Market Brief
The FX markets opened in the continuation of last week dynamics. The referendum in Eastern Ukraine, considerably against Kiev, didn’t have a significantly impact on the market sentiment. The CFTC data showed larger USD-short bets, the US 10-year yields recovered to 2.6413% (slightly lower than 21-dma at 2.6482%).
In Japan, the trade deficit deepened from Yen -533.4bn to Yen -1,133.6bn in March. USD/JPY and JPY crosses were better bid in Tokyo, despite 0.35% drop in Nikkei stocks. USD/JPY tested 102.00 offers yet failed to extend gains above 102.05. Trend and momentum indicators are marginally bearish, importer bids wait at 101.50, the key short-term supports stands at the 200-dma (101.11), then 100.76 (2014 low). Despite EUR-negative tone, EUR/JPY rebounded from the daily Ichimoku base (139.99). The sentiment remains bearish with eyes shifting to 200-dma (137.74).
EUR/USD consolidates losses above the 100-dma (1.3741) with markets still pricing in the probability of an ECB action by June. Option bids with today expiry are placed at 1.3750/60, barriers stand at 1.3800/25 zone. More selling interest expected below 1.3740, then 1.3700.
The Cable rebounded from 1.6840 (Mar-May uptrend channel base), rallied on stops above 1.6860 as Europe walked in this morning. The RSI is now at 57%, the downside correction comes to completion. Support is seen at 1.6800/36 (optionality / 21-dma). A close below should signal a short-term bearish reversal. EUR/GBP hits a fresh low (0.81551) on GBP/USD rally. The sentiment is comfortably bearish. Option related offers abound between 0.81500/0.81000 for the week ahead.
In New Zealand, the house sales dropped by 20.2% in April (y-o-y), while the house prices increased 0.1% m-o-m (vs. 3.4% a month ago). NZD/USD consolidates weakness. A daily close below 0.8648 will suggest deeper downside correction according to MACD analysis. The key support stands at 0.8590 (50-dma). AUD/NZD trend gives bullish signals, a daily close above 1.0816 (21-dma & MACD pivot) will keep the sentiment positive. The key resistance stands at 1.1031 (200-dma).
USD/CAD tests 1.0900/10-offers after disappointment on jobs data. Released on Friday, Canada unexpectedly lost 28.9K jobs in April; the unemployment remained unchanged at 6.9% for a lower participation rate of 66.1%.
The economic calendar of the day is light. Traders lean on Bank of France Business Sentiment, Swiss March Retail Sales and US April Monthly Budget Statement.
Currency Tech
EUR/USD
R 2: 1.3885
R 1: 1.3825
CURRENT: 1.3772
S 1: 1.3745
S 2: 1.3665
GBP/USD
R 2: 1.6996
R 1: 1.6925
CURRENT: 1.6874
S 1: 1.6832
S 2: 1.6763
USD/JPY
R 2: 102.79
R 1: 102.05
CURRENT: 101.88
S 1: 101.50
S 2: 101.11
USD/CHF
R 2: 0.8953
R 1: 0.8895
CURRENT: 0.8861
S 1: 0.8800
S 2: 0.8780