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Commodity Bloc Slide Continues - Opportunities in EUR, GBP vs AUD

Commodity Bloc Slide Continues - Opportunities in EUR, GBP vs AUD

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- No European data this morning; BoE’s Carney offers little for Sterling.

- US economic calendar sees several key events due.

- Rotation from commodity bloc into European currencies continues.

To keep up with the European data and news as the week goes forward, be sure to sign up for my distribution list.

Intraday Price Perspective

Commodity_Bloc_Slide_Continues_Opportunities_in_EUR_GBP_AUD_body_Picture_1.png, Commodity Bloc Slide Continues - Opportunities in EUR, GBP vs AUD

A scan of this morning’s best and worst performers via the Strong/Weak app shows that the selloff in the commodity currency bloc has restarted. This was a major theme from last week, and the European currencies benefited from lack of clarity out of the Federal Reserve; indeed, the Euro’s performance versus the Australian and New Zealand Dollars has eclipsed that of the US Dollar.

With significant economic event risk on the horizon for the United States – the November confidence reading – it is likely that USD pairs see additional volatility. Accordingly, while the momentum profile of the Australian Dollar is becoming increasingly bearish versus the Euro and the US Dollar, the EURAUD may present a better opportunity than AUDUSD over the next several hours.


EURAUD H4 Chart: August 22 to Present

Commodity_Bloc_Slide_Continues_Opportunities_in_EUR_GBP_AUD_body_x0000_i1028.png, Commodity Bloc Slide Continues - Opportunities in EUR, GBP vs AUD

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- The initial EURAUD long examined last week from A$1.4510 remains in play.

- Price has achieved initial flag extension targets taken on H4 at1.4586 (red 61.8% extension) and 1.4752 (red 100% extension). The final target remains 1.5020 (red 161.8% extension, 2013 high)

- The pause yesterday set up another flag on H1/H4 timeframes, and the new Fibonacci relationship sees an initial target at 1.5026 (blue 61.8% extension).

- Conflux of targets at 1.5020/26 too coincidental to ignore; will take profit and close entire positions there.

- EURAUD bullish bias retained above 1.4700/05 this week.

Here’s a look at the upcoming data out of the United States:


Commodity_Bloc_Slide_Continues_Opportunities_in_EUR_GBP_AUD_body_x0000_i1029.png, Commodity Bloc Slide Continues - Opportunities in EUR, GBP vs AUD

See the DailyFX Economic Calendar for a full list, timetable, and consensus forecasts for upcoming economic indicators. Want the forecasts to appear right on your charts? Download the DailyFX News App.

--- Written by Christopher Vecchio, Currency Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.