Has EUR/GBP Peaked?

Has EUR/GBP Peaked?

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Has EUR/GBP Peaked?

Despite better than expected inflation and confidence data, the euro extended its losses today below 1.19. There’s some talk that the ECB could opt for a dovish taper next week to avoid driving the euro higher and while it is not clear if they feel this way, the momentum is certainly tilted downwards for the euro. Sterling on the other hand held up well in the face of U.S. dollar strength and this resilience triggered a massive reversal in EUR/GBP. Brexit may be on everyone’s minds but data from the U.K. was healthy with shop prices falling at a more moderate pace in August and mortgage approvals rising by the largest amount since March 2016. With that in mind, U.K. consumer credit grew at its slowest pace since April 2016, which is a sign of weakness. The most important event risk for the U.K. this week comes on Friday when the manufacturing PMI report will be released. The sharp rise in the CBI index reflects stronger manufacturing activity and if the PMI report confirms that, we could see EUR/GBP back down at 91 cents.

Technically, after rising to its strongest level since October 2009, EUR/GBP is poised to end the day below the first standard deviation Bollinger Band for the first time in 4 weeks. It now spars poised to move down to the 20-day SMA near 0.9135 and possibly even to 91 cents.

Has USD/JPY Peaked?

Has USD/JPY Peaked?

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Has USD/JPY Peaked?

Dollar bulls are struggling to keep their heads above water ahead of this week’s FOMC meeting. For the first time in 9 years the Federal Reserve is expected to raise interest rates and selling U.S. dollars could be the smartest trade. Most investors would normally look to buy a currency ahead of a rate hike but in the case of the Fed, their well-telegraphed decision could mean more losses for the greenback. We have already seen investors bail out of their long USD/JPY trades as the currency pair carved out a bottomed in early December. With only a few more days to go before the historic announcement there’s very little chance of a strong pre-FOMC dollar rally. Everyone who wants to be long dollars ahead of the rate decision is probably long already with more traders moving to the sidelines as the big day nears.

However on a fundamental and technical basis, we don’t expect major losses in USD/JPY. 120 is a very important support level and if that is broken 119 should hold. Resistance is at 122.25, a former support turned resistance level.

USD/ CAD – Peaked?

USD/ CAD – Peaked?

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Fundamentals
USD/CAD has turned from one of the sleepiest currencies in the G-10 to one of the most volatile as the price of oil has effectively taken the unit hostage. But lately the swing in oil prices are having less and less impact on the pair as crude settles between $40-$50/bbl. Unless there is another sharp leg to the downside, it appears that the move in the loonie may be over for now with the pair having set a near term top at 1.2800 level. With the market paying less attention to the swings in WTI, the loonie is likely to move back to trading on fundamentals. Tomorrow’s Retail Sales could surprise to the upside especially since Wholesale sales have soared in the past month and that is likely to send USD/CAD even lower.
Technicals
USD/CAD has formed a clear triple top with lower highs suggesting that upward momentum is no longer there. The 1.2800 level remains the operative resistance to the topside while 1.2000 is most immediate near term support.