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
Mixed
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
  • - It is the end date which signals that the conditions for an increase in policy rates are getting closer, the precise sequencing and timing will, of course, require careful guidance when the time has come $EUR
  • ECB's Schnabel - As the inflation outlook brightens, it becomes less important how much a central bank buys or when a reduction in pace of net asset purchases states, but rather when such purchases end $EUR
  • Join @CVecchioFX at 7:30 EST/11:30 GMT for a webinar on developing a strategy for major event risk. Register here: https://t.co/D8DAmLpkuS https://t.co/mIuN0EGhBY
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here: https://t.co/D8DXSAdpqC https://t.co/odzyc8Qi8Y
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sIHrP https://t.co/eaA8ZI6DVu
  • Chinese property development company Sinic Holdings (2103) - Down 87%...@DailyFXTeam #contagion #Evergrande https://t.co/h5mfwqGASZ
  • 🇪🇸 Balance of Trade (JUL) Actual: €-1.60B Previous: €-0.98B https://www.dailyfx.com/economic-calendar#2021-09-20
  • Heads Up:🇪🇸 Balance of Trade (JUL) due at 08:00 GMT (15min) Previous: €-0.98B https://www.dailyfx.com/economic-calendar#2021-09-20
  • Fitch on China Property Developers - View will turn negative if sales in H2 21 fall below that achieved in H2 19 and/or if sharp fall follows through to H1 22 - Government policies in sector remain tight and show no sign of imminent loosening
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0uF2Ct https://t.co/B0Y3XJhkRS
EUR/USD Takes a Step Towards Reversal, Pound Traders Beware BoE

EUR/USD Takes a Step Towards Reversal, Pound Traders Beware BoE

John Kicklighter, Chief Strategist

Talking Points:

  • US equity indexes hit a simultaneous record high, but risk conviction is flagging with momentum and consistency
  • EUR/USD dropped below 1.19 to weigh the first line of trendline support and subsequently raise speculation of reversal
  • Top event risk ahead is the BoE rate decision leveraged with strong CPI data; but US CPI, Aussie jobs and SNB decision matter

As EUR/USD's slide breaks trendlines, are retail FX traders positioning for a full reversal? How are speculators trading the Pound crosses with the BoE rate decision on tap? See up-to-date positioning data for both on the DailyFX Sentiment page.

The risk drive is fading while the monetary policy theme looks ready to wrest back speculators' attention. This week started with a strong and explicit jolt for investor appetite. The gaps on benchmarks like global equity indexes as well as the uniformity of 'risk on' across the variety of sensitive asset classes supported the targeted focus. Yet, that drive was always bound for difficulty. With so many assets trading at expensive levels and underlying fundamentals showing little material improvement, it was up to speculation to carry the torch. And, their appetite is increasingly met with skepticism as absent momentum forces traders into shorter and more loosely held positions. The lack of conviction was fully on display this past session as many risk assets were little changed or actually slightly off the previous day's levels. The clear champion for bulls were the US equity indexes - S&P 500, Dow Jones Industrial Average, Nasdaq Composite - which all closed at record highs. That said, their performance barely registered in the green.

Regardless of what pair or asset class where are in, we cannot afford to ignore sentiment trends. It is a theme that is too comprehensively influential and has in turn seen a severe imbalance in exposure towards risky assets. Yet, as we await for resolution - or another dose of anesthesia - there are other themes that can take over the market's interest. Monetary policy has been a consistent driver, particularly for the FX market. That is certainly true of the two benchmark currencies throughout 2017. The Euro's surge through the year and the Dollar's tumble have reflected not current policy disparity but rather expectations moving forward. The US central bank which had stockpiled speculative premium for its early move to normalize policy and introduce four rate hikes has recently found the market raising questions as to how committed to their pace they can be going forward. Clearly, premium afforded this currency has significantly deflated; but the Fed may still keep to its forecast of a third hike before the end of the year if inflation materializes. That said, the US CPI figure for August is due today. That economic boost is needed if the tentative EUR/USD break below 1.19 - a move that took out a medium-term trendline support - can evolve into a true reversal.

Registering higher on the monetary policy impact scale is the upcoming Bank of England rate decision. While this meeting is highly unlikely to end with an actual change in the benchmark rate or its unorthodox stimulus program, speculation has been significantly leveraged heading into the event following the CPI readings earlier this week. An inflation reading near the top of the BoE's tolerance band gives justification to tighten if the MPC wants it. The market is clearly seeing a possibility that a hike may be in the near future with strong rallies for the Sterling with pairs like GBP/USD, EUR/GBP and GBP/JPY. I have preferences for which pairs would be better for dovish or hawkish outcomes and you should as well. Meanwhile, the cryptocurrency space (Bitcoin, Ethereum, Ripple) have started to put serious pressure on increasingly familiar technical patterns which points to the presence of a dominant market participant. And, in commodities, gold has extended its retreat while oil may be on the cusp of a bullish break. We discuss all of this in today's Trading Video.

To receive John’s analysis directly via email, please SIGN UP HERE.

EUR/USD Takes a Step Towards Reversal, Pound Traders Beware BoEEUR/USD Takes a Step Towards Reversal, Pound Traders Beware BoE

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

DISCLOSURES