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FX Rundown - Blue Line Express

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Euro (December)

Session close: Gained more than one third of a percent on a session.

Fundamentals: The day started with a solid read on German Trade Balance and an EU Forecast that revised GDP up to 2.2% on the year, the highest since 2007. ECB Board Member Coeure spoke hawkishly and all of this kept a floor under the Euro trade. However, as the session unfolded the real driver for todays move became tax-reform in the U.S. as the Senate released their version of the bill. The Dollar gave up recent gains with the Index trading at the lowest level of the week. The S&P was down 1% before lunch but ultimately recovered as worries subsided ahead of the close. There is nothing out of the Eurozone to finish out the week and the trade will be dependent on Washington and Michigan Consumer Confidence due at 9:00 am CT.

Technicals: The session high came in at 1.16775 and resistance at the 1.1671 level will be key to watch to finish out the week. Ultimately, the real level the bulls need to achieve a close out above is three-star resistance at 1.1705-1.1722 which would more than neutralize recent weakness and begin to spark a short covering rally, and every rally starts with a short cover. The session low was 1.16085 and this is the second higher low in a row. We will continue to watch the 1.1622-1.1639 level and a close back into here would be very disappointing to finish out the week. We are getting more bulled up and in line with our longer term bullish thesis now that the market is back above this level.


Resistance 1.1671**, 1.1705-1.1722***, 1.1772**, 1.1837-1.1850**, 1.1921-1.1933***

Support 1.1622-1.1639**, 1.15785*, 1.1481-1.15***

Yen (December)

Session close: Gained 43.5 ticks on the session and finished at .88475

Fundamentals: The Yen was supported by the weaker Dollar and uncertainty surrounding tax-reform. The Bank of Japan will stay the course with their easy money policy, but this is already known and for the most part, all priced in. The wild-card remains a weaker Dollar, which we believe in, and a geopolitical event that sparks safe-haven buying.

Technicals: Price action has settled above the key three-star level at .8800-.8828 and is beginning to round out a bottom; it needs to stay above the 21-day moving average at .8837 in order to continue to do so. Speculators have already established their short position so if the Yen can continue to grind higher we could see a short-covering rally here bigger than any other currency paired against the Dollar. We now have two levels noted as major three-star resistance, the first is at .8971-.8980 and the second encompasses the 200-day moving average at .9023-.9045; it is hard to decipher which will be stronger but a above here should do the trick.

Bias: Bullish

Resistance - .8868-8879**, .8971-.8980***, .9023-.9045***

Pivot- .8800-.8828***

Support - .8755-.8764**, .8639**, .8427***

Aussie (December)

Session close: Gained 5 ticks

Fundamentals: The Aussie was a laggard on the session and this could also be seen in the base metal complex. Nickel was hit hard today and Palladium traded to a new swing high, the highest level since 2001 before reversing gains to settle nearly 2% from here. The RBA policy meeting minutes are due out at 6:30 pm CT tonight.

Technicals: Price action traded to a high of .7690 but the lack of follow through today is disappointing and begins to neutralize our outright Bullish shift yesterday as major three-star resistance at .7717-.7725 remains a clear headwind. It is important to stay nimble.


Resistance - .7717-.7725***, .7780**, .7872-7902**, .7964**, .8096-.8115***

Pivot - .7673

Support - .7622***, .7550**, .7390****

Canadian (December)

Session close: Gained 33 ticks and finished three ticks from the high of the session at .78935.

Fundamentals: The Canadian is strengthening off over-emphasized poor fundamentals over the last two months and has quickly become the prime beneficiary of a weaker Dollar. The currency is also seeing strong support due to gains in Crude Oil. We remain bullish.

Technicals: Lets take a look at some of the negatives at the moment as it is best to do so when the position feels rosy. The RSI is now at the highest point since the end of September and this can signal that the rally may be due for a stalling consolidation. Furthermore, though the net long position has been reduced from its 5:1 ratio, it is still slightly greater than 3:1 and you only have to go back to August 22nd to find this few longs. To be clear, we are playing devils advocate here and remain bullish. Major three-star resistance comes in at .7920-.7954 and is our intermediate term target.


Resistance .7920-.7954***, .8019-.8035**, .8293****

Support - .7851-.7856**, .7745-.7790***, .7671**, 7550***

Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.

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About the author

Bill Baruch is President and founder of Blue Line Futures a leading futures and commodities brokerage firm located at the Chicago Board of Trade. Blue Line’s mission is to put the customer first and bring YOU the best customer service, consistent and reliable research and state of the art technology. Bill has more than a decade of trading experience. Working with clients he focuses on developing trading strategies that present a clear objective for both long and short-term trading approaches. He believes that in order to properly execute a trading strategy, there must be a well-balanced approach to risk and reward.

Prior to Blue Line, Bill was the Chief Market Strategist at iiTRADER which followed running a trade desk at Lind Waldock and MF Global.

Bill is a featured expert on CNBC, Bloomberg and the Wall Street Journal as well as other top tier publications.

Contributing author since 10/6/17 

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