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EUR/USD seen at 1.15 in 6-month

EURUSD_growing_Forex_FXPIG

EUR/USD could return to the 1.15 region in the medium term, suggested Senior Analyst at Danske Bank.

Key Quotes

EUR/USD will look ahead to Thursday’s release of May’s flash PMIs. We look for a slightly bigger rebound in the Eurozone manufacturing PMI than consensus, which should break the negative trend seen since last summer of EUR/USD plummeting on disappointing flash Eurozone PMIs”.

“In the bigger picture, a US-China trade deal is not in the cards before late Q3 and a recovery in Chinese PMIs not due before Q4. These are important prerequisites for a sustained uptick in EUR/USD. We forecast EUR/USD at 1.12 in 1M, 1.13 in 3M and then rising to 1.15 in 6M”.

Source: fxstreet


EUR/USD could return to the 1.15 region in the medium term, suggested Senior Analyst at Danske Bank.

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FOREX Week Ahead

USDCAD-lower-despite-FOREX_FXPIG

European and Chinese stocks markets are selling off from critical comments from Beijing that put a dent in trade talk optimism.  Flight to safety is the early morning theme and we may see that continue if we see softer Michigan sentiment and leading index data just after the open.  Safe-haven currencies, the Japanese yen and Swiss franc are outperforming with the early risk averse flows.  Before the open President Trump confirmed the delay of auto tariffs for at least 180 days, that news was heavily priced in and saw a slight bid with equities.

China Speak – Raises concern that talks may not resume

Brexit – Cross-party talks appear done and so is the PM

Spain – 10-year bond yield drops to record low

Oil – What will OPEC + do next?

Gold – No safe-haven appeal today

China Speak

Last night, multiple comments and reports confirmed China was switching to a firm stance on holding off talks until the US changes tactics.  China foreign minister Lu Kang reiterated China’s frustration with the US measures on Huawei and the effect to 5G going forward.  He added that China will take necessary measures to safeguard its rights and interests.  The foreign minister also confirmed earlier reports that no details exist on a Trump -Xi meeting.

The Editor-in-chief of the Global Times Hu Xijin tweeted, “The US Commerce Department put Huawei on its Entity List, making trade war more like a real ‘war’. Trade talks have been stuck in deep shock. The Chinese are more convinced concessions won’t bring peace. The only way for China is to strengthen independent research & development.”

A Chinese Communist Party Official stated a trade war could reduce China’s growth by 1%.

The onshore yuan fell to the weakest levels since December.

Brexit

The British pound continues to fall against all its major trading partners as Theresa May’s premiership nears an end.  Labour’s abandonment of talks pretty much cements the end of May’s deal getting pushed through.  Despite the high likelihood of her not delivering Brexit, she remains committed to put her bill up for one final vote.  She is considering the next step of indicative votes, but that probably does not matter as Labour is set on not working with a government that is about to collapse.

Former Foreign Secretary Boris Johnson will be one of the favorites to replace May, but regardless of who takes over, they will still have the same deadlock that May is dealing with.  Brexit is poised to drag on longer than anyone wants.

Spain

Spain’s economy has outperformed in Europe and investors are viewing Spanish bonds as a safer investment versus the rest of the periphery.  Spain’s 10-year yield fell to fresh record lows of 0.861% before settling back around the 0.863 level.  Spain’s bond market has provided investors with great yield for what was once considered one of the riskiest investments.

Italy’s 10-year yields came down sharply as markets appreciated the Deputy Prime Minister Di Maio’s de-escalation of his coalition partner Salvini’s comments that Italy will break the EU fiscal rules.  Di Maio noted that nobody wants to go 140%, otherwise debt-to-GDP level would be out of control.

The euro is mixed against the majors with the biggest declines to the Japanese yen.

Canadian Dollar Lower Despite Reaching Metal Tariffs Agreement With US

The Canadian dollar lost 0.22 percent this week. The loonie had a volatile five days as the US decision to reach an agreement on aluminium and steel tariffs was a positive for the currency alongside rising oil prices. Negatives came in the form of global trade and growth uncertainty. Escalation of rhetoric if not tariffs from both sides are reducing optimism that before the G20 meeting next month the two biggest economies can hammer out a deal.

Next week’s economic calendar in Canada will be low on events. Retail sales data on Wednesday, May 22 is the most relevant, with a 0.8 percent gain expected. Canadian data has been mixed with the employment report giving a huge boost to the loonie that will probably not be repeated in the short term.

The US dollar rose against all major pairs in the last five trading sessions. The Trump administration delayed or resolved trade issues with Europe and North America to focus on China and with that increased the appeal of the greenback as a safe haven. England’s leadership uncertainty hurt the pound while connections to the Chinese economy depreciated the currencies of New Zealand and Australia. Comments out of Italy have put downward pressure on the single currency as eurosceptic ideology is on the rise.

Pound Falls After Cross Party Brexit Talks Collapse

The British pound lost 0.53 percent on Friday and 2.11 percent on a weekly basis after Brexit talks between the Labour and Conservative parties broke down. Optimism on a positive Brexit outcome was short lived as members of the two political parties could not agree on the way forward together. Prime Minister May is facing internal pressure to step down, but the uncertainty on who her replacement could be is further pushing the currency down.

PM May remains committed to her proposal and will try to get a vote on it in June. A vote of no confidence could rob her of that opportunity and instead give rise to a eurosceptic Prime Minister in which case no-deal probabilities resurface. After the initial Brexit delay the divorce seemed to be called off, but this last push for separation will be decisive either way.

OIL – Energy Keeps Rising on Middle East Turmoil

Energy prices rose close to 2 percent in the last five days as tension in the Middle East showed no signs of easing. Disruptions to supply, either from the OPEC+ and their output cut agreement or due to political sanctions, weather and military actions have pushed prices more than 30 percent year to date. The fact that demand has not grown at the same rate, and there has been a significant ramping of production in the US highlight the fact that the market has been hyper focused on geopolitics while supply demand fundamentals have taken a back seat.

Trade war concerns have limited the rise of crude, as a tariff escalation would be negative for global growth. Energy demand would drop but so far the White House continues to be hopeful a deal can be reached, even as it is confident it would come out ahead of a full out trade war with China.

OPEC+ producers will meet in Saudi Arabia to discuss the fate of the product output cut agreement. The deal signed by OPEC members and other major producers such as Russia has been the main factor stabilizing prices after crude went on free fall in 2014. The marketshare play by OPEC led to oversupply so a correction was needed. Saudi Arabia led the talks that culminated on a plan to soak up excess production. This meeting will be the preamble of the June meeting in Vienna where the fate of the deal will be announced.

Current prices have been boosted by geopolitical disruptions and there are rising concerns that prices could be deemed appropriate for some members to opt out of the deal and start increasing production. US shale operations have ramped up operations and oversupply could once again be a concerns, although not one of President Trump that has openly advocated for lower crude prices.

GOLD – Dollar Replaces Gold as Top Safe Haven

Gold fell 0.66 percent as the White House decided to focus on China by delaying global auto tariffs and reaching an agreement on aluminium and steel tariffs with Canada and Mexico. The move on the trade front made the dollar the de facto safe haven as China countered by saying the US is trying to bully it into submission. The yellow metal fell as investors flocked to the greenback awaiting more developments as the battle between the two largest economies is set to continue.

US data and Fed speakers have been mixed leaving the U.S. Federal Reserve to keep on pause and await the data for signs of improvement. The Fed minutes to be released will bring details on how dovish Fed members are, but from the statement we know that a rate hike is unlikely to happen in 2019. A rate cut in the other hand has been rising in probability as disappointing data and geopolitical anxiety could be signalling lower growth than expected.

Source: marketpulse

European and Chinese stocks markets are selling off from critical comments from Beijing that put a dent in trade talk optimism. Flight to safety is the early morning theme and we may see that continue if we see softer Michigan sentiment and leading...

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Forex Tech Targets

Bulls-and-bears_Forex_FXPIG_17.05.2019

EUR/USD:

24-HOUR VIEW: Further weakness in EUR appears likely but 1.1130 could be just out of reach. EUR came close to the top of our expected 1.1185/1.1230 range before dropping sharply after touching 1.1225. The swift decline touched 1.1164 during late NY hours. Downward momentum has improved and further weakness appears likely even though the strong 1.1130 support could be just out of reach for today (minor support at 1.1150). Resistance is at 1.1195 followed by 1.1210. The 1.1225 high is not expected to come into the picture.

1-3 WEEKS VIEW: EUR is expected to continue to trade sideways. EUR dropped to 1.1164 yesterday before ending the day lower by -0.25% (NY close of 1.1172). Despite the relatively strong decline, downward momentum has not improved by that much. For now, we continue to hold the view that EUR is in a “sideway-trading phase” even though as highlighted on Wed (15 May, spot at 1.1205), the “immediate bias is tilted to the downside” but “1.1130 is a solid support and is unlikely to yield so easily”. To put it another way, the prospect for a break of 1.1130 is not high but it would continue to increase unless EUR can reclaim 1.1225 within these 1 to 2 days. Looking forward, a break of 1.1130 would indicate that EUR has moved into a ‘negative phase’ and the risk for a break of last month’s 1.1110 low would then increase considerably.

