BackgroundIn a quiet week for hard economic data on both sides of the Atlantic, EURUSD has traded in line with movements in the US versus Germany 10-year bond spread. The gap in favour of the USD has narrowed from 230 to 190 basis points in recent weeks, taking EURUSD up with it. It will likely be…

I am short EURUSD and looking for further losses. I expect to see a broad correction in the US dollar, with the EURUSD major taking most of the USD's gains.  USD Index Monthly – Moving lower from the Fibonacci confluence area (102.00). In April, we posted another outside candle highlighting the downside pressure for the…

BackgroundBuyers have returned in USDJPY and the medium-term bull trend is set to continue.  Monthly – For the last four months we have seen spikes in both directions highlighting the volatility in USDJPY. The fact that the Marabuzo level from November 2016 still holds (109.63) offers a mild bullish bias but we do need to…

BackgroundFriday's sharp fall through the 100 day moving average deepened on Monday. This latest decline — the third in a row — took USDCHF to test the 13 and 200 day moving average area. The scope of the three day move also took signals for sentiment to oversold extremes. That element coupled with positive divergence…

BackgroundThe New Zealand dollar remains under pressure after the market got caught out by a more dovish than expected statement from the Reserve Bank last week (see Kiwi slumps as RBNZ maintains neutral stance on monetary policy).The only Kiwi dollar specific data point this week is tomorrow’s dairy trade auction. Futures pricing suggests another small…

Short term / Buy

BackgroundAlthough yesterday's report acknowledged a bullish bias we were a little cautious. Overbought extremes did lead to a profit-taking reaction, but the setback failed to break through the 100-day moving average or even test Tuesday's Marabuzo line. By the close the limited setback had attracted fresh buyers and minor net gains were posted: four up days…

BackgroundUS financial markets are priced at 83% probability for a June rate hike, based on the fed funds futures market, but for later dates the curve is still under the Federal Open Market Committee's “dot plot”. That could change quickly if Friday’s CPI update shows core inflation moving back above 2% after dipping in the…

Medium term / Buy

The former Bundesbank president and acting chairman of UBS, Alex Weber, and German finance minister Wolfgang Schaeuble have in the past couple of days said they believe the European Central Bank will or should soon begin tapering its quantitative easing. They hinted that that could happen around September. With growth at some of the highest…