FOREX: Fed Chair Speculation Sparks Volatility, DXY Consolidates Weekly Advance
Jan-16 18:19
- Currency markets had been trading in a subdued manner approaching the weekend close, however, latest speculation surrounding a likely Warsh-led Fed sparked a fresh round of dollar demand, helping the USD index to consolidate its moderate weekly advance and extend a firmer spell for the greenback so far in 2026.
- President Trump’s comments on keeping Kevin Hassett in his current role prompted the volatility late Friday, with US 10-year yields notably rising above the pivotal 4.20%. Losses across the G10 were led by EUR, AUD and CAD, while spot gold prices declined notably from $4.620 to $4,537/oz on the news.
- For EURUSD, the pair looks set to post a 0.4% decline on the week, although the pull lower from Monday’s 1.1700 highs is more notable. Price action saw the pair breach support at 1.1618, the Jan 9 low, confirming a resumption of the downtrend and maintaining the price sequence of lower lows and lower highs. While 1.1549 is the next technical target for the move, November lows either side of 1.15 appear more significant.
- Amid analyst reports suggesting that investors are preferring to fund carry trades out of the euro, the decline for EURMXN this week has really stood out, with spot breaking through a cluster of significant support between 20.90/95, and extending this week’s declines to 2.25%. Price has substantially narrowed the gap to the August 2024 lows at 20.4379, and a break below here would signal scope for a more protracted selloff towards 19.9047 and 19.1703.
- Elsewhere in the G10, the USD’s advance has been offset by the rebounding yen, prompting USDJPY to briefly slide back below 158. This comes amid a significant ramping up of verbal warnings regarding JPY weakness this week, with both the finance minister and Japan’s top currency official more aggressively sounding the alarm. Initial support remains further down at 157.20, the 20-day EMA.
- China activity and Canada inflation data highlight Monday’s economic calendar, while US markets will be closed for the MLK holiday.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US TSYS/SUPPLY: Review 20Y Bond Auction Re-Open
Dec-17 18:04
Treasury futures show little reaction (TYH6 -3 at 112-13.5) after $13B 20Y Bond auction re-open (912810UQ9) trades slightly through - drawing a high yield of 4.798% vs 4.800% WI at the cutoff; 2.67x bid-to-cover vs. 2.41x prior.
- Peripheral stats: indirect take-up rises to 65.19% vs. 59.47% prior; direct bidder take-up retreats to 22.24% from 29.15% prior; primary dealer take-up at 12.57% vs. 11.38% prior.
- The next 20Y re-open is scheduled for January 21, 2026.
FED: US TSY 19Y-11M BOND AUCTION: HIGH YLD 4.798%; ALLOT 3.16%
Dec-17 18:02
- US TSY 19Y-11M BOND AUCTION: HIGH YLD 4.798%; ALLOT 3.16%
- US TSY 19Y-11M BOND AUCTION: DEALERS TAKE 12.57% OF COMPETITIVES
- US TSY 19Y-11M BOND AUCTION: DIRECTS TAKE 22.24% OF COMPETITIVES
- US TSY 19Y-11M BOND AUCTION: INDIRECTS TAKE 65.19% OF COMPETITIVES
- US TSY 19Y-11M BOND AUCTION: BID/COV 2.67
EURUSD TECHS: Shooting Star Candle
Dec-17 18:00
- RES 4: 1.1919 - High Sep 17 and a key M/T resistance
- RES 3: 1.1848 High Sep 18
- RES 2: 1.1813 76.4% retracement of the Sep 17 - Nov 5 bear leg
- RES 1: 1.1804 High Dec 16 and a key short-term resistance
- PRICE: 1.1755 @ 16:22 GMT Dec 17
- SUP 1: 1.1703/1658 Low Dec 17 / 20-day EMA
- SUP 2: 1.1634 50-day EMA
- SUP 3: 1.1615 Low Dec 9
- SUP 4: 1.1591 Low Dec 2
A bull cycle in EURUSD remains intact, however, a short-term reversal signal has appeared on the daily chart. Tuesday’s candle pattern is a shooting star candle formation. If correct, this suggests scope for a pullback near-term. A correction would allow an overbought trend condition to unwind. The first important support lies at 1.1658, the 20-day EMA. Key short-term resistance has been defined at 1.1804, the Dec 16 high.
