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Greenback Consolidating Near To Session Lows, JPY Outperforms

FOREX
  • The greenback extended the post US CPI weakness from last week as markets continue to remain optimistic over a soft-landing scenario. This has prompted the USD Index to breach the 200-day moving average for the first time since December last year.
  • Equity markets are reflecting similar optimism, trading on a firm footing headed through to the Tuesday APAC crossover, with the e-mini S&P comfortably above Friday's session bests and helping underpin the bid in high beta currencies. As such, NOK is one of the best G10 performers, bolstered by higher oil prices, which has helped aide EUR/NOK toward its initial support of 11.6892.
  • JPY stands closely behind as on of the best performers also, helping both USDJPY and EUR/JPY ease through Friday's lows and extend the pullback off last week's highs.
  • USDJPY has traded sharply lower Monday as the pair extends the pullback from 151.91, the Nov 13 high. Support at the 50-day exponential moving average, at 149.19, has been cleared. The break of this EMA strengthens a short-term bearish theme and signals scope for a deeper correction, towards 147.43, the Oct 3 low.
  • AUD, NZD have also rallied around 0.65%, with AUDUSD strength resulting in a clear break of resistance at 0.6522, the Aug 30 and Sep 1 high. The breach is an important short-term bullish development and signals scope for a continuation higher towards 0.6582.
  • EURUSD briefly traded above 1.0950 on Monday, piercing 1.0945, the Aug 30 high and a key resistance. Moving average studies have crossed, highlighting a bull-mode position and a rising trend, which could signal further strength towards the August highs above 1.1000.
  • The greenback weakness combined with the attractive carry profiles, also continues to support Latin American currencies which have made some impressive gains Monday, with USDBRL rising around 1.2% and USDMXN zoning in on the 17.00 handle.
  • RBA minutes are due overnight before Canadian CPI and FOMC minutes headline the Tuesday docket.
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