GBP/USD:

24-HOUR VIEW: GBP could move below the Feb’s low near 1.2775 but 1.2740 may not come into the picture. We expected GBP to weaken yesterday but were of the view that the “prospect for a sustained decline below 1.2800 is not high”. The weakness exceeded our expectation as GBP dropped to an overnight low of 1.2788 before ending the day just below 1.2800 (NY close of 1.2798). The decline is over-extended but is not showing sign of stabilizing. From here, barring a move above 1.2850 (minor resistance at 1.2825), GBP is expected to move below the Feb’s low near 1.2775. However, the next support 1.2740 may not come not into the picture today.

1-3 WEEKS VIEW: A NY close below 1.2775 could lead to acceleration lower to 1.2670. We highlighted on Wednesday (15 May, spot at 1.2910) that GBP “has moved into a negative phase” and while the price action over the past couple of days was in line with our expectation, the pace of decline has been more rapid than anticipated. The 1.2775 low indicated yesterday (16 May) appears to be within reach soon and if GBP were to close below this level in NY by the end of today, we would expect the current weakness in GBP to accelerate lower. The next major support is about another 100 pips lower at 1.2670. After the sharp drop over the past two days, it is unlikely the current negative phase would end anytime soon. Only an unlikely move above the 1.2900 ‘key resistance’ (level was at 1.2960 yesterday) would indicate a short-term bottom is in place. Shorter-term, 1.2850 is already a strong level.

AUD/USD:

24-HOUR VIEW: Decline in AUD has scope to extend to 0.6865. AUD staged a mild recovery to 0.6933 before dropping to a low of 0.6886 during late NY hours. The swift decline has scope to extend lower towards 0.6865. The next support at 0.6835 is likely out of reach for today. On the upside, 0.6933 is expected to be strong enough to cap any intraday recovery (0.6915 is already a strong level).

1-3 WEEKS VIEW: A NY closing below 0.6885 could lead to further AUD weakness to 0.6835. No change in view from yesterday, see reproduced update below. From here, a daily closing below 0.6885 would not be surprising. The ‘focus level’ of 0.6910 that was indicated on Tuesday (14 Apr, spot at 0.6945) was just exceeded as AUD dropped to 0.6893 after the release of Australian jobs data just a few minutes ago. The negative phase that started in late April is still clearly intact. From here, if there were a NY closing below 0.6885, it would indicate the negative phase has kicked into an even higher gear (next support at 0.6835). All in, AUD is expected to stay under pressure until it can move above the 0.6975 ‘key resistance’ (level was at 0.7010 previously.

NZD/USD:

24-HOUR VIEW: Month-to-date low of 0.6525 is vulnerable but odds for a break of 0.6500 are not high for today. We highlighted yesterday the underlying tone in NZD remains soft but “any weakness is likely limited to 0.6545”. We added, “the next support at 0.6525 is unlikely to come into the picture”. While NZD dropped below the 0.6545 level, 0.6525 remains intact (low of 0.6534 during late NY hours). The strong decline indicates the month-to-date low of 0.6525 is vulnerable today but the odds for NZD to break the next support at 0.6500 are not high, at least for today. Resistance is at 0.6560; yesterday’s high at 0.6583 is not expected to be challenged.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. We have maintained the same narrative since last Wednesday (08 May, spot at 0.6560) wherein NZD is expected to “test the rising weekly trend-line at 0.6500”. After trading sideways for several days, NZD finally staged a relatively strong decline of -0.41% yesterday (close at 0.6536). From here, the risk of a break of 0.6500 has increased and if NZD were to move clearly below this level, the focus would then shift to 0.6465 followed by the 2018 low near 0.6425. All in, there is no early sign that the current negative phase that started earlier this month would end any time soon. Only a move above 0.6600 (‘key resistance’ previously at 0.6630) would indicate that a short-term bottom is in place.

USD/JPY:

24-HOUR VIEW: Room for USD to test 110.10 before an easing of the current upward pressure can be expected. Expectation for USD to trade sideways was incorrect as it rose to a high of 109.96 before ending the day on a firm note at 109.84. Despite the relatively strong advance, upward momentum has not improved by much. That said, there is room for USD to test the strong 110.10 resistance before an easing of the current upward pressure can be expected. Support is at 109.60 but only a move below 109.40 would indicate a short-term top is in place.

1-3 WEEKS VIEW: USD appears to be poised to move into a sideway-trading phase. USD touched 109.96 yesterday, not too far from our 110.10 ‘key resistance’. Downward pressure has eased and if USD to move above 110.10, it would indicate that the current negative phase has ended (and the start of a sideway-trading phase). From here, unless USD can move and stay below 109.40 by end of today, a breach of the ‘key resistance’ would not be surprising. In other words, the negative phase that started on 06 May appears to be close to ending and USD is poised to move into a sideway-trading phase.

Source:eFXdata

Further weakness in EUR appears likely but 1.1130 could be just out of reach. EUR came close to the top of our expected 1.1185/1.1230 range before dropping sharply after touching 1.1225. The swift decline touched...

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Gold drops to session lows

Gold-drops-to-session-lows-FOREX_FXPIG

 •  Improving risk sentiment dents safe-haven demand and prompts some selling.
  •  Recovering US bond yields/USD adds to the selling bias/ latest leg of the slide.

Gold failed to capitalize on the early European session uptick to the $1300 neighborhood and has now dropped to the lower end of its daily trading range.

A slight improvement in the global risk sentiment, as depicted by a sudden turnaround in the European equity markets dented the precious metal's relative safe-haven status and turned out to be one of the key factors behind the intraday slide.

A goodish pickup in the US Treasury bond yields, with the yield on the benchmark 10-year government bond yield recovering over 1% intraday, reinforced the risk-on mood and was also seen driving flows away from the non-yielding yellow metal.

Adding to this, the US Dollar has managed to reverse an early dip and is now looking to build on the intraday positive move, which further undermined demand for the dollar-denominated commodity and collaborated to the latest leg of a slide.

The downside, however, remained cushioned as investors still seemed reluctant to place any aggressive bearish bets/unwinding near-term bullish positions amid the recent escalation in the US-China trade tensions and worries about slowing global economic growth.

Source: fxstreet

Gold failed to capitalize on the early European session uptick to the $1300 neighborhood and has now dropped to the lower end of its daily trading range...

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EUR/USD: Short-term consolidation?

EURUSD_Short-term-consolidation

Axel Rudolph, analysts at Commerzbank, explains that the EUR/USD cross has reached the 55 day moving average at 1.1251 which capped and they continue to favour the topside even though short-term further consolidation below the current May high at 1.1264 is seen.

Key Quotes

“Failure at the 1.1177 March low on a daily chart closing basis would put the 1.1110 April low back on the map. Be advised that the pattern being traced out is a potential large bullish reversal pattern.”

“We have positive divergence on the weekly RSI and a Tom DeMark 13 count on the weekly chart. Overhead lie the 55- and 100-day moving averages at 1.1251 and 1.1313 as well as the September-to-May resistance line at 1.1333. Further up meanders the 200 day moving average at 1.1395.”

“Support at 1.1110 is regarded as the break down point to the 2018-2019 support line at 1.1099 and the 1.0814 78.6% Fibonacci retracement.”

Source: fxstreet

“Failure at the 1.1177 March low on a daily chart closing basis would put the 1.1110 April low back on the map. Be advised that the pattern being traced out is a potential large bullish reversal pattern.”...

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JPY futures: room for further depreciation

JPY-further-depreciation_Forex_FXPIG

CME Group’s preliminary figures for JPY futures markets noted open interest extended the downtrend on Wednesday, shrinking by around 2.5K contracts. Volume, on the other hand, reversed the previous drops and rose by around 17.6K contracts.

USD/JPY found support around 109.00

After bottoming out in the 109.00 neighbourhood earlier in the week, USD/JPY is now attempting a bounce amidst a persistent down move in open interest and some choppy activity in volume around the safe haven JPY. That said, further upside momentum is not ruled out and should hinge mainly on US-China trade headlines.

Source: fxstreet

After bottoming out in the 109.00 neighbourhood earlier in the week, USD/JPY is now attempting a bounce amidst a persistent down move in open interest and some...

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USD/TRY edging higher

USDTRY_forex_FXPIG
  • TRY is on the defensive near the 6.10 handle vs. USD.
  • The 21-day SMA around 5.96 offers weekly support.
  • Turkey jobless rate came in at 14.7% in February.

The Turkish currency is losing ground on Wednesday and is pushing USD/TRY to the vicinity of the key 6.10 mark.

USD/TRY stronger, looks to trade, US docket

Following yesterday’s daily gains, the Turkish Lira appears to have resumed the downside today on the back of omnipresent US-China trade concerns and domestic politics.

