Session close (Thursday, Jan. 26): Settled at 1.24445, up 109 ticks
Fundamentals: Today was a monster session for the euro as U.S. Treasury Secretary Mnuchin took the dollar to the woodshed to get hammered. Early this morning he commented that a weak dollar is good for trade. Considering the pro-business and protectionist administration, traders bum-rushed the greenback. Lost in the headlines is the best Eurozone Markit Composite read since June 2006. Today’s move sets the table for tomorrow’s European Central Bank Meeting.
A policy statement is due at 6:45 am Central and Mario Draghi follows with a press conference at 7:30. Today’s leg up really began yesterday as the U.S. Dollar Index broke below the key 90 area, however, this move is on Dollar weakness more than Euro strength. The Euro itself has cooled off a bit since the January 11th Minutes from the December ECB Meeting that signaled a soon-to-come change in policy statement. Ultimately, traders should be cautious tomorrow, as today’s move has potentially overblown the near-term expectations. Regardless, in the long-term, we imagine that the Euro will trade much higher as the year unfolds.
Technicals: Last night, we said that yesterday’s price action confirms that the recent uptrend is not finished and today this was a textbook technical breakout above major three-star resistance at 1.2434-1.2435. Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Session close: Settled at .9196, up 105.5 ticks.
Fundamentals: On the heels of what we considered a passive-aggressive signal from the Bank of Japan they are willing to tighten policy later this year, today’s dollar weakness added fuel. We expect further dollar weakness overnight as Asia joins the party. However, the tone tomorrow will be set by the ECB and U.S data. Weekly Jobless Claims, Goods Trade Balance, and Wholesale Inventories are all due at 7:30 am Central while New Home Sales is due at 9:00. Tomorrow night will be critical for the Yen trade as we get a crack at CPI data from Japan.
Technicals: The yen is now clearly out above major three-star resistance at .9092-.91035 and this is a textbook bullish breakout. Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Session close: Settled at .8076, up 80 ticks
Fundamentals: The Aussie extended its run to the highest level since Sept. 8 on U.S. dollar weakness. This is a quiet week for economic data out of Australia but CPI data from its neighbor, New Zealand, at 3:45 pm Central missed widely and has put pressure on the Aussie since the reopen. The ECB meeting tomorrow morning will set a tone for the U.S. dollar which will inherently affect the Aussie. Furthermore, data from the United States at 7:30 am Central will also be a major catalyst.
Technicals: Price action got out above major three-star resistance and the 200-month moving average at .8037, settling at .8076. We have a second major three-star level at Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.
Session close: Settled at .81195, up 72.5 ticks
Fundamental: The Canadian extended gains to the highest level since September and traders brace for a key read on Retail Sales. While many are focused on the U.S Dollar weakness and tomorrow’s ECB meeting, the Canadian must also focus on NAFTA talks. Officials are scrambling to salvage a deal to save the trade agreement in Montreal this week. We have been adamant that we believe a deal will be done and that pullbacks are buying opportunities. Crude oil also put in a strong session, trading near $66 and has kept a bid under the currency.
Technicals: Price action got out above major three-star resistance at .8085-.81005 and traded to a session high of .81235 but the tape has begun to retreat. Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and proprietary bias and levels.