President-elect Trump says Washington Post op-ed on tariffs is wrong and led to rapid move higher in USD, rapid move higher yields (2Y back to flat/10Y up 2.5bps to 4.62% ) and lower stock rotations. However, the major indexes are still higher with the S&P up 33.75 points and the Nasdaq up 171 points).
The question to be answered is “What’s wrong with the story?”. However, volatility to the upside and downside from the news has clearly increased. Over time, those reactions may be more limited as markets reacquaint themselves with the volatility in the Trump administration, but for now (for today), the ups and downs can be swift.
EURUSD: EURUSD moved from around 1.0411 to 1.03515. Technically, the price fell below its 200-hour moving average at 1.0376 and broke the 38.2% retracement at 1.0378. That area is now near-term resistance.
On the downside, the 100-hour moving average at 1.03418 and the swing area down at 1.0332 is now the next key momentum target to reach and break to increase bearish bias. Move down and the door is open to more bottom torque (see the red numbered circles in the chart below).
USDJPY: USDJPY moved up to retest the 100/200 hourly MAs at 157.158 and 157.318 respectively. A move above those levels would tilt the short-term bias more to the upside. Stay below and sellers still have more control (short term).
For now, moving averages are slowing growth as traders rely on a key barometer for both buyers and sellers.
GBPUSD: GBPUSD moved sharply lower following Trump’s comments, which took the price back below the 200-hour moving average at 1.25083, and briefly below the swing area between 1.24739 and 1.2487 along with the 100-hour moving average at 1. 24746. The low price reached 1.24681, but bounced back.
To add to the bearish bias, a move below 1.24739 and a hold below would open the door for further selling momentum. Conversely, hold that level and break above the 200-hour moving average at 1.25083, which will take some of the sting out of the recent decline.