EURCAD – Runaway to 1.5000?

EURCAD – Runaway to 1.5000?

Chart Of The Day

The gap open in the euro that blasted the pair through the 1.0900 level continues to exert its force higher even into what is likely to be a generally dovish ECB meeting this Thursday. In te meantime, the loonie has been hammered by the double whammy of weaker oil prices and a new set of tariffs against Canadian lumber just issued by the Trump administration.

Fears of a trade war with US biggest trading partner have some traders concerned that USDCAD could push towards the key 1.4000 level as capital flees from the Great White North. Even without any additional tension, the slow drift lower in oil could hurt the loonie for the foreseeable future.

All of which is creating a very powerful rally in EURCAD that could see the cross hit the key 1.5000 mark within the next few days. A runaway gap is a rare technical formation but when it occurs it can lead to powerful rallies that could last for days. EURCAD continues to exhibit all signs of such a setup.

EUR/CAD – Will 1.5000 Hold?

EUR/CAD – Will 1.5000 Hold?

Chart Of The Day

Oil appears to have found a near term bottom at the $25/bbl level and that has helped to keep loonie steady for the past few weeks as the pair has come way off its recent highs of 1.4600 and that in turn has driven EUR/CAD lower towards the key 1.5000 level. In a battle of two weak economies the euro is getting even more battered that the loonie as the data from the EZ goes from bad to worse.

Today’s IFO report which showed a very large 4 point decline in future expectations is only the latest data point to shows that German economy is coming dangerously close to a recession. That’s likely to keep euro under pressure for the near term as markets begin to anticipate even more easing from the ECB.

Meanwhile tomorrow’s oil inventory numbers could be key drivers of CAD trade. If the pressure eases the loonie could see a strong pop that could send it towards the 1.3500 level and that in turn could push EUR/CAD through its double bottom support at 1.5000

EUR/AUD – On the Way to 1.5000?

EUR/AUD – On the Way to 1.5000?

Chart Of The Day

From the price action in the EUR/AUD pair, you would never know that euro was having any problems with Greece. The cross is now within striking distance of multi-month highs and may push towards the key 1.5000 level soon. The reason for the strength has been twofold. The market is generally complacent about the Greek crisis believing that an 11th hour solution will be worked out and on the Aussie side the market is convinced that the RBA will continue to cut rates as the Chinese economy slows even further.

Tonight the market will get a chance to test its thesis as the HSBC Flash PMI data and the Flash PMI readings from Europe all hit the screen. Analysts are actually looking for a small bump of improvement in Chinese readings from 49.2 to 49.4, but if the data misses and sinks further contractionary territory the Aussie could get hammered. On the other hand if the EZ data remains above the 50 boom/bust line and even improves a bit, the euro could get a push higher leading to a surge in EUR/AUD that could take the pair to 1.5000

Technically the pair has very little resistance until the spike highs at 1.5250 and support lies at the 1.4300-1.4500 region.

GBP/USD – Will 1.5000 Cap the Rally?

GBP/USD – Will 1.5000 Cap the Rally?

Chart Of The Day

Fundamentals
The pound has finally found a bid after scraping bottom for the past month or so. Over the past week the pair has put in a impressive rally and now stands just a few pips away from the key 1.5000 level. The move higher has been driven mainly by anti-dollar flows as US data continues to disappoint. But cable is also getting a lift form the consistently good UK data. Tomorrow will be a true test of just how strong the UK economy really is. The market will get a glimpse at the key labor metrics including claimant count, average earnings and unemployment rate. If the numbers all beat the pair could take out the 1.5000 level in a hurry.

Technicals
Technically the pair has made a strong double bottom at the 1.4600 figure but now faces massive overhead at 1.5000 and only a move through 1.5200 would confirm an upside break out.

GBP/CHF – Can it Break Above 1.5000?

GBP/CHF – Can it Break Above 1.5000?

