A meaningful beginning of the week was the Australian Dollar, which raised AUD/USD to new daily levels above 0.7100.
In these last couple of sessions Spot continues to regain portion of the surface lost, recovers the crucial 0.7100 handle while discovering proper dispute in the 0.7000 area.
From the front situation, the newest CFTC report shows that the AUD Net Risky Shorts have jumped to the most significant levels since the week ended last November 2018 on March 19.
The wide risk-cravings trends in high-beta currencies and the currency Bloc proceed to drive the sentiment where advancements in trade disputes between the United States and China stay the almost exclusive impetus for price movements.
Recent RBA minutes verified that the central bank is moving towards a more stable position, and while market attendees proceed to lower prices somewhere in H2 2019, all of them still remain constant from the midterm viewpoint of AUD.
The EUR/USD is in a downtrend below the 200-day SMA. EUR/USD bulls are attempting to break above the 1.1330 resistance and the 100 SMA. The next key resistance to the upside is at 1.1400 level. Support is at 1.1290 level.
The pair is struggling to build up its rebound from the 6-week low and so it oscillates in a narrow range around 110.00. There was a bearish break below the 2.5-month-old rising trend line in the last week, meaning that the recovery is just a correction of the oversold conditions on the 4-hour chart.
The technical indicators are bearish on the daily chart, which supports the prospects of an increase in losses, which would be confirmed by a sustained break below the 109.70/60 support area. Under the mentioned range, an acceleration of the losses in the direction of 109.35, 109.00 and 108.75 is possible.
Around the mid-1.3200s in the last hour, the USD/GBP pair rallied around 80-85 pipes, without any solid follow-up.
After a low-level session of 1.3160, the pair saw a rapid intraday reversal in response to headlines that on Tuesday UK PM Theresa May will be forcing MV3, although official sources instantly refused it, keeping a lid on any further.
With the new news of the Brexit as an exclusive driver of the British Pound's sentiment, a follow- up to the restoration of the 1.3300 handle, now the probability is clearly evident in the face of revived US dollar sales and a lack of applicable market driving economic updates.
The US major stock indices are open, and the major indices are in the red:
Yields in the US have turned lower after earlier modest gains:
The pair reversed the decline to 1.3400 by the middle of the European session and is now trading at more than 2-week highs, including the 61.8% Fibonacci retracement of the 1.3664-1.3086 downtrend.
There was a good rebound in the past week from the short-term break in resistance, which is now supportive, and the bullish oscillators on the daily chart support the prospect of further gains.
A sustainable move above 1.3440 would reinforce the positive outlook, favoring a move above the month high towards 1.3500. Resets can thus be perceived as buying opportunities, as long as they are limited by the 50% Fibo level by 1.3070/65.
At the start of the week, the Sterling was subjected to a further downswing stress and raised EUR/GBP to new peaks in this 0.8600 area.
Although the bullish attempt seems to have met with hard resistance around the milestone, the European cross overturns the solid retreat of the Friday.
PM May will, in the interim, be in the Chamber of Commons later today before debating her latest visit to Brussels. In addition, Wednesday may be an essential meeting because a series of ' symptomatic votes ' proposed by the House of Commons by MPs O.Letwin, D.Grieve and H.Benn to take over negotiations is anticipated to take place.
The AUD is the strongest when the North American Session ends. GBP is the weakest. The USD is small and mixed. In total, the main currencies have relocated 0.47% together with the largest drivers, GBPAUD. The USD has shifted to 0.06% or below EUR, CHF, CAD and NZD.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, notes that the EUR/GBP failed to hit 0.8707 on the 55-day MA and so the focus has been on the recent low of 0.8471 and the 200-week period -MA shifted from 0.8397.
“Initial resistance lies at .8722 (22nd February high) and.8842 (200 day ma). While capped here, a negative bias remains.”
“The market is expected to struggle on rallies to the 200 day ma at .8842, and only above here allows for a move to the October .8941 high, which is expected to contain the topside.”
According to Commerzbank analyst Karen Jones, the 55 days ma and 2 months upward trend in USD/JPY has destroyed at 110.25/33 and it is expected that the sale will be correct but so far finish.
“The next corrective ‘target’ is the 38.2% retracement at 109.06 and there is scope for the 50% retracement at 108.11. The base of the cloud lies at 108.90.”