In fact, optimism over an eventual deal to end the current US-China trade war have been sustaining a mild upbeat mood during early trade, although it has dissipated since the opening bell in Euroland, giving legs to the recovery in the buck.

In the meantime, a Turkish court decided to keep US consulate employee in jail for the time being. The accused, a Turkish national, is imprisoned on terrorism-related charges. This situation reminds of that involving US pastor A.Brunson and it could spark another bout of frictions between the US and Turkey.


Source: fxstreet

The Turkish currency is losing ground on Wednesday and is pushing USD/TRY to the vicinity of the key 6.10 mark...

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AUD/USD technical analysis

AUDUSD_tech-analysis_bears-flirting_Forex_FXPIG

 •  The AUD/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading band near 4-1/2 month lows.

  •  The mentioned region marks the lower end of a one-week-old descending trend-channel and should now act as a key trigger for bearish traders.

Technical indicators on daily/hourly charts have moved on the verge of breaking into oversold territory and seemed to be the only factor holding investors from placing any fresh bearish bets.

The set-up warrants some near-term consolidation/a modest bounce before the pair eventually confirms the trend-channel breakdown and resumes its well-established bearish trend.

A bearish breakdown might turn the pair vulnerable to slip further below the 0.6900 handle and accelerate the slide towards challenging its next major support near the 0.6835-30 region.

On the flip side, any attempted recovery might continue to confront some fresh supply near the 0.6935-40 region and seems more likely to remain capped near weekly tops, around the 0.6960 level.

Source: fxstreet

Technical indicators on daily/hourly charts have moved on the verge of breaking into oversold territory and seemed to be the only factor holding investors from placing any fresh bearish bets...

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Forex Tech Targets

Bulls-and-bears_forex_FXPIG-tech-analysis_14.05.2019

EUR/USD:

24-HOUR VIEW: Intraday risk is tilted to the downside but expect strong support at 1.1205. EUR traded between 1.1220 and 1.1265 yesterday, close to our expected sideway trading range of 1.1215/1.1265. The rapid set-back from 1.1265 has weakened the underlying tone and the intraday risk is tilted to the downside. That said, any weakness is expected to face solid support at 1.1205 (there is another strong level at 1.1185). Yesterday’s high of 1.1265 is unlikely to be challenged for today (minor resistance is at 1.1245).

1-3 WEEKS VIEW: EUR is expected to trade sideways but risk of a break of 1.1265 has increased. No change in view from yesterday (13 May), see reproduced update below. Note that EUR tested 1.1265 for the second time but eased off and ended lower. EUR has to move above 1.1265 within these 1 to 2 days or the prospect for such a move would diminish quickly.

EUR touched 1.1253 last Friday before easing off to end the day slightly higher (NY close of 1.1233, +0.11%). The price action offers no fresh clue and we continue to hold the same view from earlier this month (see update of 02 May, spot at 1.1200) wherein EUR is expected “to trade sideways”. That said, as highlighted last Friday (10 May), the underlying tone has improved slightly and the risk for a break above the top of the expected 1.1110/1.1265 range has increased. Overall, the build-up in momentum is expected to gain steam if EUR can continue to register a higher daily closing from here. On the downside, a move below 1.1185 would indicate that the current nascent build-up in upward momentum has fizzled out. Looking ahead, if there were a daily closing above 1.1265, it would indicate that EUR is ready to move towards 1.1325.

GBP/USD:

24-HOUR VIEW: GBP could dip below 1.2930 but next support at 1.2900 could be just out of reach. Expectation for GBP to trade sideways yesterday was incorrect as it reversed quickly after touching 1.3040. While the sharp and swift drop to an overnight low of 1.2942 appears to be running ahead of itself, the weakness is not showing sign of stabilizing. From here, barring a move above 1.3000 (minor resistance at 1.2980), GBP could dip below the 1.2930 support. That said, the next support at 1.2900 could be just out of reach for now.

1-3 WEEKS VIEW: GBP has moved into a sideway-trading phase. GBP dropped to 1.2942 during NY hours, the low is not far above the bottom of our expected 1.2930/1.3110 sideway trading range. As highlighted last Thursday (09 May, spot at 1.3010), “the risk of a break of the bottom of the expected range appears to be a tad higher”. However, at this stage, the odds for GBP to move below last month low near 1.2865 are still not high. For now, we continue to hold the view that GBP is in a sideway-trading phase but the overnight price action acts as an early indication that GBP is ready to move into a negative phase (confirmation is upon a clear break below 1.2930).

AUD/USD:

24-HOUR VIEW: Vastly improved downward momentum suggests AUD could weaken further but 0.6910 could be just out of reach for now. The anticipated weakness in AUD exceeded our expectation as it not only cracked 0.6970 but also the strong level of 0.6950 (overnight low of 0.6941). The vastly improved downward momentum suggests AUD could weaken further even though the next support at 0.6910 could be just out of reach for now. On the upside, 0.6980 is expected to be ‘safe’ for today (minor resistance is at 0.6965).

1-3 WEEKS VIEW: Focus is at 0.6910. We have held the same view since last Monday (06 May, spot at 0.6980) wherein a “break of 0.6950 would shift focus to 0.6910”. After about a week, AUD finally cracked 0.6950, albeit not by much (low of 0.6941). The price action is not surprising as we indicated yesterday (13 May) that “the current short-term sideway trading phase is likely to be resolved by a ‘downside break’”. As per our narrative, the level to focus on now is at 0.6910. The level is followed by a rather critical level at 0.6885. A break of 0.6885 would greatly increase the risk of AUD accelerating lower in the weeks ahead. On the upside, the ‘key resistance’ has finally moved from its previous level of 0.7060 to 0.7010. Only a break of the 0.7010 ‘key resistance’ would indicate that the current AUD weakness has run its course (note the current negative started in late April).

NZD/USD:

24-HOUR VIEW: NZD could edge lower to 0.6545. We expected NZD to trade between 0.6570 and 0.6610 yesterday but it drifted to a low of 0.6564 before ending the day on a weak note (NY close of 0.6569). While downward momentum has not improved by much, the weak underlying tone suggests NZD could continue to edge lower to the next support at 0.6545. For today, a break of the post-RBNZ low of 0.6525 would come as a surprise. Resistance is at 0.6590 followed by 0.6610. The latter level is acting as a solid resistance now.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. No change in view from yesterday, see reproduced update below. After crashing to a low of 0.6525 last Wednesday (08 May), NZD has traded in a relatively subdued manner. The quiet price action has dented the downward momentum and the prospect for further NZD weakness has diminished. However, as long as the 0.6630 ‘key resistance’ is intact (no change in level of ‘key resistance), we continue to see chance for NZD to “test the rising weekly trend-line at 0.6500”. That said, NZD has to move and stay below 0.6570 within these few days or the downside risk would diminish further.

USD/JPY:

24-HOUR VIEW: USD could dip below but is unlikely to challenge the next support at 108.70. The sudden lurch lower in USD came a surprise as it cracked the strong 109.30 support and came close to taking out the next support at 109.00 (overnight low of 109.01). Despite the bounce from the low, it is too soon to expect a recovery. However, the ‘hesitant’ downward momentum suggests while USD could dip below 109.00, it is unlikely to challenge the next support at 108.70. Resistance is at 109.50 but the stronger level is closer to 109.85.

1-3 WEEKS VIEW: Risk of a clear break of 109.00 has increased. The negative phase in USD that started last Monday (06 May, spot at 110.65) is not only intact but has notched up a gear as USD easily cracked 109.30 and came close to 109.00 (low of 109.01 during NY hours). The rapid pace of decline suggests risk of a clear break of 109.00 has increased. However, shorter-term indicators are rather oversold and this could lead to a couple of days of consolidation first. For now, the prospect for further USD weakness is not that high but it would continue to increase as long as the ‘key resistance’ at 110.10 is intact (level was at 110.40 previously).

Source: efxdata

Intraday risk is tilted to the downside but expect strong support at 1.1205. EUR traded between 1.1220 and 1.1265 yesterday, close to our expected sideway trading range of 1.1215/1.1265...

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GBP/USD keeps the red below mid-1.2900s

GBPUSD_red_Forex_FXPIG

  •  The latest Brexit headlines prompt some fresh selling around the British Pound.
  •  Mixed UK employment details fail to impress the bulls or provide any impetus.

The GBP/USD pair held on to its weaker tone near two-week lows and had a rather muted reaction to mixed UK monthly employment details.

The pair added to the overnight weakness and lost some additional ground during the early European session on Tuesday after reports suggesting that the UK PM Theresa May will not sign up for a permanent customs union, a key demand by the opposition Labour party in the long cross-party talks.

On the macroeconomic data front, the UK unemployment rate unexpectedly ticked lower to 3.8% but was largely offset by the disappointing release of wage data, showing that average earnings growth including bonus decelerated to 3.2% during the three months to March from 3.5% previous.

Source: fxstreet

The GBP/USD pair held on to its weaker tone near two-week lows and had a rather muted reaction to mixed UK monthly employment details...

