Daily Market Report: EURUSD, GBPUSD, USDJPY, USDCAD
US dollar outperforms as safe haven currencies lag
EURUSD: Institutional bias moves closer to the middle as euro short positions get reduced
Another red day for this pair's price as negative technical bias continues to form following a break in its short-term bull trend line, and with a negative DMI cross occurring yesterday. Friday's plummet was the real catalyst, and as it stands its price is below all its main moving averages having crossed below the 100-day and 50-day MA's. Attention now shifts to Fed speak, of which there will be plenty with Fed Chair Powell speaking over the next few days, and his semi-annual testimony starting tomorrow. In terms of sentiment, the latest CoT report shows institutional bias shifting towards the middle on a reduction in shorts by 26.7K lots and a smaller reduction in euro longs by only 2.2K lots, with the net result a 3% drop in majority short sentiment.
GBPUSD: Bear trend technical overview intact as its price hovers near its mid-term support level
Another consecutive day of losses for the pound, especially with the greenback the top performer amongst the FX majors yesterday. That has put the squeeze on retail traders who are holding extreme long bias of 84%, while to the benefit of institutional traders who remain heavy short at 74%. The latest CoT report shows an increase in pound longs by 1.6K lots being outdoing by a larger increase in pound shorts of 6.9K lots. From a technical standpoint, the bear trend technical overview remains intact, albeit at a mid-term support level more visible on its weekly chart. Important UK data will be released tomorrow, but in the meantime it’s Fed speak effecting this pair’s USD aspect.
USDJPY: Yen lags while US dollar outperforms, technical overview shift occurs
Safe haven currencies’ yen and franc lagged yesterday amongst the FX majors, which against the top performing greenback meant this pair’s previous stalling bear trend technical overview suffered a blow. As it stands, while the overview is more consolidatory, its price is still below all its main long-term moving averages, and hence more will be needed to shift to a more bullish outlook even if more of its technical indicators are lighting up green. As for sentiment, it wasn’t too long ago that institutional bias against the yen reached extreme long levels of 85%, only for yen short positions to dwindle and push the bias now closer to the middle. Majority long bias against the yen has dropped 6% last week on a reduction in yen shorts by 5.8K lots and a simultaneous increase in yen longs of 3.1K lots.
USDCAD: Central banks in focus as BoC announcement tomorrow and Fed’s Powell testifies, while institutional bias shifts
Although the US dollar ended higher against the FX majors, the damage to this pair was limiting with its price still hovering near the lows and its mid-term support level still holding. But technicals are far less relevant over the next few days, as Fed Chair Powell’s testimony tomorrow and the day after, as well as the BoC’s rate announcement will keep the focus on fundamental aspects of this pair, as well as USD-denominated pairs in general as well. Going into the event, retail bias is heavy long at 69% and squeezed on the run lower in the pair’s price, while institutional bias has shifted from a previous majority long 62% to a now slight short 54% on an increase in CAD longs by 20.3K lots. The last time the CoT report showed large speculative traders holding a majority long CAD bias (i.e. majority short USD/CAD) was in March of last year.
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