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XTB TRADEBEAT

USD near key levels vs the EUR, NOK and TRY

Summary:

  • USD dropping back lower
  • Post-NFP weakness still in play
  • EURUSD, USDNOK and USDTRY all approaching big levels

There’s been some continuation seen from Friday’s move after the NFP release in the US dollar today, with the buck extending its decline. The GBPUSD has gained on the latest Brexit developments mentioned here, but let’s look at 3 other USD crosses that have reached interesting levels. First, the EURUSD has now recaptured nearly all of the sell-off from the last ECB meeting  and once more trades near the 1.18 handle.    

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 The EURUSD is back near the 1.18 handle and a bullish cross in the EMAs could be seen to indicate a possible change in trend. 1.1850 is a key resistance level but a break above there would pave the way for further upside. Source: xStation

The USDNOK has also shown some weakness for the greenback today, with the pair falling below the 8.00 level for the first time in almost a month. With the recent strength seen in the Oil price there is some suggestion that the NOK may be set to appreciate, and a possible head and shoulders setup seems to be developing in this cross. The head can be taken from the 2018 peak at 8.3310 with the adjacent highs the 2 shoulders. There is some subjectivity as to where the neckline resides, with a possible rising trendline already broken but recent swing lows around 7.99 remaining in tact. A daily close below 7.99 would settle the argument and constitute a break, whichever way you look at it and open up the possibility of a larger decline. 

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 The USDNOK is showing potential reversal signs and a daily close below 7.99 would pave the way for a sustained push lower. Source: xStation

Finally the USDTRY could be another market to keep an eye on with a decline in excess of 1% seen as traders await President Erdogan’s cabinet appointments this evening. The constitution of the new cabinet could well provide some major clues as to how the newly re-elected leader will plan to shape economic policy. The new cabinet will be a reduced 16 members (from 27 previously) and one potentially key area to look to is the role handed to Mehmet Simsek - or the lack of a role could be equally telling. Simsek is seen as a key member due to his possible dulling of Erdogan’s unorthodox policies - Simsek helped to soothe markets back in May by meeting with international investors in London. Simek is presently deputy prime minister, but the post will be abolished in the new cabinet structure. 

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 USDTRY is approaching previous lows and also the bottom of the D1 Ichimoku cloud. A clean break below these may herald a larger decline.

 

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