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GBPUSD - Election RangeThe average range for GU in an election week is 2.41% (roughly - records from the 70's are less reliable). A short would need to aim at the 1.3 area as maximum first T1 - that consolidation pattern has made some strong resistance to get through. In the expected weekly range, we are currently in no man's land, so nothing but a quick scalp would be worthwhile in this area. If for some reason we dipped over the next few days a long banking on a Conservative victory around the 1.3 mark would be worthwhile. More likely, we will grind higher into Thursday and there will be an opportunity to fade the pop. For now, I hope that is useful to see the framework I'm operating in for Cable this week. You'll note the R4 Monthly Pivot high in our 2.41% expected range. R4 Pivots are interesting to look at - they are at extremes of range so two things often happen if the price reaches them - a) It normally mean reverts for the next few weeks as hitting R4 means the pairs usual range has been far exceeded. b) It often signals a proper breakout/ change in direction. The momentum required to push price this far means a lot of the big money has been involved. While I would trade the fade for now, if we hit R4 it is another sign that the bottom around 1.2 is going to be a major multi-year bottom.
by ForexVox
USDJPY tests the lower channel boundsThe USD is the worst performing G10 currency as we come to the final days of December and the end of the decade. DXY broke below the 96.750 level (US dollar index) which is its lowest in 6 months. The catalyst of the weaker dollar has likely been risk appetite holding up since both the US and China said that they were ready to sign a Phase 1 deal; as well as the US Federal Reserve’s continued repo operations, which have recently been undersubscribed. US Yields are expected to extend their grind higher in Q1 and a weaker USD should continue to support Commodity strength. Gold & Copper continue to be bullish and have established a base. A weaker USD and stronger Commodities are expected to support Emerging Markets equity strength, with MSCI EM China crucially now also breaking higher.
by ForexVox
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AUDUSD - gains on weaker US dollar.Inflation expectation is creeping higher in Australia. Currently, Core CPI is at 1.60, CPI Housing Utilities is increasing, the inflation rate is currently 1.7 and up 0.1 from September. With the US CPI coming out today better than expected but less than the previous reading traders have sold the US dollar. The likelihood is that the Fed keeps interest rates as they are today at the FOMC meeting but narrow the gap between the US and Australian rates in the early part of 2020. The AUDUSD has started to create higher highs and higher lows and this could continue if the trade war news and tariffs, in general, don't cause any further global economic damage.
by ForexVox
EURUSD gets a bid off better data.Germany's trade surplus widened to EUR 21.5 billion in October 2019 from EUR 18.7 billion in the same month of the previous year. The ZEW Indicator of Economic Sentiment for Germany jumped 20.7 points from a month earlier to -2.1 in November 2019, the highest since May and easily beating market expectations of -13. Euro is currently enjoying the rise in economic data out of Germany. However, sentiment across the board is for a weaker Euro Area with permanent monetary operations ongoing since September. Low inflation and zero interest rates.
by ForexVox