Follow USD/JPY higher, caution on USD/CAD – Deutsche Bank

The research team at Deutsche Bank explains that trendiness in G10 FX continues to improve, with aggregate VHF reaching the 83rd percentile and newgroundiness at the 97th percentile while aggregate realized vol. has remained firm at the 83rd percentile. USD/JPY is our top-scoring currency pair among G10.

Key Quotes

“It is highly trending and is breaking new ground to the topside. The pair is not stretched on RSI metrics and has smooth price action from a realized volatility perspective. USD/CAD is our top-trending pair. It is breaking new ground to the topside with both VHF and newgroundiness measures above the 99th percentile. The cross is highly stretched as measured by RSI metrics, however, suggesting caution in chasing the trend. EUR/USD and EUR/NOK are also trending (to the topside) and have smooth price action but are stretched.”

“USD/CHF is trending to the downside with VHF at the 88th percentile and newgroundiness at the 92nd percentile. It is not stretched and has smooth price action . Avoid EUR/GBP and EUR/SEK as the pairs lack momentum.”

“EM FX

USD/TWD tops our technical scorecard. The pair is moderately trending and is breaking new ground to the downside with the newgroundiness measure at the 88th percentile. It is not stretched and has relatively smooth price action. USD/ TRY, USD/ILS, USD/CLP and USD/HUF are highly trending with VHF above the 90th percentile. The pairs are extremely stretched as measured by RSI metrics, however. USD/MYR is also highly trending with VHF at the 98th percentile and has smooth price action. USD/PHP and USD/PLN are also moderately trending. Avoid trading in USD/SGD and USD/RUB as the pairs display low momentum.”