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EUR/USD Technical Analysis

Eur_extra-gains_Forex_FXPIG
  • EUR/USD remains bid above the 1.1200 handle although gains are still capped by the 1.1260/70 region, where converge the 55-day SMA and recent tops.
  • Further consolidation is likely in the near term, although the inability to clear this initial hurdle could motivate sellers to step in once again and put the pair under downside pressure.
  • In the broader picture, the negative outlook on spot stays unchanged while below the key multi-month resistance line at 1.1299. Against this backdrop, the door for another visit to 2019 lows in the 1.1100 neighbourhood remains well open.

Source: fxstreet

EUR/USD remains bid above the 1.1200 handle although gains are still capped by the 1.1260/70 region, where converge the 55-day SMA and recent tops...

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EUR/USD: Balance of risks still favour 1.10 in 2Q19

EURUSD_balance-risk_Forex_FXPIG

According to analysts at ING, there seems to be a little reason to change the near term view that EUR/USD pair stays offered this summer and will test the 1.10, barring a temporary squeeze of short EUR positions.

Key Quotes

“US-China trade tension is unresolved and there is a still a risk that later this month President Trump opts for tariffs on auto imports.”

“Admittedly there are a few green shoots in terms of European growth, but probably not enough to lift Euro area interest rates off the floor. The TLTRO III to be announced by the ECB in June should also cement the view that EUR rates stay lower for longer.”

Source: fxstreet

According to analysts at ING, there seems to be a little reason to change the near term view that EUR/USD pair stays offered this summer and will test the 1.10, barring a temporary squeeze of short EUR positions...

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FOREX Tech Targets

Bulls-and-bears_forex_FXPIG_13.05.2019

EUR/USD:

24-HOUR VIEW: EUR is expected to trade sideways, likely within a 1.1215/1.1265 range. We highlighted last Friday “a retest of 1.1250 would not be surprising but prospect for a clear break of 1.1265 is not high for now”. In line with expectation, EUR touched 1.1253 before easing off. While upward pressure has waned, it is too soon to expect a significant pullback. EUR is more likely to trade sideways at these higher levels, expected to be within 1.1215 and 1.1265.

1-3 WEEKS VIEW: EUR is expected to trade sideways but risk of a break of 1.1265 has increased. EUR touched 1.1253 last Friday before easing off to end the day slightly higher (NY close of 1.1233, +0.11%). The price action offers no fresh clue and we continue to hold the same view from earlier this month (see update of 02 May, spot at 1.1200) wherein EUR is expected “to trade sideways”. That said, as highlighted last Friday (10 May), the underlying tone has improved slightly and the risk for a break above the top of the expected 1.1110/1.1265 range has increased. Overall, the build-up in momentum is expected to gain steam if EUR can continue to register a higher daily closing from here. On the downside, a move below 1.1185 would indicate that the current nascent build-up in upward momentum has fizzled out. Looking ahead, if there were a daily closing above 1.1265, it would indicate that EUR is ready to move towards 1.1325.

GBP/USD:

24-HOUR VIEW: GBP is expected to trade sideways, likely within a 1.2970/1.3055 range. GBP traded between 1.2992 and 1.3047, narrower than our expected sideway trading range of 1.2980/1.3060. The largely unchanged daily closing in NY of 1.3000 (-0.03%) offers no fresh clue. Momentum indicators are still mostly neutral which suggest GBP is likely to continue to trade sideways for now. Expected range for today, 1.2970/1.3055.

1-3 WEEKS VIEW: GBP has moved into a sideway-trading phase. No change in view from last Friday, see reproduced update below. There is not much to add to the update from yesterday (09 May, spot at 1.3010). As highlighted, GBP has moved into a sideway-trading phase and is expected to trade sideways, likely within a 1.2930/1.3110 range. At this stage, the risk of a break of the bottom of the expected range appears to be a tad higher even though at this stage, the odds for a move below last month’s low near 1.2965 appear to be rather low.

AUD/USD:

24-HOUR VIEW: Underlying tone has weakened somewhat but any down-move in AUD is likely limited to a test of 0.6970. AUD traded sideways between 0.6978 and 0.7019 last Friday, relatively close to our expected range of 0.6975/0.7015. The underlying tone appears to have weakened somewhat even though any down-move is likely limited to a test of 0.6970 (next support at 0.6950 is likely out of reach for now). Resistance is at 0.7010 followed by 0.7030.

1-3 WEEKS VIEW: Break of 0.6950 would shift focus to 0.6910. After dropping to 0.6960 last Monday (06 May), AUD has not been able to make much headway on the downside as it subsequently traded sideways for the remaining of last week. The ‘negative phase’ that started late last month appears to be tiring but the current short-term sideway trading phase is likely to be resolved by a ‘downside break’. In other words, we continue to hold the same view as last Monday (06 May, spot at 0.6980) wherein a “break of 0.6950 would shift focus to 0.6910”. That said, in order reinvigorate the flagging downward momentum, AUD has to move and stay below 0.6970 within these few days or the prospect for a break of 0.6950 would diminish further. Conversely, if AUD were to move above the 0.7060 ‘key resistance’ (no change in level), it would indicate that 0.6960 is a short-term bottom (AUD would then likely to consolidate and trade sideways for a period).

NZD/USD:

24-HOUR VIEW: NZD is expected to trade sideways, likely between 0.6570 and 0.6610. NZD traded sideways as expected even though at a narrower range than anticipated. The current movement is still viewed as part of a consolidation phase. In other words, NZD is expected to continue to trade sideways for now, likely between 0.6570 and 0.6610.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. After crashing to a low of 0.6525 last Wednesday (08 May), NZD has traded in a relatively subdued manner. The quiet price action has dented the downward momentum and the prospect for further NZD weakness has diminished. However, as long as the 0.6630 ‘key resistance’ is intact (no change in level of ‘key resistance), we continue to see chance for NZD to “test the rising weekly trend-line at 0.6500”. That said, NZD has to move and stay below 0.6570 within these few days or the downside risk would diminish further.

USD/JPY:

24-HOUR VIEW: USD is expected to trade sideways, likely within a 109.40/110.10. Expectation for USD to “test 109.35” did not materialize as rebounded after touching 109.46. The recovery lacks momentum and a sustained rise from here is not expected. USD is more likely to trade sideways at these lower levels, likely within a 109.40/110.10 range.

1-3 WEEKS VIEW: Next support levels at 109.30, 109.00 may not come into the picture so soon. While the negative phase in USD that started last on Monday (06 May, spot at 110.65) is still intact, the sharp and rapid decline appears running ahead of itself. Oversold short-term conditions suggest that USD could trade sideways for a few days first. In other words, the next support levels at 109.30, 109.00 may not come into the picture so soon. On the upside, the ‘key resistance’ level has moved lower to 110.40 from 110.60. Only a break of this level would indicate that the current negative phase has ended. On a shorter-term basis, USD should ideally hold below 110.10.

Source: efxdata

In line with expectation, EUR touched 1.1253 before easing off. While upward pressure has waned, it is too soon to expect a significant pullback. EUR is more likely to trade sideways at these higher levels, expected to be within 1.1215 and 1.1265...

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BoE's Broadbent:

Brexit_messy_no deal_Forex_FXPIG

The BoE Deputy Governor, Ben Broadbent, in an interview with the Press Association published this Monday, said that a delay in Brexit deadline to October will have a negative impact on investments.

Key quotes:

  •  Investment already feeling the consequences of uncertainty.
  •  If Brexit deal is struck, there could be quite a strong rebound in investment.
  •  Doesn't know which way rates would go in case of a messy no-deal Brexit.
  •  Reiterates that any BOE rate hikes will be gradual.
  •  Haven't decided whether to apply to succeed Carney as BoE Governor.

Source: fxstreet

The BoE Deputy Governor, Ben Broadbent, in an interview with the Press Association published this Monday, said that a delay in Brexit deadline to October will have a negative impact on investments...

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Forex Week Ahead

Dollar-falls-china-war-Forex_FXPIG

The ambiguity of trade progress continues to be the dominant driver with all asset classes.  The dollar finished lower after a round of trade talks in Washington DC did not see cataclysmic outcome after President Trump delivered a tariff hike.  Global equities saw some buying, mainly because the market is pricing in some agreement being reached on the trade front along with puts from Powell, the PBOC, and Trump.  Europe takes centre-stage, with the focus shifting to Germany’s first quarter GDP reading and the ZEW Survey which are expected to see a rebound and improved sentiment respectively.

USD – Trade deal progress expected

EUR – Germany GDP to rebound sharply; ZEW Survey to show improved sentiment

Oil – Supported on geopolitical risks from Iran, Venezuela and Libya

Trade

The vulnerability from trade talks saw US equities selloff strongly as fears of a prolong trade war prevented an attempt for fresh record highs.  As talks reach a climax, the market appears exhausted chasing both punitive and optimistic headlines.  The implementation of the tariff hike by the US did not derail high-level talks as talks appear poised to resume in Beijing.  Chinese goods that left ports before May 10th are not subject to the increase, thus providing a roughly small two-week window that could provide added incentive for a deal to be finalised.

