AUD/USD, EUR/USD Test Range Lows, NZD on the Edge
- EURUSD seeing follow through on yesterday's hammer.
The US Dollar's rally is starting to feel a bit long in the tooth now, even after the Bank of Japan's wildly overhyped easing measures propelled USDJPY through ¥114.00 yesterday. Although the buck gapped higher to start the week, a lack of follow through and signs of technical reversals raises the alarm a few days ahead of major event risk.
Three pairs in particular - AUDUSD, EURUSD, and NZDUSD - have all fallen to and tested their October swing lows either yesterday and today; but since then, reversal candles (hammers, inside days, engulfing bars) have started to form. Perhaps the gap higher in USDJPY and the USD-complex was an exhaustion gap.
The New Zealand Dollar looks particularly weak, sitting on the verge of declines in NZDUSD as well as AUDNZD. If anything, AUDNZD offers some insight as to which high beta FX name to use: for now, NZD appears to be staring off the edge of a cliff.
--- Written by Christopher Vecchio, Currency Strategist
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