USD pushing for new highs, few other alternatives for traders to consider
Once again, due to the lack of viable alternatives in the current environment, the USD is the standout buy at present, and we have seen a fresh surge this week, pre-empted by the sharp rally in USD/CHF, which did also drag the EUR cross rate higher at the time.
Monday's session saw a sustained push lower in EUR/USD however, taking out the 1.1300 level, though we note more demand here into the 1.1255-70 zone. This is the last line of support before we test the 1.1215 lows from last year, though below 1.1200, we note key support which will likely draw in fresh demand unless data/news dictates otherwise.
Cable has been moving in tandem with the EUR rate, for the most part, underperforming a little based on the minor gains seen in EUR/GBP, though this was to be expected with the clock ticking down towards the withdrawal date at the end of March. The latest losses are largely a function of nervousness and USD strength also, with Cable support seen ahead of 1.2800 and just below 1.2700 if indeed we get that far.
Elsewhere, USD/JPY is also pressing higher with a positive risk mood adding a small tailwind to the move and given that we have breached the 109.80-110.30 band of resistance, the next target area on the upside lies ahead of 111.45-50.
Even though risk appetite has returned, it does not seem to have helped the commodity-linked currencies, with the AUD on autopilot to the downside as fears of a further China slowdown and an RBA rate cut see any rallies quickly snuffed out. It seems to be the same for CAD, though the drop in Oil prices pushed the spot rate back above 1.3300 last night to revisit levels seen ahead of the bumper Canadian jobs report on Friday - which seems to be all but forgotten!