Friday’s rebound stemmed from supportive comments from Treasury Secretary Steven Mnuchin that talks were constructive and his counterpart Chinese Vice Premier Liu He, who noted that talks went fairly well.  China is expected to announce countermeasures as we enter the final stages of negotiations.

NZD

The RBNZ sent the kiwi to a 6-month low after deciding to cut rates for the first times since November 2016.  The downward trend did not continue as the central bank appeared to be one and done.  Some analysts are now targeting the official cash rate to remain at the record low 1.5% through the middle of 2022.  If we do see further deterioration of data another cut is possible, but that may not happen if China gets a trade deal done and the PBOC continues to deliver more stimulus.

AUD

The Australian dollar finished slightly softer as bearish bets remain in place as expectations remain high the RBA will cut rates later this year growth remains weak and inflation stays lows.  The RBA rate decision surprised many Aussie dollar sellers that the central bank opted against an easing policy.  The Statement of Monetary Policy (SOMP) however slashed growth, consumption and investment forecasts, highlighting that we will likely see two rate cuts.

The Australian currency also saw its correlation to trade war stories increase.  While most of the week saw a risk averse theme driven by trade talks, the Australian dollar finished modestly lower.  A trade deal is expected over the next several weeks, so that means we could be nearing a key bottom for some commodity currencies.

CAD

Canada’s economy is starting to show signs of life after posting a record job gain in April.  The loonie has been battered over the last few months, despite a strong recovery with oil prices, its largest export.  The employment report could be a game changer as broad strength was seen throughout all four provinces.  The Bank of Canada may be right that the slowdown is temporary and bets for easing have come down dramatically.

Oil saw some weakness on global growth concerns, but a plethora of geopolitical risks could keep prices stable.

Gold

Gold’s safe-haven demand appears to be fluttering.  With significant moves in equities and bond yields stemming from the trade war developments, recently the yellow metal has done little to impress.  The base case that a trade deal will be reached is not doing gold any favours.  The lack of a major move higher despite a Fed that is on hold, the PBOC is actively providing fresh accommodation and central banks continue to be buying gold is frustrating bullion bulls.  It appears commodities might need to see a major rout in the dollar before rallying.  Eurozone growth could be key next week, and if we start to see better data in Europe, that might help spur dollar weakness, which could help gold.

Source: marketpulse

The ambiguity of trade progress continues to be the dominant driver with all asset classes. The dollar finished lower after a round of trade talks in Washington DC did not see cataclysmic outcome after President Trump delivered a tariff hike...

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FOREX Tech Targets

Bulls-and-bears_Forex_FXPIG_10.05.2019

EUR/USD:

24-HOUR VIEW: A retest of 1.1250 would not be surprising but prospect for a clear break of 1.1265 is not high for now. After trading quietly for several days, EUR staged a sudden but short-lived surge and hit a high of 1.1251. Despite the rapid pull-back from the high, the underlying tone remains positive. From here, a retest of 1.1250 would not be surprising but the prospect for a clear break above last week’s 1.1265 top is not high for now. Support is at 1.1200 followed by 1.1185.

1-3 WEEKS VIEW: EUR is expected to trade sideways. Despite the relatively strong gains of +0.25% yesterday (NY close of 1.1220), it is too soon to get ‘excited’ about the potential of a sustained advance in EUR. That said, after yesterday’s price action, the risk has shifted slightly to the upside even though EUR may struggle to break clearly above the top of the expected 1.1110/1.1265 consolidation range at 1.1265. Overall, the underlying tone in EUR has improved slightly and would improve further as long as it can continue to register a higher daily closing. On the downside, a move below 1.1165 would indicate that the current nascent build-up in upward momentum has fizzled out. Looking ahead, if there were a daily closing above 1.1265, it would indicate that EUR is ready to move towards 1.1325.

GBP/USD:

24-HOUR VIEW: GBP is expected to trade sideways, likely within a 1.2980/1.3060 range. GBP traded sideways yesterday albeit at a narrower range than anticipated. The largely unchanged close in NY (1.3004, -0.02%) suggests GBP is still trading in a consolidation phase. In other words, GBP is expected to continue to trade sideways for now, likely between 1.2980 and 1.3060.

1-3 WEEKS VIEW: GBP has moved into a sideway-trading phase. There is not much to add to the update from yesterday (09 May, spot at 1.3010). As highlighted, GBP has moved into a sideway-trading phase and is expected to trade sideways, likely within a 1.2930/1.3110 range. At this stage, the risk of a break of the bottom of the expected range appears to be a tad higher even though at this stage, the odds for a move below last month’s low near 1.2965 appear to be rather low.

AUD/USD:

24-HOUR VIEW: AUD is expected to trade sideways to slightly higher, likely within a 0.6975/0.7015 range. We expected AUD to “drift lower” yesterday but were of the view that “a break of 0.6960 appears unlikely”. AUD subsequently touched 0.6965 before rebounding. While downward pressure has waned with the recovery, it is too early to expect a sustained rise. From here, AUD is expected to trade sideways to slightly higher, expected to be within a 0.6975/0.7015 range.

1-3 WEEKS VIEW: Break of 0.6950 would shift focus to 0.6910. There is not much to add as AUD closed largely unchanged in NY (0.6987, -0.03%). The current negative phase in AUD appears to be tiring but only a break of the 0.7060 ‘key resistance’ (no change in level) would indicate that the 0.6960 low registered on Monday (06 May) is short-term bottom. Until then, we continue to hold the view that a “break of 0.6950 would shift focus to 0.6910”.

NZD/USD:

24-HOUR VIEW: NZD is expected to trade sideways, likely between 0.6565 and 0.6605. NZD traded between 0.6571 and 0.6596, narrower than our expected consolidation range of 0.6555/0.6605. The quiet trading offers no fresh clues and NZD is likely to continue to trade sideways for now. Expected range for today, 0.6565/0.6605.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. No change in view, see reproduced update below. There is not much to add to the update from yesterday (08 May, spot at 0.6560). As highlighted, NZD would likely depreciate further in the coming days and the focus is at the rising weekly trend-line connecting the 2015 and 2018 lows (trend-line is currently sitting at 0.6500). This is a solid level and may not yield so easily. Overall, NZD is expected to remain under pressure unless it can reclaim the 0.6630 ‘key resistance’ (no change in level).

USD/JPY:

24-HOUR VIEW: Any weakness in USD would likely be at a slower pace and limited to a test of 109.35. We expected USD to trade “sideways to slightly lower” but it plummeted to a low of 109.46 before recovering. Despite the bounce, the underlying tone remains weak. That said, in view of the oversold conditions, any weakness would likely be at a slower pace and limited to a test of 109.35 (next support is at 109.00). Resistance is at 110.00 but only a move above 110.20 would indicate the current weakness in USD has stabilized.

1-3 WEEKS VIEW: Next support levels at 109.30, 109.00 may not come into the picture so soon. We indicated on Monday (06 May, spot at 110.65) that USD has “moved into a negative phase and the focus is at the March low of 109.70”. While we correctly anticipated the direction of the movement in USD, the ease of which it cracked 109.70 was not exactly expected (USD dropped to 109.46 yesterday). The negative phase is still clearly intact and the next level to focus on is at 109.35 followed by 109.00. In view of the oversold shorter-term conditions, these levels may not come into the picture so soon. On the upside, only a break of the 110.60 ‘key resistance’ (level was at 110.90) would indicate that the negative phase has ended.

Source: efxdata

A retest of 1.1250 would not be surprising but prospect for a clear break of 1.1265 is not high for now. After trading quietly for several days, EUR staged a sudden but short-lived surge and hit a high of 1.1251. Despite the...

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Central Banks: Space to deliver more easing

Central-banks_easing_forex_FXPIG

Economist at Standard Chartered, suggests that their Monetary Conditions Indices (MCIs) indicate that monetary conditions have continued to tighten globally.

Key Quotes

“Falling inflation, soft credit growth and higher real effective exchange rates (REERs) have combined to tighten conditions since end-2018. Monetary conditions are already close to their tightest in three years in several countries, and are tightening further.”

“Central banks in Malaysia, New Zealand and the Philippines cut policy rates this week, in line with our call. We expect rate cuts from India, Indonesia and the Philippines for the rest of 2019; most other central banks are likely to maintain a dovish outlook.”

Source: fxstreet

Economist at Standard Chartered, suggests that their Monetary Conditions Indices (MCIs) indicate that monetary conditions have continued to tighten globally...

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USD/JPY fails to extend recovery

USDJPY-fails-to-extend-recovery-Forex_FXPIG

  •  Initial signs of stability in equity markets dented the JPY's relative safe-haven status.
  •  Sliding US bond yields held the USD bulls on the defensive and seemed to cap gains.
  •  Market participants now eye US consumer inflation figures for some fresh impetus.

