London Forex Report: Disappointment over failure to reach an agreement on oil production freeze by the world major oil producers at a meeting over the weekend had pushed oil prices back down below the US$40/ barrel handles. This pared hopes of a sustainable rebound in oil prices that could help lift many oil-exporting countries out of its current doldrums. In the US, contrary to upticks seen in recent manufacturing indices, be it nationwide or regional, industrial production fell more than expected by 0.6% MoM in March amid continued contractions in all the three main sectors, led by the steepest decline in manufacturing output in a year and bigger fall in mining production. Slowing global backdrop and strong greenback are expected to continue dampen demand for US goods, hence exerting further pressure on overall growth and further dimming the outlook of Fed rate normalization. USD weakened Friday following a set of soft US data that dampened further the tightening prospects of the Fed. The USD Index slipped 0.22% to 94.69 after sliding through European and early US trades.
EUR/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR surged to an intraday high of 1.1317 against the USD after the worse-than-expected US Michigan Confidence data. However, it retreated to 1.1280 at Friday NY close. Euro Zone February Trade Balance was released as 20.2b euros, worse than the expectation 21.5b. Mario Draghi, the president of ECB, said ECB will do anything necessary to boost inflation and so far has not seen that expansion monetary policies are creating asset bubbles.
Technical: 1.1220 support survives on the initial test as 1.1330 now becomes resistance. A breach of 1.1220 opens 1.1140 as the next downside objective.
Interbank Flows: Bids 1.12 stops below. Offers 1.1350 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: GBP strengthened on Friday to post its first week of gains in five against a basket of currencies as the UK inflation data was better than expectation. The pound has fallen 1.06% month-to-date against USD on worries that Britain will vote to leave European Union at the referendum on June 23. BoE and IMF both warned the harm of Brexit issue that it may damage the British and even the global economy.
Technical: Price continues to finds bids at 1.4050 pivotal support within the broader 1.45/1.40 range, While 1.4140 supports 1.44 symmetry swing objective is the upside target.. A failure to hold 1.40 opens a retest of year to date lows at 1.38 ahead of 1.37 weekly swing objective.
Interbank Flows: Bids 1.41 stops below. Offers 1.44 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Against the JPY, doll fell 0.6 percent to 108.72 on last Friday, its biggest daily loss since April 7. The USD/JPY so far has dropped nearly 10% this year, on track for its worst year since 2010. Some research said that soft Japanese data and wage negotiations pointed to a slowing growth of the domestic economy, BoJ may have to take action at its April meeting. It is possible for BoJ to cut rate deeper into negative territory.
Technical: The downside ratchet now targets 105.50 as the next major downside objective.Trend resistance is sited at symmetry and structure confluence at 110.70 which should attract fresh selling for renewed weakness.
Interbank Flows: Bids 107 offers below. Offers 110.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Japan’s industrial output fell 1.2% YoY in Feb, according to a final report from Ministry of Economy, Trade and Industry. It was the third straight monthly contractions after the 4.2% YoY decline in Jan, foreshadowing a technical recession in 1Q.
Technical: Bears now target weekly symmetry objective at 120.60, resistance is sited at 124.50. Only a close over 126.80 eases immediate downside pressure.
Interbank Flows: Bids 120.50 stops below. Offers 124.50 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short
AUD/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Fundamental: The Aussie dropped more than 1% to as low as 0.7594 in early Asian session as oil producers failed to reach an agreement on output freeze. Aussie was traded in a range of 0.7680 to 0.7733 last Friday. The Aussie eased to 0.7680, from a high of 0.7717 on Wednesday.
Technical: Only a close below .7500 threatens the near term bullish bias, while this level supports intraday expect a grind higher to test .7770. A failure at .7500 opens pivotal .7450 support.
Interbank Flows: Bids .7500 stops below. Offers .7700 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: CAD dropped more than 1.2% this morning due to the disappointing result from Doha oil producers meeting. The oil prices movement will be focused as which will decide the next level of Loonie. The Loonie dropped in tandem with oil prices last Friday. The WTI Crude slipped to an intraday low at 40 USD per barrel and met its support there.
Technical: Bids just below below 1.2780 encourage a bounce intraday resistance now sited at pivotal 1.30 resistance. An upside breach of 1.30 opens 1.33 as the next upside objective
Interbank Flows: Bids 1.29 stops below. Offers 1.30 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
