Major pairs gain on USD weakness

16 January, 2018

The USD has taken another beating today on the charts as all the major pairs continued to dominate against the USD. This can be seen as a bit of a surprise given the positive CPI figures out on Friday as Core CPI m/m lifted to 0.3% (0.2% exp), showcasing the drop in the value in the dollar but also the booming economy. However retail sales were muted, coming in at 0.4% (0.5% exp) which had some pundits a little worried in the market. The reality though is that USD bulls are struggling to find a footing when it comes to any sort of positive movement higher. The arrival of USD bulls looks all the more certain given the massive lows we are seeing in the long run, but for now the USD bears have complete control and keep on swiping.

Nowhere is this more so the case than the USDJPY which continues to see large falls as traders sell of USD positions. I don't think the Yen should be appreciating strongly, and I do wonder if the Bank of Japan has another trick up its sleeve in order to help keep the Yen at a level which it thinks is positive for the economy. Only time will tell in this instance though. Looking at the charts though it's clear though that the dollar bears are looking to push the USDJPY below the 110 mark at present, however the USDJPY has been shy of support at 110.202 thus far. Any extension through this level could lead to further pressure on support at 109.385. In the event we did see a swing upwards I would expect to see the 200 day moving average be the first major level of resistance in the market as thus far it has done exactly that on the daily chart. Leading on from this higher would be levels at 111.944 and 112.787, with the bearish trend line also likely to be a key feature for traders going forward.

The NZDUSD has been another stand out player in the market, which is uncanny given its recent economic troubles after a change of government. However, it seems that economy has shrugged it off with the most recent employee confidence survey hitting a high not seen since before the 2008 GFC, as it pushed up to 113.9. This does not mean more growth though, as while the NZ employment market is looking good, the expansion of the economy has been a little slower.

For traders the NZDUSD is very much in a bull run at present, as it plays off the weaker USD. A push up to resistance at 0.7342 fell just short today, but it can't be dismissed that this is a very steep trend and could continue for some time. The next level above this can be found at 0.7418 on the charts, but in all reality we could extend further past this. In the event we did see the bears come into the market I would be watching the 20 day moving average, although lagging behind it's something that traders should watch given how the NZD loves moving averages.


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