The USD/JPY pair failed to capitalize on its early recovery attempt and dropped to fresh session lows in the last hour, closer to three-month lows touched on Thursday.

Despite the fact that the US decided to go ahead with a tariff hike on Chinese goods, the pair gained some positive traction during the Asian session on Friday and climbed to levels just above the key 110.00 psychological mark amid receding safe-haven demand.

Source: fxstreet

The USD/JPY pair failed to capitalize on its early recovery attempt and dropped to fresh session lows in the last hour, closer to three-month lows touched on Thursday...

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FOREX Tech Targets

Bulls-and-bears_Forex_FXPIG_Tech-analysis_09.05.2019

EUR/USD:

24-HOUR VIEW: EUR is expected to trade sideways, likely between 1.1170 and 1.1215. EUR traded sideways and registered a range of 1.1181/1.1214 yesterday, narrower than our expected 1.1165/1.1215 range. The muted price action has resulted in most indicators turning ‘flat’ and further sideway trading appears likely. Expected range for today; 1.1170/1.1215.

1-3 WEEKS VIEW: EUR is expected to trade sideways. After EUR dropped from a high of 1.1265, we indicated last Thursday (02 May, spot at 1.1200) that EUR has likely moved into a consolidation phase and is “expected to trade sideways”, likely between the two strong levels of 1.1110 and 1.1265. The price action for the past week is in line with our expectation as EUR traded in a subdued manner. There is no further clue for now and we continue to hold the same view. As highlighted before, there is no early indication on which level is more ‘vulnerable’.

GBP/USD:

24-HOUR VIEW: GBP is expected to consolidate its loss and trade sideways, likely within a 1.2980/1.3060 range. Expectation for GBP to “test 1.3040 first before recovering” was incorrect as it plummeted to an overnight low of 1.2987. While the sharp drop appears to be running ahead of itself, it is too soon to expect a recovery. From here, GBP is more likely to consolidate its loss and trade sideways at these lower levels, expected to be within a 1.2980/1.3060 range.

1-3 WEEKS VIEW: GBP has moved into a sideway-trading phase. We highlighted yesterday that “upward momentum is beginning to wane and GBP has to move and stay above 1.3130 within these few days or a break of the 1.3035 ‘key support’ would not be surprising”. GBP subsequently cracked 1.3035 and dropped to an overnight low of 1.2987. As highlighted yesterday, a break of the ‘key support’ would indicate that GBP has moved into a sideway-trading phase. In other words, GBP is expected to trade sideways from here, likely within a 1.2930/1.3110 range.

AUD/USD:

24-HOUR VIEW: AUD is expected to drift lower but a break of 0.6960 appears unlikely. AUD traded between 0.6986 and 0.7027 yesterday, relatively close to our expected 0.6990/0.7035 range. The subsequent soft daily closing of 0.6989 in NY has weakened the underlying tone. From here, AUD is expected to drift lower even though a break of the 0.6960 low seen earlier this week is unlikely (minor support is at 0.6975). On the upside, resistance is at 0.7015 followed by 0.7030.

1-3 WEEKS VIEW: Break of 0.6950 would shift focus to 0.6910. No change in view from yesterday, see reproduced update below. Post-RBA announcement yesterday, AUD surged to 0.7048 but the up-move was short-lived. While our narrative remains as “a break of 0.6950 would shift focus to 0.6910”, after yesterday’s price action, the prospect for such a scenario has diminished. That said, only a move above the 0.7060 ‘key resistance’ (no change in level) would indicate that the 0.6960 low registered on Monday (06 May) is a short-term bottom.

NZD/USD:

24-HOUR VIEW: NZD is expected to trade sideways, likely between 0.6555 and 0.6605. NZD briefly crashed to 0.6525 before rebounding quickly to trade mostly sideways. The price action is viewed as part of a consolidation phase. In other words, NZD is expected to trade sideways for today, likely between 0.6555 and 0.6605.

1-3 WEEKS VIEW: NZD is expected to test the rising weekly trend-line at 0.6500. There is not much to add to the update from yesterday (08 May, spot at 0.6560). As highlighted, NZD would likely depreciate further in the coming days and the focus is at the rising weekly trend-line connecting the 2015 and 2018 lows (trend-line is currently sitting at 0.6500). This is a solid level and may not yield so easily. Overall, NZD is expected to remain under pressure unless it can reclaim the 0.6630 ‘key resistance’ (no change in level).

USD/JPY:

24-HOUR VIEW: USD is expected to trade sideways to slightly lower, likely within a 109.85/110.30 range. We expected USD to “test 110.00 first before stabilizing” yesterday. USD subsequently dipped to 109.89 before recovering. While downward pressure has waned, it is too early to expect a significant rebound. From here, USD is more likely to consolidate and trade sideways to slightly lower, expected to be within a 109.85/110.30 range.

1-3 WEEKS VIEW: Focus is at the March low of 109.70. No change in view, see reproduced update below. However, ‘key resistance’ has moved lower to 110.90 from 111.10. There is not much to add to the update from Monday (06 May, spot at 110.65). As highlighted, USD is deemed to have moved into a negative phase and the focus is at the March low of 109.70. This is a rather solid support and may not yield so easily (next support is at 109.35). On the upside, the ‘key resistance’ level has moved lower to 111.10 from 111.45. Only a break of the ‘key resistance’ would indicate the current negative phase has ended.

Source: efxdata

EUR traded sideways and registered a range of 1.1181/1.1214 yesterday, narrower than our expected 1.1165/1.1215 range. The muted price action...

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AUD finds little relief in RBA

AUD_RBA_relief_FOREX_FXPIG

Analyst at Westpac, suggests that the fragility of the AUD/NZD rally to near 5 month highs after the RBNZ move is a clear sign that the Aussie remains vulnerable despite the RBA’s cautious statement.

Key Quotes

“The RBA’s steady hand at 1.5% surprised enough in the market to lift the overnight indexed swap curve well into 2020, with the terminal rate back above 1.00%. But markets still price a lot closer to 2 than 1 rate cut, with the RBA statement including lower growth and inflation forecasts.”

“Most importantly, the RBA introduced a policy outlook “that a further improvement in the labour market was likely to be needed for inflation to be consistent with the target.” So it is not enough for the unemployment rate to keep hovering around 5%; it needs to trend lower, otherwise the RBA will cut rates. The monthly jobs report was already in close focus but now the April data next week will be a very nervous time for A$ traders.”

“Westpac retains its call for rate cuts in Aug and Nov, with the RBA statement reiterating its view that the job market is strong, not a view it is likely to change on one month’s data. The RBNZ meanwhile said it cut the OCR because “the outlook for employment growth is more subdued and capacity pressure is expected to ease”.”

“Yet the RBNZ now has “a more balanced outlook for interest rates”, with markets pricing only a 40% chance of another cut by 26 Sep. So RBA and RBNZ are now both at 1.5% but pricing is for terminal rates roughly 1.0% vs 1.25%, leaving the Aussie under pressure – even before US-China trade talks soured.”

Source: fxstreet

The RBA’s steady hand at 1.5% surprised enough in the market to lift the overnight indexed swap curve well into 2020, with the terminal rate back above 1.00%. But markets still price a lot closer to 2 than 1 rate cut, with the RBA statement including lower growth and inflation forecasts...

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EUR/JPY Technical Analysis

EURJPY-tech-analysis-extra-losses_Forex_FXPIG
  • EUR/JPY is intensifying the weekly leg lower below the critical support at 123.00 the figure.
  • Immediately to the downside lies early January lows in the 122.60 region ahead of 122.39, June 2017 low.
  • The cross is expected to keep the negative bias as long as the multi-month resistance line at 126.12 caps the upside. Interim resistance, however, emerges at the 125.03/34 band, where converge the 21-day, 100-day and 55-day SMAs.

Source: fxstreet

EUR/JPY is intensifying the weekly leg lower below the critical support at 123.00 the figure...

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US Dollar Index probes daily tops

US-Dollar-tops_forex_FXPIG
  • The index moves to tops in the 97.60/65 band.
  • Yields of the US 10-year note bounce off lows.
  • FOMC’s Brainard did not comment on monpol.

The greenback is now picking up extra pace and is moving to the upper end of the daily range near 97.60/70 when tracked by the US Dollar Index (DXY).

US Dollar Index looks to trade for direction

The index has managed to regain some composure on Wednesday and advance to the area of daily highs, although cautiousness among investors seems to have prevented the buck to extend the bullish attempt.

In fact, US-China trade jitters remain well and sound despite President Trump hinted at the likelihood that a trade deal could be closer in light of the imminent meeting between US and Chinese officials in Washington.

What to look for around USD

The centre of the debate for the greenback has shifted to the US-China trade dispute, although a high degree of uncertainty as well as scepticism among investors seem to prevail for the time being. On another direction, the lack of traction in US inflation – and concerns among Fed members – currently challenges the continuation of the recent up move in DXY. Dips in the buck, however, are seen shallow as overseas weakness, the safe haven appeal, favourable yield spreads vs. the Fed’s G10 peers and the status of global reserve currency keep the constructive bias on the buck unchanged.