Chart Of The Day

Fundamentals

GBP/CHF has been inching in towards the key 1.5000 level, but the most of rally has been due not to pound strength but to franc weakness. One of the unintended consequences of the recent ECB rhetoric about negative rates has been a marked decline in the Swiss franc despite risk aversion fears sweeping through the market. The reason why the Swissie has fallen is because many speculators anticipate that the SNB will have to move to negative deposit rates as well in order to keep the EUR/CHF peg anchored well above the 1.2000 mark. This week the market will get a looks at the EZ flash PMI data which provides the most recent view of economic activity and if those reports show further deterioration the rate cut from ECB will be almost assured which is likely to drive Swissie lower as well and help push GBP/CHF over the 1.5000 barrier

Technicals

The GBP/CHF pair faces key resistance at the 1.5000 level, but a break above opens the prospect of a run towards recent highs at 1.5100 and then further to 1.5300. The downside is supported by the 1.4800 and 1.4700 levels where there is a firm base.

EUR/CAD – Will Break of 1.5000 Hold?

EUR/CAD – Will Break of 1.5000 Hold?

Chart Of The Day

Fundamentals

Mario Draghi’s casual admission that the ECB would consider a rate cut at its next meeting in June, caused a complete reversal in the euro and the euro complexes sending EUR/CAD through the 1.5000 level. If the ECB chief wanted to jawbone the euro he certainly succeeded as the pair backed off the critical 1.4000 level in the reaction to his remarks. However the last time the ECB cut rates the reaction was temporary as the pair shrugged off the move and continued to move higher. The fact of the matter is that for euro to really see a decline the pair must see some strength from the dollar and the Fed has not given anyone any reason to get bullish the buck. The EUR/CAD story is similar. The Canadian economy must produce strong signal of recovery in order for the BOC to get more hawkish. That’s why tomorrow’s Canadian employment figures could be key. If the data surprises to the upside it could seal the break of the 1.5000 and push the cross towards the 1.4500 level.

Technicals

Technically the EUR/CAD cross has seen the 1.5000 level as the key breakout/breakdown level over the past several months. The pair does have support near the 1.4900 figure but a a break there could open a full on liquidation towards 1.4500. To the upside only a recapture of the 1.5200 level negates the bearish bias.

EUR/AUD – Targeting 1.5000 Support?

EUR/AUD – Targeting 1.5000 Support?

Chart Of The Day

Fundamentals

Perhaps one of the more surprising stories of the past few days has been the strength of the Australian dollar. As we noted earlier the strength is a function of three factors. First, the market is becoming more and more convinced that the RBA easing cycle has ended with the rate curve no longer pricing in any further cuts. That leaves the yield on the AUD/USD relatively secure and allows the pair to act as conduit for carry trades once again. Secondly, the anticipated fallout from the slowdown in China has not had the negative impact that many analysts feared. Australia has been able to somewhat rebalance its economy away from mining and exports to services and retail as evidenced by last month’s strong employment report. While still vulnerable to a sharp slowdown in economic activity from China, Australia is clearly able to weather the drop off in demand better than the bears had thought. Finally, the late shorts that have opened up sell recommendations this week have only served as fodder for a short squeeze rally. Aussie still faces stiff resistance above the 9100 level, but if general risk appetite improves as geopolitical tensions ease the pair could quickly bust through the offers and move towards 9200 by the end of next week. In the meantime the euro is under pressure both from the strengthening dollar and the possible weakness in Eurozone economic activity. Tonight’s EZ PMIs will provide the freshest measure yet of demand on the ground and if they show deterioration EUR/AUD could be heading to 1.5000.

Technicals

Technically EUR/AUD is in a downtrend having made a series of lower highs and is now targeting the 1.5000 support area. A break below would open a run towards 1.4700 while only a rally above 1.5500 alleviates the bearish bias.

EUR/AUD – Will 1.5000 Hold?

EUR/AUD – Will 1.5000 Hold?

Chart Of The Day

Fundamentals

Today is the most important day of the week for Aussie and the Australian crosses as the market gets a look at the Australian employment numbers. The Australian employment report has shown contraction for two months in a row and now market expectations are for a rebound of 15K new jobs. Should the number meet or beat expectations it would confirm the recent move of the RBA to a neutral rather than dovish stance and will likely help push the Aussie through the critical 9100 level. The Aussie could strengthen in particular against the euro after ECB officials suggested today that they are seriously considering negative rates. That is why the 1.5000 level is going to be critical tonight as the markets decide whether the Aussie recovery is sustainable.

Technicals

EUR/AUD is now at critical 1.5000 support and a break there opens a run towards the 1.4800 level while a take out of the 1.5200 figure suggests a possible move towards the 1.5500 level.