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Jan 15 - 04:55 PM

EUR/USD - COMMENT-US Recap: Haven Flows, Dire Data Drive EUR/USD Down Toward Key Support

By Randolph Donney  —  Jan 15 - 03:23 PM

The dollar rose broadly on Friday as dour U.S. retail sales sparked safe-haven flows, augmenting gains that started when investors took profits on popular reflation trades after President-elect Joe Biden nL1N2JP30B announced his economic relief package.

Italian political uncertainty added to the drag on the euro, helping to guide EUR/USD down to its lowest since Dec.
10 and close to important support from the 50-day moving average, the 38.2% Fibo of the November-January advance and Dec.
9 swing low at 1.2076/64/58 on EBS.

A bearish 10- and 21-DMA cross nL1N2JQ1NM and overbought sell signals from weekly RSIs and Bolli bands make holding the nearby supports all the more important for a market still quite heavily spec long.

The dollar index extended its recovery from pandemic lows to new January highs, largely on the back of the EUR/USD's fall, as risk-off flows outweighed slippage in TIPS yields as global demand for Treasuries led the price action nL1N2JQ1FR.

Markets gave stellar U.S. industrial production data nAQN03OGJ6 less weight than the retail sales miss since retail and services, the sectors most undermined by the pandemic, far outweigh manufacturing as GDP inputs.

Sterling's repeated run-ins with resistance above 1.3700 ended poorly again amid broader dollar gains and stocks losses, but it suffered no major damage to its uptrend nL1N2JQ1IY.
A close below last week's 1.3533 low would be needed to undermine the dip-buying bias.

The safe-haven currencies -- dollar, yen and Swiss franc -- ran as a pack, leaving USD/JPY in the middle of Thursday's range, with prices this week stuck below the down trend-line from March, last at 104.23, and above the 10-DMA, kijun, tenkan/50% Fibo at 103.63/59/50.

USD/JPY's positive correlation to the broader dollar and good demand above 103.50 kept it aloft, if in consolidation.

The bigger yen price swings were against the retreating aussie and other high-beta currencies caught in the de-leveraging undertow nL1N2JQ1SE.
But the yen also scored haven gains against the euro and pound, with EUR/JPY breaking below its last five weeks' range lows.

Commodities weakened amid the dollar's gains, lousy U.S. retail sales and pandemic lockdowns in Europe nL4N2JQ22J and China nL1N2JQ0B4.

A bevy of Chinese data will start the new week, one without U.S. participation during Monday's holiday and no top-tier U.S. data until jobless claims on Thursday.

Instead, investors will watch the Jan.
20 U.S. presidential inauguration and opening agenda from Congress.

For more click on FXBUZ

Refinitiv IFR Research/Market Commentary


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