New York Forex Report: Markets have begun the week in a decidedly risk-off manner with both oil and equity markets under pressure. Amidst the early European session, which saw USD continue to strengthen, news hit wires that China has again cut its reserve requirement ratio for major domestic Banks, returning concerns for the world’s second-largest economy to the forefront. A raft of China PMI data sets over the week presents the risk of sharp volatility on any weakness.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Expectations for further ECB easing have the Euro under pressure as February EuroZone CPI prints below expectation falling -0.2% against an expected flat reading.
Technical: While prior support at 1.10 acts as intra day resistance bears target prior range support at 1.08. Only a close over 1.1080 eases immediate downside pressure
Interbank Flows: Bids 1.09 stops below. Offers 1.1050 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Despite positive data this morning ( an increase in both Net Consumer Credit and Mortgage Approvals) GBP remians under pressure as Brexit concerns still drive the action with yet further forecasts emerging from various Banks regarding the likely damage to the UK economy from such an event.
Technical: While 1.4040/60 acts as resistance expect a continued grind lower for a test of the next major monthly downside objective at 1.37. Only a close over 1.4250 eases immediate downside pressure.
Interbank Flows: Bids 1.3850 stops below. Offers 1.4040 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: JPY begins the week in demand as risk-averse investor sentiment dominates the early European session. The Japanese MoF state that they did not intervene in FX markets over February as the latest CFTC COT data shows that JPY longs continue to build. JPY is set to register its biggest gain since October 2008
Technical: Friday’s close over 113.30 sets up the potential for a broader corrective phase against the daily double bottom pattern from last week. Bulls will be looking for 112.20/40 to support on the pullback for a further leg of corrective gains, to retest the broken neckline support at 115/116
Interbank Flows: Bids 112.50 offers below. Offers 114 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR/JPY starts the week under heavy selling pressure with EUR driven lower on weak inflation data and JPY supported via safe-haven demand.
Technical: While 124.80/125 offers intraday resistance expect a continued grind lower to print fresh lows and test bids at the psychological 120 en route to a weekly downside objective at 118/117, only a close over 126.60 eases bearish bias.
Interbank Flows: Bids 122 stops below. Offers 125 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD starts the weak lightly bid as support comes from heavy cross-flow buying in AUD/NZD following weak NZD data overnight. Traders next focus will be the monthly policy meeting of the Reserve Bank of Australia (RBA) on 1 March.
Technical: Expected retest of offers above .7240 attracts near term profit taking. While .7150 supports intraday expect a test of range resistance at .7300. Only a failure at.7050 pivotal support threatens bullish bias.
Interbank Flows: Bids .7150 stops below. Offers .7300 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: USD/CAD begins the week in a bid tone as Oil softens and USD continues to extend gains from last week’s positive CPI and GDP data prints.
Technical: While USD/CAD trades sub 1.3660 downside pressure remains the driver with bears focusing on a AB=CD ultimate downside objective at 1.2966, the next support level to watch is is 1.3450 the breakout point of the upside acceleration
Interbank Flows: Bids 1.3450 stops below. Offers 1.3650 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
