G10 trendiness low, follow USD/JPY lower, caution on USD/ZAR – Deutsche Bank

Oliver Harvey, Macro Strategist at Deutsche Bank, explains that in general, G10 pairs are showing a low level of trendiness with aggregate VHF at the 35th percentile and new groundiness at the 10th percentile.

Key Quotes

“Realized vol has remained at fair levels around the 70th percentile. USD/CHF tops our technical scorecard particularly due to low levels of stretchiness and high realized vol. USD/JPY is our top trending pair, breaking new ground to the downside, with new groundiness at the 86th percentile. The pair is not yet stretched and has a relatively smooth price action. EUR/SEK is highly trending to the upside with VHF at the 80th percentile. The pair is not at all stretched from both RSI and RR perspective and has a smooth price action. NZD/USD may be running out of steam as the pair has displayed slow momentum with trendiness at very low percentiles.”

“EM FX

USD/PLN tops our technical scorecard. The pair is moderately trending and is breaking new ground to the topside. It is not at all stretched and has a smooth price action as measured by realized volatility metrics. USD/ZAR is highly trending with VHF at the 99th percentile.  It is also breaking new ground to the topside with new groundiness at the 88th percentile. However, the pair is extremely stretched, with RSI and RR metrics both below the 10th percentile. Notably, USD/THB, USD/INR and USD/RUB are breaking new ground to the downside with our new groundiness measure exceeding the 80th percentile. Avoid trading in USD/BRL, USD/IDR, USD/SGD and USD/TRY as the currencies are displaying low momentum with both the trendiness measures at extremely low percentiles.”