro after weakness overnight in AUD and NZD was erased, but we're still in limbo for AUDUSD and NZDUSD until at least the other side of Friday's Fed speech.
- Gold has broken an important local support level above $1,330/oz and the next levels lower come in from $1,300-1,311/oz. Silver has led the charge lower in precious metals and the key support looks like the $18.00-50/oz zone next.
The next level of interest is perhaps the 61.8% Fibo down around 0.8430, which is the last gasp support ahead of the 0.8250 area post-Brexit vote bottom. 0.8500, meanwhile, may prove a psychological sticking point.
Will 0.8500 protect EURGBP from further slippage?
It is disappointing for the bulls that we couldn't even run up to test the 1.1400/25 resistance before this latest selloff, another sign of the lack of commitment to directional moves from an indecisive market.
EURUSD cast adrift by an indecisive market
No commitment until event risk out of the way
Spot gold staring down the barrel
John J Hardy is head of forex strategy at Saxo Bank