After the S&P Downgrade, the Trading Week Opens with USD-Negative Gaps

The market had the weekend to digest Friday’s news that Standard and Poor’s downgraded US credit rating from AAA to AA+. To open the week, we see gaps that are USD-negative in the EUR/USD, GBP/USD, USD/JPY, and USD/CHF. Let’s take a look at the technical setups in these crosses. While the gaps are most apparent in these 4 among the majors, other crosses such as USD/CAD, AUD/USD and NZD/USD, which involve “commodity” related currencies, are NOT opening with gaps. Commodity inflation may be at an end of its cycle?