Tuesday’s return to trading desks in the US, France and Canada saw a return to some reasonable volume to get things moving again. UK CPI came in much lower than expected which saw some GBP/USD longs unwind to push the cross through key support ahead of Wednesday’s unemployment data and the Inflation report. The associated press conference from Governor Carney will be closely watched for hawkish tones which would push the pound higher again. This along with the Preilinary GDP data from Japan will likely be pivotal for the near term market outlook.
USD% Index
The dollar rallied up to a triple top on Tuesday although has still failed to make a fresh high since the ECB rate cut spike. Currently making higher lows, there is a possibility of a push higher from here to break out to the upside, although the price action remains uninspiring and with the Nikkei looking heavy into the Asian session, we could just as easily see a drop down to trend line support before a push higher. I am neutral USD until a fresh high is made
USD% Index Resistance (EUR/USD support): EUR/USD 1.3400, 1.3385, 1.3323
USD% Index Support (EUR/USD support): EUR/USD 1.3445, 1.3492
EUR% Index
Pound wekness translated into Euro strength on Tuesday as the EURGBP cross drove price action with a rally higher after an inflation miss from the UK. With UK employment data and the inflation report followed by Carney’s speech, EURGBP could further drive EUR/USD in terms of direction, especially since the dollar is quite directionless at the moment. I am bullish EUR until EUR/USD 1.3300 is meaningfully broken to the downside
EUR% Index Resistance: EUR/USD 1.3486, 1.3500, 1.3528
EUR% Index Support: EUR/USD 1.3390, 1.3350, 1.3280
EUR/GBP Positioning
Long from 0.8447
JPY% Index
Further Yen weakness has pushed the JPY% index down to meet support, while stopping shy of test bearish trend line support shown around USD/JPY 100.00. With the Japanese GDP figures out on Wednesday evening, we may see some profit taking in Yen pairs ahead of the data, especially considering the Nikkei was looking heavy into the Asian session.The Yen’s direction could go either way from these levels after that. If we see poor UK data and poor JPY data, the dollar may fail to break the recent highs and begin selling strongly via USD/JPY, which would be bullish for the JPY% index. I am bearish JPY
JPY% Index Resistance (USD/JPY Support): USD/JPY 99.21, 98.84
JPY% Index Support (USD/JPY Resistance): USD/JPY 99.80, 100.00, 100.42
Nikkei 225 Futures
GBP% Index
Another big day ahead for the GBP% index with Tuesday’s welcome drop in inflation pushing the pound lower through critical support ahead of Wednesday’s unemployment claims and Governor Carney’s inflation report and presser. The GBP% index has had two recent attempts to post a new high and failed each time, but likewise has also failed to break the lows, consolidating sideways in a range that could be interpreted as a medium time-frame bullish flag. This could also be read as a two headed head and shoulder formation if we break the current lows. Outlook is bearish GBP although data dependant
GBP% Index Resistance: GBP/USD 1.6000, 1.6050, 1.6122
GBP% Index Support: GBP/USD 1.5875, 1.5800, 1.5700
GBP/USD Positioning
short from 1.5911
AUD% Index
Westpac Consumer Sentiment came in quite well but failed to stop the Australian dollar from dropping sharply, stopping short of meeting critical support. Momentum remains to the downside although we may be nearing the kind of price where we could see a retracement back up to channel resistance. I remain bearish AUD
AUD% Index Resistance: AUD/USD 0.9300, 0.9350, 0.9385
AUD% Index Support: AUD/USD 0.9286, 0.9250, 0.9242
AUD/USD Positioning
Short from 0.9296
CHF% Index
A contimued bounce for the VHF% index following a test of a wide bullish channel. This was largely due to EUR/USD being propped up by a GBP/USD drop and the Swiss Franc following suit, so Wednesday’s UK data should be important for the direction for the Swiss Franc also. I am bullish CHF
CHF% Index Resistance (USD/CHF support): USD/CHF 0.9145, 0.9100
CHF% Index Support (USD/CHF resistance): USD/CHF 0.9191, 0.9200, 0.9211