29 November 2017 at 15:55 GMT
- EURUSD stumbles as EURGBP sells off
- USDJPY 'one of the highest beta pairs' to US PCE data
- GBPUSD pauses at final resistance before 1.36-plus cycle top
USD is trying to bounce back, but today belongs to the pound. Photo: Shutterstock
By John J Hardy
Please see today's FX Board PDF attached to this post for the latest Notes of Interest, Trend and Trend Heat readings, as well as a few thoughts on key chart developments below.
EURUSD has stumbled again, at least partially on the weight of heavy EURGBP selling on yesterday's supportive Breixt divorce bill agreement-in-principle announcement, though the US dollar has also been resilient on the day. The EURUSD bulls are disappointed by the price action taking us below 1.1850-60, but the tactical rout doesn't start to look like a reversal until we are fully through 1.1800.
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Source: Saxo Bank
USDJPY has sloshed back higher above the pivotal 111.75-112.00 area, giving the bulls their first argument in favour of a test back higher, though it would only take a close back in the lower range today to neutralise any immediate significance of today's rally.
This is perhaps one of the highest beta pairs to the US PCE inflation release tomorrow after today's bond selloff in the US (on Fed chair Janet Yellen's jawboning) set the pair in motion through 112.00 briefly. A positive inflation surprise from the US – or continued bond selloff regardless of the print – is likely needed to put more pep in the greenback's step.
The rally has so far paused around the 61.8% Fibo of the prior selloff rally, perhaps the last notable resistance ahead of the 1.3600-plus top.
— Edited by Michael McKenna
John J Hardy is head of FX strategy at Saxo Bank