July 29, 2021 13:31:49
A mixed bag of data has just been released across the pond, but the dollar selling has continued today after the FOMC tip-toed around taper talk. Hawks are talking up Jackson Hole and more detail while more cautious watchers still believe the overall Fed message is quite dovish, especially concerning the path for rates.
How many decent jobs reports does Jay Powell want to see? How long is “some ways to go”? We guess everyone can glean something from glacial steps towards normalisation, but at least the Fed are ahead of other major central banks. The policy and growth mix are in favour of the dollar (versus EUR, JPY, CHF) but some currencies should do better with more hawkish policymakers (CAD, NZD, NOK).
USD/CAD near-term range break out
The past week’s narrow range trading (1.2530/1.2605) has been busted with dollar sellers also breaking the rising June/July trend channel. We note the 200-day SMA also capped the upside around 1.26. Last week’s bearish pin bar warned that losses were on the cards and a second down week continues the bearish momentum. Next support sits at 1.2423 ahead of the 100-day SMA at 1.2368. If the uptrend channel holds prices, then bulls will want to get above 1.26 to be more sure of further upside.
USD/CHF touches 200-day SMA
After shooting higher on the Fed’s bullish dot plots in mid-June, USD/CHF could not sustain a push up into the year-to-date highs above 0.94. The failure at the four- month downtrend at 0.9220 has seen prices under pressure with yesterday’s selloff breaking down past the July low at 0.9117. The 200-day SMA at 0.9075 is the first line of support but a move below here would see the late May/early June highs around 0.9052/46. Five straight days of declines could see buyers step in, though momentum indicators have room for more downside.
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