Currency Playbook - Blue Line FX Rundown
FX Rundown

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Euro (December)

Fundamentals:Risk assets found broad support to finish last week as President Trump paraded an interim trade deal. Mounting positivity surrounding Brexit and soft U.S inflation data brought additional tailwinds to help the Euro settle Friday at the highest level since September 19th. The tables quickly turned coming out of the weekend though, cold water was poured over progress on each U.S-China and Brexit. Still, the Euro is clinging to gains in a low volatility atmosphere ahead of a crucial German ZEW Sentiment read tomorrow morning. The economic data has not gotten any better, Chinese Trade Balance last night showed Exports and Imports both contracted more than expected and tomorrow we hear the IMFs revised growth estimates. We continue to believe rallies in the Euro are sell opportunities and if ZEW misses at 4:00 am CT tomorrow, look for follow through from todays session to the downside.

Technicals:Last week was truly the first construction weve seen out of the Euro since the September 12th reversal which faded the next day and ended up leading to new lows on the year. Weve been referencing a resistance trend line going back to June and Thursdays move settled at the mark before following through Friday. This brings first key support at 1.10425-1.1055 and above here the bulls have some fight in them. The Dollar Index broke its corresponding support trend line from June, and this now brings resistance at 98.45. Given the trend line violation, the Euro is not a near-term sell until reaching 1.1175-1.1184, however, a close back below first key support ultimately opens the door to a retest of the 1.09385 low.

Bias:Neutral/Bearish

Resistance: 1.11115*, 1.1175-1.1184***, 1.1248-1.1254***

Support: 1.10425-1.1055**, 1.1005-1.1008**, 1.09385***, 1.075-1.08****

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Yen (December)

Fundamentals:Trade optimism and U.S equity markets again reaching towards record highs has pressured the Yen to the lowest level since May. While Treasuries and Gold also slipped sharply, the Yen has arguably seen the most damage among the three and the least elevation during rallies. Dismal Trade Balance data from China last night, underwhelming Industrial Production from the Eurozone this morning, much more uncertainty on U.S-China trade than Friday afternoon and the Yen has still creeped lower all session. Fundamentally, we see why the Yen may have value, but the technicals tell us otherwise. Bank of Japan Governor Kuroda speaks tonight at 7:30 pm CT, China CPI and PPI is due at 8:30 pm CT and Industrial Production is out at 11:30 pm.

Technicals:The Yen is clinging to major three-star support at .9243-.9257 in an otherwise ugly technical pattern. A failure to decisively settle below here is just about the only thing perma-bulls can hang their hat on at the moment. The good news, construction without closing below this support is not too difficult to achieve with a close above first key resistance now aligning with this mornings spike high.

Bias:Neutral

Resistance: .9292-.93035**, .9400-.9425***

Support: .9243-.9257***, .9082-.9100***

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Aussie (December)

Fundamentals:The Aussie climbed into Fridays settlement, the highest since September 24th on U.S and China trade hopes. Those hopes were quickly dashed coming out of the weekend with China releasing a statement saying it wanted further talks before signing a Phase One deal. This added to already developing pressures due to weak China Trade Balance data Sunday night. Tonight, we look to the release of the RBA Minutes at 7:30 pm CT and China inflation data at 8:30. Neither event is expected to bring much optimism to this long-lasting gloomy picture seemingly only hinging on U.S-China trade progress.

Technicals:The Aussie violated and closed above a downtrend line Friday but quickly neutralized the achievement by fading through todays session. This exudes the longer-term heavy downtrend and price action must continue to close above major three-star resistance at .6797-.6824 in order to bring near-term waves of relief.

Bias:Neutral/Bearish

Resistance: .6797-.6824***, .6911***

Support: .6772**, 6685-.6722***, .6280-.6300***

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Canadian (December)

Fundamentals:The Canadian surged higher on Friday after another blowout jobs report but gains quickly dissipated as it followed other risk assets lower to begin the week. Not only did U.S and China seem to take a step backwards, but Chinas poor Trade Balance data was another blow as it exudes global weakness and does not bode well for Crude Oil. Outside of the energy sector, there are bright spots for the Canadian to pair with job growth; there were steady gains in housing data last week and upbeat hopes on finalizing the USMCA soon. Coming out of todays Thanksgiving Holiday in Canada there is not economic data tomorrow.

Technicals:After edging to a new swing low on Thursday, the Canadian reversed sharply finding a tailwind from U.S-China and jobs data. What was an extremely bright technical picture upon Fridays close at the resistance pocket we have continued to reference at .7600 quickly fizzled out to start the week. With price action slipping, the bulls will lose their near-term edge below first key support at .7546-.7558.

Bias:Neutral/Bullish

Resistance: .7575-.7596***, .7623**, .7695***

Support: .7546-.7558***, .74965***

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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.