London Forex Report: In line with recent data weaknesses and the Fed latest assessment, 1Q GDP growth in the US economy tapered off more than expected to a two-year low of 0.5% QOQ, the first estimate showed. The slowdown was rather broad-based, led by moderation in private consumption to +1.3% (4Q: +1.7%) and bigger drag from net exports (-0.34% vs -0.14% in 4Q). Lackluster growth will continue to keep the Fed in a cautious mode, reinforcing the case for gradual normalization. On the contrary, Eurozone sentiments were seen rebounding from lows. Economic confidence rebounded from the lowest level in more than a year to increase 0.9 points to 103.9 in April. USD slipped the USD Index fumbled 0.66% to 93.76, first slumping on strong rebound in JPY before sliding lower as rate hike outlook faded with softer US economic performance.
EUR/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR managed to regain some ground against the USD and returned to the 1.1350 level during the American afternoon after completing a round trip to 1.1367 and back to 1.1310 at the beginning of American session. On the data front, the German harmonized CPI fell into negative territory, while in the US GDP growth slowed to 0.5%, the slowest pace in two years.
Technical: 1.1220 is the pivotal support zone ahead while this area holds expect another test of offers towards 1.1400 a break higher here targets 1.1487 as the next upside objective. Failure at 1.1220 opens 1.1140
Retail Sentiment: Bearish
Trading Take-away: Long
GBP/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: Despite a disappointing US GDP reading and higher than expected US jobless claims, GBP/USD was rejected once again from the 1.4620 zone and fell back below the 1.46 mark at the beginning of American session, trimming most of its intraday gains. The pair has been attempting to stand firm above 1.4600 level several times while it is awaiting fresh triggers to build on the recent gains.
Technical: While 1.4440/60 supports bulls target a broader symmetry swing objective at 1.4670. Failure at 1.44 opens a near term base test at 1.4240 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The BoJ decided to hold monetary policy steady on Thursday resulting to a red-hot rally of yen. USD/JPY was down more than 3% at 108.08. USD/JPY extended its loss at the early Asian session. The pair is now trading at 107.79, its lowest since 11 April.
Technical: he violent breach of 110 support suggests false upside break and opens a move to retest year to date lows, en-route to the weekly downside objectives of 106.50/105.50. Only over 111.80 eases immediate downside pressure
Retail Sentiment: Bullish
Trading Take-away: Short
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Japanese markets are shut for a public holiday. However, markets are still alerting for any intervention from Japanese official since the JPY has gone too far and too fast.
Technical: Bears now target weekly symmetry objective at 120.60. Only a close over 126.80 eases immediate downside pressure
Retail Sentiment: Bullish
Trading Take-away: Short
AUD/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Fundamental: AUD was steady at 0.7625, after recorded the biggest one-day drop in eight months on Wednesday. It dropped because the soft inflation figures revived expectations of a cut in rates by the Reserve Bank of Australia (RBA). Markets projected an increasing chance of an easing to a record low of 1.75% at the RBA’s policy meeting next week
Technical: While .7550 supports expect a grind higher to retest.7830 highs. A failure at .7550 opens pivotal .7470/50 support
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: CAD hit nearly a 10-month high against the USD as oil rallied and weaker-than-expected US economic growth weighed on the USD Oil markets rose to new 2016 highs, with US crude settling at $46.03 per barrel, as a weaker USD had investors ignored record high US crude inventories
Technical: While prior support at 1.2740/60 acts as resistance expect a grind lower to test 1.2350 bids next.
Retail Sentiment: Bullish
Trading Take-away: Short
