Forex Update: Risk Assets Plunge Again Amid Turmoil in Washington
Forex Market Snapshot
|Asset||Current Value||Daily Change|
|WTI Crude Oil||46.09||-0.32%|
One of the most volatile December’s on record continued to provide plenty of action today, on the last trading day before Christmas Week, and risk-on currencies and stocks were under pressure again. The Yen continued to shine thanks to the strong safe-haven flows, while the Dollar also recovered from yesterday’s dip amid the broad risk-off shift.
The Treasury market continued to discount the hawkish Fed-surprise and yields are now back near their recent multi-month lows, and the megatrends that have been dominant in currency markets are firmly intact, and it seems that we are in for a volatile January.
The ongoing monetary tightening and the slowing global growth are still defining the broader trends, and today, the increasing threat of a US government shutdown, the weaker than expected Durable Goods report, and the resignation of Defense Secretary Jim Mattis just added to the bearish pressures. While next week, trading activity will likely be very low, it will be interesting to see if risk assets can recover from this week’s rout or we will see volatile trading in the illiquid environment.
EUR/JPY, 4-Hour Chart Analysis
The EUR/JPY pair completed the technical breakdown that we anticipated and now the common currency is testing the key support zone near 126.50 after moving out of the long-standing bearish consolidation pattern. The pair looks ready to move back towards its lows form June and August near 125, and the coming months will likely see new lows with the next major zone found near 122.50, and with resistance zones now ahead near 127.50 and 129.
AUD/USD, 4-Hour Chart Analysis
The Aussie also established the short-term downtrend as expected, and the AUD/SUD pair is now close to its recent multi-year lows, looking ready to test the 0.70 level. While the short-term picture is now oversold, and the holiday week could bring a bounce back towards 0.7150, the broader bearish trend is clearly intact, and new lows are very likely next year.
USD/CNH, 4-Hour Chart Analysis
While the USD/Yuan pair continues to be stable compared to the major pairs, the brief period of strength in the Chinese currency might already be over, and a move towards the highs might be ahead in the coming month.
That would further confirm the global bearish shift, since the weakness in China remains one of the most significant risks for the shaky global economic growth, and the steep devaluation of the currency seems inevitable from an investment standpoint. The pair is now near its pre-trade-truce levels, after moving out of a triangle consolidation pattern, and it could be headed to 6.94 soon with crucial support found at near 6.8925 and 6.865.
WTI Crude Oil, 4-Hour Chart Analysis
WTI crude oil showed signs of stability today in the risk-off environment after getting close to the $45 per barrel price level, and although the downtrends remain intact both short- and long-term, the crucial commodity might provide a tradable bounce in the holiday period. A recovery above the $46.60-$47 support/resistance zone could trigger the counter-trend move, with possible targets ahead near $50 and in the $53.50-$54.50 area.
EUR/USD, 4-Hour Chart Analysis
USD/JPY, 4-Hour Chart Analysis
GBP/USD, 4-Hour Chart Analysis
EUR/GBP, 4-Hour Chart Analysis
AUD/JPY, 4-Hour Chart Analysis
GBP/JPY, 4-Hour Chart Analysis
USD/CHF, 4-Hour Chart Analysis
Gold Futures, 4-Hour Chart Analysis
Copper Futures, 4-Hour Chart Analysis
Major Stock Indices
S&P 500 Futures, 4-Hour Chart Analysis
DAX 30 Index CFD, 4-Hour Chart Analysis
Nikkei 225 Futures, 4-Hour Chart Analysis
Shanghai Composite Index CFD, 4-Hour Chart Analysis
Featured image from Shutterstock