DailyFX Roundtable: Pre-NFP Trade Setups & Key Themes for 3Q 2017

Talking Points:

- DXY Weakness to Persist as Fed Fund Futures Project 50/50 Chance for December Rate-Hike.

- Euro Retail Sentiment Hits Bearish Extreme; Faces Resistance Going Into July.

- USD/CAD Downside Risk Remains as BoC Changes Tune for Monetary Policy.

- Japanese Yen Outlook Mired by BoJ Easing; NZD/JPY Carves Golden-Cross Formation.

- AUD/USD Clings to Resistance Ahead of Reserve Bank of Australia (RBA) Meeting.

- EUR/GBP Sits Near 2017 Highs Even as BoE Governor Carney Softens Dovish Tone.

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The Euro has staged an impressive rally against its major counterparts as European Central Bank (ECB) President Mario Draghi highlights an improved outlook for the monetary union and declares ‘deflationary forces have been replaced by reflationary ones.’ However, EUR/USD retail positioning has pushes to fresh extremes going into the second-half of the year, with IG Sentiment showing 20.4% of traders are net-long euro-dollar. The ratio of traders short to long is at 3.9 to 1, and traders have remained net-short EUR/USD since April 18 when the pair traded near 1.05782.

USD/CAD breaks to fresh 2017-lows as Bank of Canada (BoC) Governor Stephen Poloz alters the monetary policy outlook and notes ‘the rate cuts from 2015 ‘have done their job.’ At the same time, AUD/USD sits near yearly highs ahead of the Reserve Bank of Australia (RBA) interest rate decision, with the pair at risk of facing near-term headwinds should Governor Philip Lowe and Co. merely attempt to buy more time.

Highlighted setups include DXY, EUR/USD, USD/CAD, USD/JPY, USOIL, EUR/AUD, AUD/USD, GER30, SPX500, AUD/JPY, NZD/JPY, EUR/GBP.

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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