The US dollar shook off yesterday’s mixed data flow to trade sharply higher over the European morning on reports that the ECB are considering further policy easing. Equity markets are stronger also as Middle East tensions subside following the shooting down of a Russian jet by Turkey this week. Markets are responding positively in the absence,as yet, of a Russian response. US Core PCE and Durable Goods data are the key releases for today’s US session with PCE core expected to see a small pickup.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR plummeted over the European morning on news that the ECB are contemplating staggering charges on banks holding on to cash or simply buying more debt. Policy divergence between the ECB and the Fed continues to drive EUR downside.
Technical: While 1.07 caps intraday upside corrections, bears target a test of 1.0560 next ahead of an assault on year to date lows. Only a close above 1.08 eases immediate downside pressure.
Interbank Flows: Bids 1.06 stops below. Offers 1.0750 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Short 1.0830 targeting 1.0560
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP today extended losses on the back of Dovish comments yesterday by BOE’s Haldane opining that the risks to inflation and growth are skewed to the downside. The UK’s Autumn budget is being released today, with the Chancellor expected to challenge the UK’s growing deficit with the unveiling of hugs public spending cuts.
Technical: While 1.5160 contains upside reactions expect a test of of bids at 1.50 as the next bearish objective. Only a close above 1.5250 eases immediate bearish bias
Interbank Flows: Bids 1.5050 stops below. Offers 1.5250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now
USD/JPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: The October BoJ minutes provided no fresh leads as widely expected. However, the minutes warned that Japan economy is likely to grow at a slower pace in financial year 2017 seeing some JPY weakness, whilst USD soared over early European trading today.
Technical: While 122.50/30 supports downside reactions, market structure remains bullish to test 2015 highs next.
Interbank Flows: Bids 122 stops below. Offers 124 stops above
Retail Sentiment: Bearish
Trading Take-away: Long 122.50 stops to entry target 125.50
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR/JPY was sharply lower over the European morning on news of ECB considering further easing ahead of their upcoming monetary policy meeting.
Technical: While 131.50 caps upside reactions expect a sustained break below 130 to confirm a retest of 2015 lows. Only a close above 132.50 eases immediate bearish pressure.
Interbank Flows: Bids 130.50 stops below. Offers 132.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines for now
AUD/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD was lower over the European morning as a resurgent US dollar trumped recent AUD bullishness. Softer copper prices added further weight to the Aussie.
Technical: While .7170/50 remains the bid zone expect grind higher to test .7350 area next, only a close below .7150 concerns near term bullish bias.
Interbank Flows: Bids .7150 stops below. Offers .7300 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: The Candian dollar has over the last few days received a boost from the rally of oil prices amid heightened geopolitical fears arising from Russia and Turkey. However, as these risks have subsided and oil prices have fallen, the resurgent US dollar has seen USD/CAD higher over European trading today.
Technical: Bulls have the ball while 1.33/1.3280 supports intraday downside. A close below 1.3220 would ease the near term bullish bias and suggest a broader correction is underway.
Interbank Flows: Bids 1.33 stops below. Offers 1.34 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines for now