US Dollar Index relevant levels

At the moment, the pair is losing 0.01% at 97.55 and a breach of 97.15 (low May 1) would aim for 97.03 (55-day SMA) and finally 96.75 (low Apr.12). On the other hand, the next hurdle aligns at 98.10 (high May 3) seconded by 98.32 (2019 high Apr.25) and then 99.89 (high May 11 2017).

Source: fxstreet

The greenback is now picking up extra pace and is moving to the upper end of the daily range near 97.60/70 when tracked by the US Dollar Index (DXY)...

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Gold eases from near 2-week tops

Gold-eases-Forex_FXPIG

 •  The global flight to safety continues to fuel the ongoing positive move.
 •  A goodish pickup in the US bond yields now seemed to cap further gains.

Gold edged higher for the fourth consecutive session on Wednesday and is currently placed at near two-week tops, around the $1288 supply zone.

The precious metal continued attracting some safe-haven flows after the US Trade Representative Robert Lighthizer confirmed that the US will increase tariffs on $200 billion worth of Chinese goods on Friday.

This comes on the back of a modest US Dollar downtick, which provided an additional boost and further assisted the dollar-denominated commodity to build on last week's goodish post-NFP bounce from YTD lows.


However, the positive momentum remained capped near the $1288 supply zone amid a goodish pickup in the US Treasury bond yields, which tends to undermine demand for the non-yielding yellow metal.

Hence, it would be prudent to wait for a sustained move beyond the mentioned barrier before positioning for any further appreciating move amid absent relevant market moving economic releases from the US.

Source: fxstreet

The precious metal continued attracting some safe-haven flows after the US Trade Representative Robert Lighthizer confirmed that the US will increase tariffs on $200 billion worth of Chinese goods on Friday. ..

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USD/JPY stuck in a range

USDJPY_firm-direction-Forex_FXPIG

•  A modest USD weakness fails to assist the pair to build on the overnight bounce.
  •  The ongoing slide in the US bond yields further collaborates towards capping gains.

The USD/JPY pair lacked any firm directional bias and was seen oscillating in a narrow trading band, below the 111.00 handle through the Asian session on Tuesday.

The pair's overnight attempted bounce from multi-week lows lost steam ahead of the 111.00 handle, with receding demand for traditional safe-havens also doing little to attract any fresh buying on Tuesday.

Despite the latest escalation in the US-China trade tensions, the fact that negotiations will continue this week undermined the Japanese Yen's relative safe-haven status and extended some support to the major.


Bearish traders further took cues from the ongoing slide in the US Treasury bond yields, which exerted some downward pressure on the US Dollar and collaborated towards capping any meaningful up-move.

It would now be interesting to see if the pair is able to gain traction or the current subdued/range-bound trading action turns out to be a consolidative phase before the next leg of near-term bearish trajectory.

There isn't any major market-moving economic data due for release on Tuesday and hence, the USD price dynamics/broader market risk sentiment might continue to be key determinants of the pair's momentum.

Technical outlook

As Omkar Godbole, FXStreet's own Analyst and Editor writes: “The pair, therefore, looks set to test support at 109.70 (April 25 low) in the short-term. The bearish outlook would be neutralized if the pair closes above the descending 10-day MA, currently at 111.37. That, however, looks unlikely with signs of risk aversion.”

Source: fxstreet

The USD/JPY pair lacked any firm directional bias and was seen oscillating in a narrow trading band, below the 111.00 handle through the Asian session on Tuesday...

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EUR/USD Technical Analysis

eurusd-tech-analysis-bearish-forex-FXPIG
  • The pair is prolonging the upside momentum and looks to consolidate above the critical 1.1200 barrier.
  • The initial hurdle of relevance emerges in the 1.1270 region, coincident with last week’s tops and the 55-day SMA. The downside pressure is expected to mitigate above this region.
  • Looking at the broader picture, another move lower to the 1.1100 neighbourhood remains on the cards as long as the multi-month resistance line, today at 1.1317, caps the upside.

Source: fxstreet

The pair is prolonging the upside momentum and looks to consolidate above the critical 1.1200 barrier.

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Australia: Lowest real retail growth

AUD_Lowest-real-growth_Forex_FXPIG

ANZ analysts point out that for the Australian economy, there is a surprise decline in real quarterly sales in this quarter, which represents the lowest q/q growth in real retail sales since September 2012 (and lowest y/y since 2011) and continuing a negative volume growth downward trend in retail volumes from the past year.

Key Quotes

“Retail sales grew 0.3% m/m in March, slightly stronger than our and the market’s expectations. This brought quarterly sales growth to 1.3%, which is a slightly stronger result, in nominal terms, than recent quarters.”

“Volume growth was negative, at -0.1% q/q – the lowest volume growth since September 2012. High food price inflation explains the divergence between nominal and real growth.”

“Retail volume growth has been below the long-term average for the last couple of years and has declined y/y for the last few quarters. Volumes of household goods and department store goods fell during the March quarter, while clothing and other goods both increased by 0.3%.”

Source: fxstreet

For the Australian economy, there is a surprise decline in real quarterly sales in this quarter, which represents the lowest q/q growth in...

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Forex Tech Targets

Bulls-and-bears_Forex_FXPIG

EUR/USD:

24-HOUR VIEW: Short-term EUR strength has scope to extend 1.1225. We expected “further weakness in EUR” last Friday but were of the view that any decline is “likely limited to a probe of 1.1145”. EUR subsequently dipped to 1.1133 before staging a surprisingly rapid and robust recovery. While there is not much improvement in momentum, the short-term EUR strength has scope to extend to 1.1225. For today, a break above last week’s 1.1265 top is not expected. Support is at 1.1165 followed by Friday’s low near 1.1135.

1-3 WEEKS VIEW: EUR is expected to trade sideways. After closing lower for two consecutive days, EUR rebounded strongly on Friday (from a low of 1.1133) and ended on a firm note (NY close of 1.1200, +0.21%). The price action reinforces our current view wherein EUR is “expected to trade sideways” between the strong levels of 1.1110 and 1.1265. As highlighted previously, there is no early indication on which level is more ‘vulnerable’.

GBP/USD:

24-HOUR VIEW: GBP strength could extend further but a sustained rise above 1.3200 appears unlikely for now. GBP surged to a high of 1.3177 last Friday before ending the day on a very strong note at 1.3176. While overbought, the rally is not showing sign of slowing down just yet. From here, barring a move below 1.3075 (minor support at 1.3100), the current GBP strength could extend further. That said, a sustained rise above 1.3200 appears unlikely for now.

1-3 WEEKS VIEW: Odds for a break of the April’s peak of 1.3196 have improved. We have held the same view since last Thursday (02 May, spot at 1.3050) wherein the “rebound in GBP has scope to extend to 1.3130”. We also indicated, “at this stage, the prospect for a move to the April’s peak of 1.3196 is not high”. However, after Friday’s strong surge (GBP closed higher by a whopping +1.10% at 1.3176), the odds for a break of 1.3196 have improved considerably. However, there are a couple of strong resistance levels above 1.3196 and for now; it is premature to expect a move to the year-to-date high of 1.3380. Overall, the current ‘positive phase’ in GBP is expected to remain intact as long as the 1.3035 is not taken out (‘key support’ was previously at 1.2975).

AUD/USD:

24-HOUR VIEW: A dip below the 0.6950 support would not be surprising. We expected AUD to weaken last Friday but were of the view that “0.6970 is likely out of reach”. AUD subsequently dipped to 0.6985 before rebounding to close at 0.7025. Trump’s tweet sent AUD gapping lower upon opening this morning and from here, a dip below the 0.6950 support would not be surprising (this level is followed by a rather strong support zone between 0.6900 and 0.6910). On the upside, 0.7025 is expected to be strong enough to cap any intraday rebound (0.7010 is already quite a strong level).

1-3 WEEKS VIEW: Break of 0.6950 would shift focus to 0.6910. The negative phase in AUD that started more than a week ago (see update on 25 Apr, spot at 0.7015) is still clearly intact. Last Friday, we indicated that in view of lackluster momentum AUD could “drift” lower to lower to 0.6950. While AUD ended last Friday on a firm note (NY close of 0.7025, +0.35%), the sudden lurch lower this morning suggests that a break of 0.6950 would not be surprising. A break of this level would shift the focus to 0.6910. On the upside, only a break the 0.7060 ‘key resistance’ (no change in level for now) would indicate that the current negative phase has ended.

NZD/USD:

24-HOUR VIEW: NZD could challenge last week’s low near 0.6580. Expectation for NZD to “drift lower to 0.6595” last Friday did not materialize as it recovered after touching 0.6606. NZD gapped down upon opening this morning and from here, NZD could challenge last week’s low near 0.6580. For now, a sustained decline below this level appears unlikely (next support is at 0.6550). Resistance is at 0.6625 followed by 0.6640. Last Friday’s 0.6653 top is not expected to come into the picture.