“Immediate resistance is 111.45 200 day ma, the 112.13 March high and 112.23, the 6th December low, the 112.43 55 quarter moving average and recent high at 113.71. We have a 5 month resistance line also at 113.01.”
This index adds to latest gains over the 96.00 handle, which runs through the 96.60 pollution area, where the 10 days, 21 days and 100 days are converged. A new tour to the area 97.00 will stay well on cards, while over the crucial 200-day SMA at 95.86. More peaks will be on the 97.70/75 range in mid-February at around 97.40 prior to 2019.
The EUR/JPY recorded a slight gain at the beginning of the week, after 3 days of downward correction. The pair was sold from the high of the past week from the range of 126.80 to below 124.00 and with the break below the short-term support line, the door is open for more pullbacks. A sustained movement below this range (124.50) gives way to mid-January low of 123.40 Friday.
The common currency has been able to absorb some of the recent pessimism, with EUR/USD climbing to over 1.1300 at daily peaks.
The pair recorded a slight gain after a pullback for 2 consecutive days, but purchases increased at a lower level, allowing the 1.1300 to be overcome.
The poor PMI results of the core Eurozone combined with the increase in demand for the greenback left the pair in the second half of last week. The strong downward correction followed, after the pair had reached the multi-week high in the middle of 1.1400 following last Wednesday's FOMC meeting.
From the economic calendar, the German IFO results await us next, while investors continue to pay attention to the Brexit negotiations and the reversal of the 3-month 10-year US yield curve.
Market participants have processed the dovish attitude of the ECB. The focus is now on broader risk trends and USD momentum. The economic performance of the euro area is also in the center of attention as it has an impact on the prospects of the ECB's new assessment of monetary policy. The market now assumes that there will not be a first rate hike by the central bank until Q3/Q4 2020.
The USD/JPY pair has been experiencing a humble recovery after having revived the lows for several weeks, and are now trying to construct on the strength further than the main mental 110.00 mark.
Following another round of deceptive economic data for the Eurozone and causing a new wave of worldwide risk-aversion trade, there emerged a close-knuckled recessions indicator-reversing the US bond yield curve.
However, the increase was lacking in solid bullish belief and stayed capped behind the restrained US dollar price action as traders are awaiting a new advancement in trade talks between the United States and China.
In the lack of significant market-related economic releases, the wider sense of market risk and price dynamics in the USD market could proceed to represent on the first day of a current trade week as the main motivators of pair momentum.
Commerzbank analyst Karen Jones explains that the GBP/USD has fallen to and has recovered from the 55-day MA over the past week as the 200-day MA is supporting at 1.2980 and for the time being it can be assumed that the upward movement will continue to be preferred.
“The market recently challenged the 1.3363 July 2018 high, reaching 1.3382 before failing. Provided that dips lower are contained by the 200 day ma, our overall target remains the 1.3563 200 week ma.”
“Below the 200 day ma lies the double Fibo retracement at 1.2900/1.2895. This guards the recent low at 1.2772.”
Karen Jones, Commerzbank analyst describes that the EUR/USD pair has been attempting to split the downsloping trend, but the market went into merger mode and faced immediate resistance at 200 days ma.
“We suspect that it is trying to base but need to do more work – once above the 200 day ma this will target the 1.1570 January high together with the 55 week ma at 1.1610. We view 1.1176 as an interim low in place. Initial support lies at 1.1216 November low ahead of 1.1176 low.”
“Long term trend (1-3 months): Completed a falling wedge–target the 55 week ma. Then the 1.1815 September 2018 high on route to 1.20.”
At the beginning of Monday gold prices are bidding at about $1316. The precious metal has newly profited as world markets turned risk shifts after sluggish data from the United States sparked a sign of downturn to the biggest economy in the world.
The US Markit Purchasing Manager Index (PMI) print of Friday's sluggish print was the first time since 2007 to drag the 10-year treasury yields under three months bill. Cynics viewed it as an additional indicator favoring the downturn of the US economy.
Now traders can look forward to Fed lawmakers ' speeches, respectively the Chairs of the Federal Reserve Bank of Chicago and Philadelphia, to prove further bias on the part of the central bank in the US.
Asian stocks are moving through the morose shown at the end of last week as fear of worldwide growth begins to resound in the new week. Concerned about a downturn, bonds rallied on Friday, and we see a more comparable tone in the stocks at the beginning of the week.