Is This Risk Aversion?
Skerdian Meta • 1 min read
Today looks pretty strange. The price action has been weird this week, but today it´s really confusing. Looking at the forex charts of forex majors, we can see lots of divergence in some pairs which used to be really correlated recently.
For instance, we see two of the commodity currencies (Com Dolls), specifically the Pacific ones, getting bids all morning. On the other hand, the Canadian Dollar has been totally smashed today. That´s likely due to the decline in oil prices but there you go, divergence between the Com Dolls.
The biggest divergence though is between the Euro and the Japanese Yen. If you have read our articles during the last year or so, we have highlighted that the Euro has turned into some sort of safe haven. Whenever there was risk aversion sentiment in the market, EUR/USD would surge higher and USD/JPY would sink.
Today, we are seeing only sinking in these two forex pairs. USD/JPY has lost about 50 pips this morning and so has the EUR/USD pair.
The H1 chart looks favourable for a long position, but the H4 chart thinks otherwise.
This is some strange price action so we must leave correlation aside today and concentrate individually on each pair. For instance, right now I´m looking at AUD/USD and the H1 chart looks pretty good for a short term buy forex signal. However, the H4 chart is still pointing down, so we´ll hang on for a while longer in case we get a better entry price lower.