New York Forex Report: Full focus is now on the FOMC meeting decision due tonight. While the central bank is largely expected to keep rates unchanged, the dot plot and economic projection accompanying the policy statement will be closely scrutinized for cues on future policy direction with some players gearing up for a hawkish tone from the Fed. Quiet choppy session expected ahead of the meeting, USD remains firm heading into the US open with US CPI headline data on the session ahead of the FOMC.
EUR/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: Markets widely expect FOMC will take no action at the meeting tonight, but traders will be sensitive to any guidance delivered by Yellen and her colleagues. Yesterday data showed that 4Q EuroZone employment rose 1.2% YoY, better than the previous value 1.1%.
Technical: Intraday support is sited at 1.1060/40 while this survives expect a further grind higher to test pivotal resistance at 1.1370. Failure at 1.10 suggests false break and opens retest of bids towards 1.0820
Interbank Flows: Bids 1.1050 stops below. Offers 1.13 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Sterling remains heavy as Brexit concerns outweigh positive data. The latest employment and earnings data showed the Unemployment rate remained steady at 5.1% whilst average-weekly earnings beat expectations at 2.1% vs 2% exp. UK March Budget will be announced at 1230 GMT and is expected to confirm aggressive fiscal tightening.
Technical: The failure at 1.42 opens a retest of bids towards 1.41/1.4080 as we retest the base of the advance, below 1.4030 opens a full retest of year to date lows at 1.3828, Only over 1.43 eases immediate downside pressure
Interbank Flows: Bids 1.4050 stops below. Offers 1.4250 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
USD/JPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: Choppy flows continue in USD/JPY with the BOJ having recently kept rates unchanged though noting the room for potential further action if necessary. Attention on FOMC later today.
Technical: 112.30/10 continues to support expect a further leg of corrective gains, to retest the broken neckline support at 115/116. Failure at 112 open 11 again.
Interbank Flows: Bids 112 offers below. Offers 114.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
EUR/JPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: BOJ paused in its MPC meeting yesterday, holding its recently introduced QQE with negative interest rate at -0.1% by a 7-2 majority vote. Asset purchase will be maintained at 80 trillion yen per annum. Tone of the MPC statement was dovish, leaving rooms for BOJ to “take additional easing measures if it is judged necessary for achieving the price stability target”.
Technical: While 125 acts as support for the current advance expect a test of symmetry resistance at 128.15 as the immediate corrective objective. Failure at 124.50 suggest false upside break and opens retest of 123.
Interbank Flows: Bids 125 stops below. Offers 127.50 stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines
AUD/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Fundamental: The Australian Dollar remains under pressure over the European morning as commodities remain weak following further poor data from China over the weekend and RBA meeting minutes which confirmed scope for further easing.
Technical: While .7400 supports intraday expect further upside pressure targeting .7672 next. Only a failure at.7300 support threatens near term bullish bias.
Interbank Flows: Bids .7400 stops below. Offers .7600 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: The recent retracement in Oil has seen USD/CAD pause in its descent, with upside supported by a stronger US Dollar. US crude Oil inventories will be watched at 1430GMT.
Technical: While 1.3400 contains the recovery, downside pressure remains the driver with bears focusing on a AB=CD ultimate downside objective at 1.2966. Only a close over 1.3650 negates the bearish bias
Interbank Flows: Bids 1.3150 stops below. Offers 1.3350 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
