04 October 2016 at 14:25 GMT
By John Hardy
Key developments in FX today
- Today has been all about the US dollar's relatively broad strength, versus the major European currencies and Japanese yen in particular, while the hold out commodity dollars have refused to yield much ground thus far. The breaching of key technical levels should inject some much needed energy into activity in coming sessions as the move must either thrive further or fail.
- On the attached FX Board, note all fo the crosses of major USD pairs to new USD positive trends and look for a hold of today's moves to confirm.
EURUSD pressing hard on the 200-day moving average that has supported for some weeks now - with the pair so bottled up in the range for so long, a break lower could develop considerable energy - the next focus lower still be the 1.1000 area and the nominal lows from the post Brexit weeks just below there.
With the JPY losing considerable air today and yields generally a bit higher recently while the market has brushed aside Deutsche Bank systemic fears, it looks like the market is jumping at the chance to get short of a negative yielder like the Swiss franc, which was sharply lower again versus both the EUR, and of course the USD today. This has been one of the most bottled up pairs in chart history and could likewise (as with EURUSD ) develop considerable energy on a notable break of the next layers of resistance - locally 0.9900/50, but especially parity in the bigger picture.
The descending trend-line has given way and the action today took the pair into the daily Ichimoku cloud, with the top of that cloud at 103.25, a break of which could lead to a spurt higher as we establish a range toward 105.00-107.50 on a stronger USD.
New modern era lows below 1.2800 today for GBPUSD, with round figures clearly the theme on these breaks as 1.2750 saw a bit of magnetism intraday. The next level lower is perhaps 1.2500 and the 1.2800 prior support is the nominal resistance.
Gold likewise suffering on the stronger US currency today, and the very important 1310/00 level giving way with a bang today. That zone becomes resistance as the focus shifts lower to the 200-day moving average rising quickly, a 61.8% Fibo (of move from 1200 low to <1400 high not shown here) near 1267 and then the 1250 level - a pivotal round number and the 38.2% retracement of the entire rally off the 1050 area lows.
— Edited by Clemens BomsdorfJohn J Hardy is head of FX strategy at Saxo Bank