New York Forex Report: An unexpected rise in US oil inventories reported yesterday has oil prices under pressure once again today, dragging risk sentiment lower once again. Market's main focus is the US rate decision later today and whilst no increase in rates is expected, traders will be paying close attention to the statement for any clue as to the proximity of future rate increases, alongside how the Fed views the continued slide in oil prices and recent volatility stemming from increased concerns regarding the slowdown in China. Expectations are built for a Dovish message tonight and so there is some upside USD risk if the Fed aren’t as downbeat as expected.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: EUR grinded higher over the European morning as European equities unwound on renewed oil weakness.
Technical: Trading mid to upper range, a sustained breach of 1.08 bids opens 1.07 range lows. A breach of 1.0990 trend resistance opens a broader 1.1240 symmetry corrective objective.
Interbank Flows: Bids 1.08 stops below. Offers 1.0950 Stops above.
Retail Sentiment: Bullish
Trading Take-away: Neutral
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: GBP weakened over the European morning as renewed oil weakness saw risk-sentiment scaled back, further weighed on by weaker House Price data.
Technical: A breach of 1.42 opens a retest of last weeks 7-year lows. Over 1.44 eases immediate downside pressure and sets up a broader correction.
Interbank Flows: Bids 1.42 below. Offers 1.44 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: USD/JPY remains range-bound into the US crossover with flows muted ahead of the FOMC later today. Overnight Japanese small business confidence printed below expectations.
Technical: While 117.90 caps downside attempts expect a retest of 119 offers. Only above 119.30 eases immediate downside pressure. A breach of 117.40 resets the bearish tone.
Interbank Flows: Bids 117.50 stops below. Offers 119 stops above
Retail Sentiment: Bearish
Trading Take-away: Long
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Market choppiness continues, as EUR/JPY seesaws inside the broad 129-127 range, and it looks like we will need to wait for the FOMC and BOJ policy decisions in the next couple of days to establish a new theme. For choice, prefer the pair to find support in dips especially as we anticipate the FOMC to maintain a relatively moderate tone and players to be wary of a potential move from the BOJ on Friday.
Technical: Anticipated grind higher to test 129, over 129.50 eases immediate bearish tone bulls target 131 next while 127.50 supports
Interbank Flows: Bids 127.50 stops below. Offers 129.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: AUD remains range-bound near yesterday’s session highs supported by better than expected domestic inflation data overnight which saw Q4 CPI tick up.
Technical: While .6930/50 caps intraday downside expect a test .7050. Only a breach of .7150 eases immediate downside pressure.
Interbank Flows: Bids .6900 stops below. Offers .7050 stops above
Retail Sentiment: Neutral
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bullish
Fundamental: The Canadian dollar continues to strengthen against the US dollar with USD weakness ahead of the FOMC underpinned by a slight recovery in oil prices into the US crossover.
Technical: While 1.4310/30 caps upside reactions expect a broader corrective phase to test 1.40 support. Only above 1.44 eases immediate downside pressure and opens a retest of 2016 highs.
Interbank Flows: Bids 1.4050 stops below. Offers 1.4350 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
