Following Fed’s signalling for rate cut soon, the softer US payrolls report (last Fri) was the latest trigger to drag the USD lower, OCBC FX strategists Frances Cheung and Christopher Wong note.
Focus on ISM services on Monday
“NFP missed estimates (114k vs. +175k expected), hourly earnings dipped (3.6% vs. 3.9% prior) and unemployment rate rose (4.3% vs. 4.1% prior). We reiterate that recent thematic has also been a case of growth fears resulting in rise in vols, unwinding of carry and continued sell-off in equities. Renewed geopolitical concerns is also another risk to watch out for after US warned of a possible attack from Iran in retaliation for assassinations of top Hamas, Hezbollah leaders.”
“And we caution this may have some spillover effects onto other high-beta, risk sensitive FX. In a scenario of growth fears and geopolitical concerns, safe-haven proxy should remain in demand while carry trade should unwind further (as vols pick up), we favour expressing USD shorts via long JPY, CHF and gold. DXY was last at 103 levels.”
“Daily momentum turned mild bearish while RSI fell. Risks skewed to the downside. Resistance here at 104.30/45 (21, 200 DMAs), 104.80/90 (61.8% fibo retracement of Oct high to 2024 low, 21, 50, 100 DMAs). Support at 102.2 (23.6% fibo). Resistance at 103.2 (38.2% fibo), 104 (50% fibo). Focus on ISM services tonight. Another softer print should see recent momentum follow through.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays within a touching distance of 1.1000 after US data
EUR/USD continues to trade in positive territory slightly below 1.1000 in the second half of the day on Monday. Despite the upbeat ISM Services PMI data and the risk-averse market atmosphere, the US Dollar struggles to find demand.
GBP/USD struggles to gain traction, holds above 1.2750
GBP/USD holds steady above 1.2750 after recovering from the daily low it set near 1.2700. Although the US Dollar stays under persistent selling pressure, the intense flight-to-safety doesn't allow the pair to stage a rebound.
Gold bounces off lows, trades above $2,400
After falling below $2,370 earlier in the session, Gold recovered back above $2,400 in the American session. The persistent USD weakness and the sharp decline seen in the US Treasury bond yields help XAU/USD limit its losses for now.
Crypto Today: Bitcoin slips under $50,000, double-digit decline in top 30 cryptocurrencies
Bitcoin and altcoins in the top 30 have suffered double-digit corrections in the past 24 hours. XRP suffers a nearly 15% drawdown on Monday, slips to support at $0.4459.
Five fundamentals for the week: Global sell-off has a life of its own, Middle East may spiral out of control Premium
Panic – no better word to describe a fall of over 12% in the Nikkei stock index and plunges in almost all assets. Will it continue? The sell-off has a life, but the factors triggering it matter.