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Low FX Volatility & PM Johnson Meets Merkel

Updated 09:11AM 22/08/2019

FX Strategy 22 Aug 19

 

SEK and NOK are the top G10 FX gainers today, up 0.39% and 0.26% vs the dollar while JPY and GBP are the top losers, down -0.3% and -0.15% vs the dollar.

 

The forex volatility is down ahead of the meeting of central bankers at the Jackson Hole Symposium on Friday. The holiday season is also aiding the lack of volatility. That said, the trade wars worries will continue to impact the forex market with the devaluation of yuan a big concern.

 

Elsewhere, sterling remains in focus as PM Boris Johnson heads to Berlin to meet Chancellor Merkel for talks over Brexit. The pound has got some support after Merkel improved chances of pragmatic solutions on the Irish-Backstop. Due to the heavy short-position in GBPUSD, any positive news can cause sharp upside in the pound.

 

In the Asian equities space, the Nikkei 225 closed -0.28% lower at 20,618.57, Hang Seng closed 0.15% at 26270.04 and Kospi ended 0.22% at 1964.65. The European equities were trading firm with the FTSE up +0.73% at 7176.75, DAX up +0.77% at 11741.17, and CAC up +1.13% at 5405.13. In the rates market, global yields were trading firmer; the US 10-year yield was trading at 1.6029% and the Bund 10-year yield trading at -0.654%. In the energy space, the Brent (front month) is trading up (0.6%) for the day at $60.39.

 

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Daily Pivots for Key Currency Pairs

 
 

Economic Calendar

 
 

10-year Yields Chart (6-month)

 
 

USD-Index Daily Chart (6-month)

 
 

Brent Front Month Daily Chart (6-month)

 
 

Trade Weighted Basket Hourly (two-week)

 
 

(Content and Data by Tradermade)

 

Major Currency Pairs

 

EURUSD Chart (Two-week)

 
 

Strategy: Support at 1.1062 for 1.1167
Short-term view: EUR/USD support at 1.1062, MACD and RSI are improving. Hence, we see a move to 1.1120, possibly 1.1167. Below 1.1062 to open 1.1019.

 

GBPUSD Chart (Two-week)

 
 

Strategy: Resistance at 1.2190 for 1.2046
Short-term view: GBP/USD resistance at 1.2190, MACD and RSI are weak hence, we see a dip to 1.2087, likely 1.2046. Above 1.2190 to open 1.2243.

 

USDJPY Chart (Two-week)

 
 

Strategy: Resistance at 106.65 for 105.03
Short-term view: USD/JPY has resistance around 106.65 MACD and RSI are giving mixed signals, hence, we see a move lower to 105.81 and 105.03. Above 106.65 opens 107.05-107.48.

 

AUDUSD Chart (Two-week)

 
 

Strategy: Resistance at 0.6800 for 0.6725
Short-term view: AUD/USD short-term downtrend intact, we look for resistance at 0.6800 for a move lower towards 0.6725, likely 0.6650. Above 0.6800 we look for 0.6830-0.6869 in the immediate short-term.