EUR/USD Struggles as France’s Le Pen Pledges to Replace Euro

Talking Points:

USD/JPY Tests Channel Support; Continues to Track Risk Sentiment Following FOMC Meeting.

EUR/USD Struggles as France’s Le Pen Pledges to Replace Euro.

DailyFX Table


USD/JPY Daily Chart

Chart – Created Using Trading View

  • The Japanese Yen outperforms opposite a vital counterparts as risk view wanes, with a shutting cost below a Fibonacci overlie around 112.40 (61.8% retracement) to 112.50 (38.2% retracement) lifting a risk for a serve decrease in a sell rate generally as a Relative Strength Index (RSI) preserves a bearish trend carried over from December; nevertheless, a dollar-yen might reason channel support as a span continues to work within a broader bull-flag formation, and a longer-term opinion for USD/JPY stays constructive as Fed Fund Futures prominence a larger than 60% luck for a Jun rate-hike.
  • However, a greenback stays during risk of confronting near-term headwinds as marketplace participants scale behind bets for a Mar rate-hike following a Federal Open Market Committee’s (FOMC) initial seductiveness rate preference for 2017, and risk view might continue to change a sell rate over a residue of a month as Chair Janet Yellen and Co. seem to be in no rush to exercise aloft borrowing-costs; might see Fed officials try to buy some-more time during a subsequent rate preference on Mar 15 as a executive bank argues ‘market-based measures of acceleration remuneration sojourn low; many survey-based measures of longer-term acceleration expectations are small changed, on balance.
  • After creation countless unsuccessful attempts to mangle subsequent 112.40 (61.8% retracement) to 112.50 (38.2% retracement), a shutting cost subsequent a Fibonacci overlie might open adult a subsequent downside aim around 111.60 (38.2% retracement) followed by 110.20 (50% retracement).


EUR/USD Daily Chart

Chart – Created Using Trading View

  • The EUR/USD allege from progressing this year appears to be losing steam, with a fibre of unsuccessful attempts to exam a Dec high (1.0873) lifting a risk for a delay of a long-term bear trend generally as cost RSI keep a downward trends carried over from 2016; might see a bearish trigger in a movement indicator as it appears to be diverging with cost and approaches trendline support.
  • With French Presidential candidate Marine Le Pen laying out skeleton to replace a Euro with a basket of new inhabitant currencies, a pull for destruction might put increasing vigour on a European Central Bank (ECB) to serve support a financial kinship generally as Greece struggles to secure a subsequent bailout payment; a elections in France (April) and Germany (September) might change a single-currency over a entrance months amid a doubt surrounding a predestine of a euro-area.
  • With a broader opinion slanted to a downside, a break/close behind subsequent 1.0660 (50% expansion) to 1.0680 (78.6% expansion) accompanied by a bearish RSI trigger might open adult a subsequent downside segment of seductiveness around 1.0600 (23.6% expansion) followed by 1.0470 (38.2% expansion) to 1.0500 (50% expansion).

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  • The DailyFX Speculative Sentiment Index (SSI) shows a sell throng stays net-short EUR/USD given Jan 4, with view attack an impassioned reading of -2.66 behind in August, while traders have been net-long USD/JPY given Jan 30.
  • EUR/USD SSI sits during -1.29 as 44% of traders are long, with brief positions 7.7% aloft from a prior week, while open seductiveness stands 8.7% aloft opposite a 30-day average.
  • USD/JPY SSI sits during +1.86 as 65% of traders are long, with prolonged positions 25.4% aloft from final week, while open seductiveness stands 7.8% above a monthly average.
  • The burst in sell USD/JPY longs suggests a throng is shopping a span around near-term support as they expect range-bound conditions for a entrance days.

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— Written by David Song, Currency Analyst

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