After the surge in trading volumes and uptick in volatility around the June Federal Reserve policy meeting and quad witching Friday, stability in global bond yields has started to trickle down to FX markets, culminating in a lower volatility environment. But as is often the case, sustained periods of lower volatility tend to translate into increased risk appetite among traders. Indeed, a trio of EUR-crosses suggests that a ‘risk-on’ attitude may be building again.
In the prior update it was noted that “even if there is a break higher, EUR/NOK rates are still below the rising trendline from the January 2013 and July 2019 lows, evidence that, on a longer-term basis, we remain in bearish breakout territory.” The multi-year rising trendline proved as resistance, rejecting EUR/NOK’s bullish breakout attempt last week. Bearish momentum is developing, with the pair falling to its daily 21-EMA; the daily EMA envelope is compressing, losing its bullish disposition. Daily MACD is starting to shift lower (albeit above its signal line), while daily Slow Stochastics have encroached their median line. A rest of the uptrend from the April, May and June swing lows may be nearing.