News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/v6RGICQvge
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/rws9LHJV3E
  • RT @FxWestwater: Japanese Yen Forecast: JPY Crosses Eye BoJ, CPI as Haven Flows Bolster Yen Strength Link: https://www.dailyfx.com/forex/fundamental/forecast/weekly/jpy/2021/09/18/Japanese-Yen-Forecast-JPY-Crosses-Eye-BoJ-CPI-as-Haven-Flows-Bolster-Yen-Strength.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https:/…
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/FVisZuTP6M
  • Stocks appear to be in a corrective phase but could get put to the test; levels and lines to watch in the days ahead. Get your weekly equities forecast from @PaulRobinsonFX here: https://t.co/H1BaTlIHjY https://t.co/zP3mjfslSD
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/Of1thU4zXw
  • Further your forex knowledge and gain insights from our expert analysts on AUD with our free guide, available today: https://t.co/p2FhEwym1E https://t.co/MjiYB85TSF
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/fIO9TP7D62
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/Xja8DHUqlH
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/9po5Lg4vnR
Gut Check for EUR/USD Reversal; GBP/USD Looks to Exit Range

Gut Check for EUR/USD Reversal; GBP/USD Looks to Exit Range

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- The return of liquidity to FX markets has helped the US Dollar wipe away its losses from last week.

- Meanwhile, Brexit headlines are turning up favorably for the Sterling.

- Retail trader sentiment points to continued mixed trading conditions in the US Dollar through the end of this week.

Upcoming Webinars for Week of November 26 to December 1, 2017

Thursday at 7:30 EST/12:30 GMT: Central Bank Weekly

Thursday at 8:15 EDT/13:15 GMT: Live Event Coverage: US PCE (OCT)

See the full DailyFX Webinar Calendar for other upcoming strategy sessions

The return of liqudity to FX markets this week has meant that price discovery has been in full force. Accordingly, some of the moves made by the majors last week, in particular EUR/USD, have been reversed as some of the optimism around the Euro-Zone PMI reports may have been overdone. Concurrently, with headllines about the progress of tax reform legislation in the United States starting to turn hopeful again, the DXY Index has found all its needed to justify a reversal of last week's losses.

Chart 1: DXY Index Daily Timeframe (July to November 2017)

Gut Check for EUR/USD Reversal; GBP/USD Looks to Exit Range

The DXY Index found support near the October swing lows around 92.80, piercing the low in what could be described as 'illiquid' conditions - thereby suggesting it's not a true representation of the market. As such, we find ourselves maintaining a slightly bearish bias towards the DXY Index with a clear caveat: if price breaks back above 93.48 (October 26 bullish outside engulfing bar low and daily 13-EMA) then the downtrend from the November 7 high is likely over.

Chart 2: EUR/USD Daily Timeframe (July to November 2017)

Gut Check for EUR/USD Reversal; GBP/USD Looks to Exit Range

After clearing out the October 26 bearish outside engulfing bar high last week, EUR/USD has been hit negatively by the return of liqudity to markets. There haven't been any material developments to suggest anything other than the moves last week were driven by the holiday conditions, little more. While the uptrend from the September low is still in place, a close below 1.1835 today could signal that the EUR/USD reversal is finished in the near-term.

Elsewhere, we're watching GBP/USD as a break of the multi-month consolidation may be afoot. Price broke down into the 1.3018 to 1.3340 range on October 1 and has not traded outside of it since then.

Chart 3: GBP/USD Daily Timeframe (June to November 2017)

Gut Check for EUR/USD Reversal; GBP/USD Looks to Exit Range

The nearly two months of consolidation haven't been without drama: neither a BOE rate hike nor questions over UK Prime Minister Theresa May's leadership have proven meaningful enough to force a reckoning. However, now that it appears the UK is willing to accept the €100 billion liability for leaving the EU, the Brexit negotiations appear to be turning earnestly in the right direction. A close through 1.3340 today would suggest that a more bullish bias across the GBP spectrum would be appropriate.

Read more: FX Markets Look to Busier Calendar after US Holiday Week

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

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

DISCLOSURES