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Dollar Rebound Hits Key EURUSD, USDJPY Levels While SPX Tests Risk

Dollar Rebound Hits Key EURUSD, USDJPY Levels While SPX Tests Risk

2016-04-06 01:21:00
John Kicklighter, Chief Currency Strategist
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Talking Points:

  • Where USDollar may have recovered some ground Tuesday, EURUSD and USDJPY are still stationed at key USD-support
  • FOMC minutes and additional Fed speeches are the upcoming session's key - if moderate - event risk
  • Risk trends are in a prone technical position but the IMF's economic forecasts are unlikely to decide sentiment

Having trouble trading in the FX markets? This may be why.

The tension continues to build for the capital and FX market benchmarks. For global shares, the S&P 500 has further slid into the floor of its aggressive rising channel floor. With higher profile risk assets (junk bonds, emerging markets and commodities) already sliding lower, the risk for a break look particularly acute. Yet, the question returns to the transmission of sentiment in these markets. It has proven difficult to mount a trend across the financial system born of conviction - and certainly that threshold is higher when it is a risk aversion move that would run against the grain of the past five to six weeks. The data ahead looks to lack the authority to decide the market's fate with only the IMF's World Economic Outlook (WEO) on tap. Meanwhile the Dollar has recovered modest ground on aggregate, but the key counterparts in EURUSD and USDJPY are pressuring what is USD-support. Range versus break on a market-wide basis can set the expectations for individual pairs. Today's Trading Video looks at setups and their motivators.

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