The past 24 hours or so have been very active in global markets as a short squeeze took control of currencies that had the USD involved in their name. For months we have been singing the praises of King Dollar and the infallibility of its rise against any and all challengers. The unfortunate side-effect of that kind of thinking is that a majority of investors begin to agree and join in on the fun which then creates an environment that is ripe for a short squeeze. Once the squeeze begins, it is difficult to determine when it will end as it could last hours, days, or even weeks if it has been beaten down for long enough. This is the predicament we find ourselves in now as the USD appears as if it is trying to fight back.
A couple of currencies that participated in yesterday’s squeeze were the EUR which has been everyone’s favorite currency to sell of late, and the AUD, which rallied back from an interest rate cut. Due to the EUR being demoralized so much over the last few months; it even squeezed higher against the AUD, despite the face-ripping rally the AUD experienced against others. The EUR/AUD even continued following an established trend line that started in late January amongst all the activity.
In addition to the established trend line, the EUR/AUD also more recently retraced 61.8% of the squeeze which brought it right back to the trend line and sets it up to potentially complete an ABCD pattern that could extend it up to 1.50. This pattern could potentially get blown away by Australian Retail Sales scheduled for release this evening, but then again, it could help it as well. Consensus is calling for a 0.3% increase which would better last month’s disappointing 0.1% rise, but considering the actions of the Reserve Bank of Australia earlier this week, another disappointment may be in the cards.
_20150204162942.png "EURAUD 1H")
Recommended Content
Editors’ Picks
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up. The pair traded at 0.6518.
EUR/USD mired near 1.0730 after choppy Thursday market session
EUR/USD whipsawed somewhat on Thursday, and the pair is heading into Friday's early session near 1.0730 after a back-and-forth session and complicated US data that vexed rate cut hopes.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.