New York Forex Report: Following hawkish comments from a string of Federal Reserve Bank presidents, another top fed official joined the bandwagon in making the case for a rate hike sooner rather than later. St Louis Fed chair James Bullard said that policy makers should consider hiking in April amid positive outlook on inflation and the job market. Recovery in economic indicators suggests that policy tightening would avoid “overshooting on inflation” . In response to these comments, USD strengthened as equities and oil prices weakened. Traders now turn their attention to the Durable Goods number for February as well as Initial and Continuing jobless claims and FOMC’s Bullard who speaks later today.
EUR/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: Amidst a slight pullback in USD strength, EUR corrected higher over the European morning though still under pressure from a week of straight daily losses. Focus now on key US data and FOMC’s Bullard.
Technical: EUR has breached symmetry support in the 1.12 which now becomes initial intraday resistance, while this level contains upside reactions anticipate a move back to 1.1050 in broader range trade.
Interbank Flows: Bids 1.1150 stops below. Offers 1.14 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Hawkish comments from Fed’s Bullard pushed GBP below 1.4100 handle, a level which was seen ahead of last Wednesday’s FOMC rate decision. Sterling has suffered a double blow of increased Brexit fears and Fed rate hike talk since Monday. Political developments over the weekend in the UK and terror attacks in Brussels heightened Brexit fears and weighed on the currency. On the data front, UK Retail Sales for February fell less than expected.
Technical: The breach of 1.4130 support has exposed 1.4050 pivotal support. A failure to hold 1.4050 opens a retest of year to date lows at 1.38 ahead of 1.37 weekly swing objective
Interbank Flows: Bids 1.4050 stops below. Offers 1.4200 stops above.
Retail Sentiment: Bearish
Trading Take-away: Short
USD/JPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: USD/JPY weakened over the European morning led by a pullback in USD strength. Alongside US data later today we also have Japanese CPI coming out this evening which could see some volatility amidst lightened holiday markets.
Technical: Price currently testing near term resistance sited at 112.88 with a close over 113 required to neutralise the immediate downside threat, in the broader range of 111/114
Interbank Flows: Bids 111 offers below. Offers 113 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral
EUR/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: Choppy flows persist in EUR/JPY which has been firmly range-bound all week with both EUR & JPY weaker. The Japanese government downgraded its assessment of the domestic economy and with private consumption in particular. However, it was more upbeat on business investment. This downbeat assessment could weigh on the Nikkei and then on the pair, which could cap upside.
Technical: Bids sub 125 supported the current advance to target a test of symmetry resistance at 128.15 as the immediate corrective objective. Failure at 124.50 suggests false upside break and opens retest of 123.
Interbank Flows: Bids 125 stops below. Offers 127.50 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral
AUD/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Fundamental: AUD has regained some ground over the early European session today on the back of USD weakness. AUD currency dropped yesterday with markets in an uncertain market mood and continues With equity markets suffering declines and the retreat of crude oil prices, the Aussie sold off in times of heightened risk aversion. The broad US dollar move drove by the overall positive tone of the Fed speakers also weighed on the Aussie.
Technical: Only a failure at.7400 support threatens medium term bullish bias. Expect consolidation above this level ahead of the holiday weekend with intraday resistance sited at .7550.
Interbank Flows: Bids .7450 stops below. Offers .7700 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: Despite some USD weakness over the European morning, USD/CAD continues to squeeze higher as Oil edges lower. Oil prices lost 4% as US crude stockpiles rose more than expected, strengthening concerns about a stubborn global glut
Technical: AB=CD downside objective at 1.2966 achieved, while 1.3110 contains downside reactions expect a test of symmetry swing objective at 1.33 as next meaningful resistance, a close over 1.34 negates near term bearish bias.
Interbank Flows: Bids 1.3100 stops below. Offers 1.3300 stops above
Retail Sentiment: Bearish
Trading Take-away: Long
