Currencies: Two currencies, one fight

Since the vote in favor of Brexit, some have called for a full uncoupling between England and continental Europe's economies. However, despite the differing points of view and the sometimes stormy relations between the two blocs, the currencies themselves are adopting the same attitude to the dollar king.

Indeed, for several years now, the pound sterling and the euro have been moving in the same direction. To see for yourself, take a look at the chart below, which traces the evolution of these currencies over the last 5 years. The correlation is quite striking. In other words, if you want to trade either of these currencies, make sure you look at the parallel points on the other to avoid any potential setbacks.

Source : Bloomberg

As for the Japanese yen, the USDJPY has indeed bounced back, and has just stumbled on the resistance zone at 146.10/33, the level from which a new bearish salvo should materialize. Only a breakout above 148.15 will spoil the party.

Commodity currencies remain well positioned above 0.6200 on the kiwi and 0.6640 on the aussie, which roughly corresponds to 103.10 on the dollar index (DXY). In simple terms, as long as the US 10-year yield remains below 4.07%, the dollar will remain under downward pressure against the other main G10 currencies. Conversely, any breach of this level should once again whet the appetite for dollar crosses. You've been warned!