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USD Index Consolidates Most Recent Recovery, EURCHF Approaches 2022 Lows

FOREX
  • Despite some moderate intra-day weakness, the greenback looks set to close Wednesday’s session at its best levels, although G10 ranges have remained contained. A close here for the USD index (+0.09%) would see a fifth positive session in the last six trading days, with price action broadly consolidating the most recent 1.5% recovery as we approach Friday’s non-farm payrolls release.
  • Antipodean currencies have outperformed, with AUD among the strongest performers in G10 following the Australian GDP print overnight, which topped expectations at 2.1% Y/Y vs. Exp. 1.9% across Q3 to help partially reverse the early weakness in AUD/USD and put the pair (briefly) back above the 200-dma of 0.6578. NZD/USD exhibited similar price action, with 0.6150 providing a magnet for prices across much of the session.
  • Euro weakness continues to be the path of least resistance following last week’s inflation data and associated adjustment for ECB pricing. A brief pop above 1.08 was well faded and EURUSD has been grinding back towards the lows as we approach the APAC crossover.
  • Note that the trend condition is overbought and the pullback is allowing this to unwind. However, price action has narrowed the gap to support at 1.0774, the 50-day EMA – of which a clear break would be bearish.
  • Interestingly, the single currency weakness and lower core yields have continued to weigh on EURCHF, down 0.30% on the session and at the lowest point since September last year. Spot now hovers just above the 2022 lows of 0.9410, a breach of which would see the cross at the lowest level since the pulling of the floor in 2015.
  • China trade balance data overnight may garner some interest, as well as Swiss currency reserves data. US jobless claims will provide the last insight into the health of the labour market before Friday’s key employment report release.
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