New York Forex Report: The early European session on Monday was largely a quiet one amidst a lack of tier one data to move markets. Sterling however, which was the biggest mover over the session, saw a spike higher. The Bank of England meet on Thursday for their monthly rate setting meeting and whilst no change to rates is expected, traders will be keen to kear the Bank’s latest outlook on the UK economy in the wake of a raft of poor data recently.
EUR/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: Litte changed over the session with no data to provide the catalyst for a directional move. Last week ECB president Draghi stressed that the central bank had no shortage of tools available to drive up stubbornly low inflation, and would continue to do “whatever is needed”.
Technical: Price continues to recoil and rotate below symmetry swing objective at 1.1420, printing a hight of 1.1438 before pulling back below the figure, price action appears to be coiling. While 1,1330 continues to support expect a test of offers towards 1.15 next.
Interbank Flows: Bids 1.1330 stops below. Offers 1.1450 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines
GBP/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish
Fundamental: Sterling was higher on the session as traders adjust positions ahead of the upcoming BOE meeting. Choppy flows are expected to persist in the interim.
Technical: Price continues to finds bids at 1.4050 pivotal support within the broader 1.45/1.40 range. A failure to hold 1.40 opens a retest of year to date lows at 1.38 ahead of 1.37 weekly swing objective.
Interbank Flows: Bids 1.40 stops below. Offers 1.4250 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: JPY remains firm despite recent warnings from Japanese finance minister Aso who notified markets of potential intervention in th event of continued JPY strength.
Technical: The downside ratchet now targets 105.50 as the next major downside objective. Near term look for upside reaction to fail at 1.09 ahead of trend resistance at 110.50 for renewed weakness.
Interbank Flows: Bids 107.50 offers below. Offers 109 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Japanese data painted the picture of a generally subdued growth environment. Barely budging from the 13-month low in Feb, consumer confidence index ticked only 1.6 points higher to 41.7 in March and outlook for the next few months remained gloomy. An outlook survey by Eco watchers edged lower to 46.7 in March (Feb: 48.2), the lowest in fifteen months.
Technical: Bears target a retest of 122.05 year to date lows, intraday resistance is sited at 124.50. Only a close over 126.80 eases immediate downside pressure.
Interbank Flows: Bids 122 stops below. Offers 124.50 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short
AUD/USD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Fundamental: Higher commodities prices and a weaker US Dollar continue to support the Australian Dollar though traders remain cautious about the potential for RBA action if the currency continues to strengthen. Unemployment Rate data on Thursday provides the key domestic event risk for the week.
Technical: Only a close below .7500 threatens the near term bullish bias, while this level supports intraday expect a grind higher to test .7770. A failure at .7500 opens pivotal .7450 support.
Interbank Flows: Bids .7500 stops below. Offers .7650 stops above.
Retail Sentiment: Bearish
Trading Take-away: Long
USD/CAD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: USDCAD remains under pressure at the start of the week with the Canadian Dollar supported by recent positive employment data and higher Oil prices. Traders look ahead to the upcoming BOC meeting On Wednesday.
Technical: The major hurdle to the upside remains the symmetry swing resistance sited at 1.3230, while this area continues to contain upside reactions anticipate a retest of 1.2830/50 level as we once again attempt to set a double bottom base to encourage a broader correction.
Interbank Flows: Bids 1.29 stops below. Offers 1.3250 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