1-3 WEEKS VIEW: Short-term bottom in place, NZD has likely moved into a consolidation phase. No change in view from last Friday, see reproduced update below. NZD tested the bottom of our expected 0.6610/0.6730 sideway-trading range as it touched 0.6609. The underlying tone has clearly softened even though it is unclear at this stage whether NZD is ready to challenge last week’s 0.6581 low. For now, we continue to hold the view that 0.6581 is a short-term bottom and that the current movement is part of a consolidation phase. However, a NY close 0.6595 would greatly increase the odds for further NZD weakness to 0.6550.

USD/JPY:

24-HOUR VIEW: USD is expected to consolidate its loss and trade sideways to slightly lower. The strong gap down in USD this morning appears to be running too fast, too soon. That said, it is too early to expect a recovery. USD is more likely to consolidate its loss and trade sideways to slightly lower. Expected range for today, 110.30/111.00

1-3 WEEKS VIEW: Focus is at the March low of 109.70. The week-long consolidation phase ended with a bang as USD nose-dived early this morning and cracked a couple of solid supports with ease. USD is deemed to have moved into a negative phase and the focus is at the March low of 109.70. This is a rather solid support and may not yield as easily. All in, USD is expected to trade under pressure in the coming days as long as the 111.45 ‘key resistance’ is intact

Source: efxdata

Short-term EUR strength has scope to extend 1.1225. We expected “further weakness in EUR” last Friday but were of the view that any decline is “likely limited to a probe of 1.1145”. EUR subsequently...

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GBP/USD: Short term downtrend eroded

GBPUSD_downtrend_Forex_FXPIG

According to analyst at Commerzbank, GBP/USD pair has recently eroded its short term downtrend and this is now acting as support at 1.2967.

Key Quotes

“The intraday Elliott wave count has turned more positive and we have already reached 1.3188/97, the 61.8% retracement and 3rd April high. It will need to regain 1.3217 (25th January high) to introduce scope up to the 1.3351/82 resistance, where we expect it to struggle. Dips lower should hold around the 200 day ma at 1.2960. Failure here targets the 1.2865 April low and this in turn protects the February low at 1.2772.”

“Below 1.2772 we would allow for losses to the 1.2669/62 15th January low and August low and possibly the 1.2609/78.6% retracement.”

Source: fxstreet


GBP/USD pair has recently eroded its short term downtrend and this is now acting as support at 1.2967...

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Forex Week Ahead

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The US dollar reversed earlier gains on a blockbuster headline employment number as market participants focused on the slightly lower than expected wage growth.  The nonfarm payroll report showed April employment created 263,000 new jobs, well above all estimates.  Wage growth for the prior year slowed to 3.2%, down from the 3.4% high of the current cycle.  The US economy remains the most attractive spot for equity traders, but the greenback may be at a critical turning point.  The US dollar may take a backseat at the start of the week as the focus shifts to live rate decisions from the RBA and RBNZ.

Earnings – Softbank, Disney, Toyota, Tyson Foods, and Anheuser-Busch Invev on tap

AUD – RBA to switch to an easing bias

RBNZ – First cut expected in over two years  

Mexico – Higher inflation to support bank’s tightening bias

Oil – Demand arguments improve on strong US data  

Gold – Fifth weekly decline in six weeks  

Earnings

Roughly 10% of the S&P 500 companies will report earnings in the last full week of earnings results.  Technology earnings will come from SoftBank, Wirecard and JD.com.  Toyota, Honda, BMW, and Subaru will wrap the automobile results. Big media names, such as Disney, Viacom and News Corp will report as well.

Heading into the final week, Financials and Technology stocks have outperformed this earnings season, delivering 3.3% and 2.5% returns respectively, while Energy, Materials and Real Estate disappointed with negative price returns.

AUD

The Reserve Bank of Australia (RBA) rate decision is a live event that will likely see rates kept steady with a shift to an easing bias.  Current implied probabilities are pricing in a 38% chance the RBA will cut interest rates by 25 basis points on Tuesday.  Positive signs for both the domestic and global outlook may have the RBA take a patient stance on delivering rate cuts.

The RBA could downgrade their forecasts following softer Australian and Chinese data over the past month.  While inflation has softened, economic growth and building approvals saw steep declines, retails sales, consumer confidence and employment change all posted significant rebounds.

RBNZ

The Reserve Bank of New Zealand is expected to cut rates at its May 8th policy meeting as inflation and economic activity have fallen off a cliff in recent months.  The labor market is showing signs of weakening and dismal wage growth might warrant two rate cuts this year by the RBNZ.

RBNZ Governor Adrian Orr switched to an easing bias in March, highlighted a mixed picture in April, and since then the data has been soft, probably solidifying a rate cut in the near future for the bank.  The last time New Zealand cut rates was back in November 2016.

Mexican Peso

Mexican inflation is expected to remain high and Thursday’s reading could support the Mexico Central Bank (Banxico) bias for high interest rates.  The central bank is in a tightening cycle that last saw a rate rise in December.  While other economic indicators are showing a deceleration in growth and domestic demand, rising inflation will keep the bank on hold.  Hotter inflation could help the peso target the lower boundaries of the 2019 range of 18.80 and 19.60.

Oil

Oil prices got a boost from an impressive US nonfarm payroll employment report.  The better than expected data should alleviate some falling demand concerns, but it will not likely shift the focus away from the supply side risks.  West Texas Intermediate posted its second consecutive weekly decline after a string of 7 straight weeks of gains.

The Venezuelan situation remains volatile and will likely see opposition leader Guaido push for further protests and attempts to gain more military support.  It appears he is still pretty far away from gaining momentum in ousting Maduro.

Gold

The precious metal remains vulnerable after delivering a fifth weekly loss in six weeks.  The Friday rally was mainly attributed to the softer wage data that suggested that low inflation is transitory.  Wages however are still close to cycle highs and we will not likely see this be the key catalyst to support a sustained rebound for gold prices.

Source: marketpulse

The US dollar reversed earlier gains on a blockbuster headline employment number as market participants focused on the slightly lower than expected wage growth. The nonfarm payroll report showed...

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Forex Tech Targets

Bulls-andbears_forex_FXPIG_03.25.2019

EUR/USD:

24-HOUR VIEW: EUR is not ready to recover but any further weakness is likely limited to a probe of 1.1145.

Yesterday, we were of the view that the “weakness in EUR could test 1.1170 first before a recovery can be expected”. While EUR dipped to 1.1169 during late-NY hours, the current soft patch in EUR is not showing sign of stabilizing. In other words, EUR is not ready to recover just yet. That said, lackluster momentum suggests any further weakness is likely limited to a probe of 1.1145 (the next support 1.1110 is unlikely to come into the picture). Resistance is at 1.1195 followed by 1.1220.

1-3 WEEKS VIEW: EUR is expected to trade sideways. There is not much to add to the update from yesterday.

As highlighted, the rapid pull-back from the 1.1265 trend-line resistance and the inability to move below 1.1100 last week (low of 1.1110) suggest the current movement is likely part of a consolidation phase. In other words, EUR is expected to trade sideways for now, likely between the two strong levels of 1.1110 and 1.1265. For now, there is no early indication on which level is more ‘vulnerable’.

GBP/USD:

24-HOUR VIEW: GBP is expected to trade sideways, likely within a 1.3000/1.3080 range.

GBP traded sideways between 1.3019 and 1.3083 yesterday, narrower than our expected range of 1.3010/1.3090. While the current movement is still viewed as part of a consolidation phase, the weakened underlying tone suggests a lower range of 1.3000/1.3080.

1-3 WEEKS VIEW: Rebound in GBP has scope to extend to 1.3130. No change in view from yesterday, see reproduced update below.

The strong advance in GBP over the past couple of days took out several strong resistance levels with ease. The price action suggests GBP has likely made a short-term bottom at 1.2866 last Thursday (25 Apr). While upward momentum is not exactly strong, the rebound from the low has room to extend higher towards 1.3130. At this stage, the prospect for a move to the April’s peak of 1.3196 is not high. All in, GBP is expected to trade with a positive bias from here and only a break of the 1.2975 ‘key support’ would indicate that the current upward pressure has eased.

AUD/USD:

24-HOUR VIEW: AUD could weaken further but 0.6970 is likely out of reach.

We expected AUD to continue to move lower yesterday but were of the view that “any weakness could be limited to a probe of last week’s 0.6988 low”. While AUD subsequently moved lower, it did not threaten 0.6988 (overnight low of 0.6995). From here, the improved downward momentum suggests that a break of 0.6988 would not be surprising but 0.6970 is likely out of reach (there is another relatively strong level at 0.6950). On the upside, only a move back above 0.7030 would indicate that the current downward pressure has eased (0.7020 is already quite a strong level).

1-3 WEEKS VIEW: AUD is expected to drift lower to 0.6950.

We have held the same view since last Thursday (25 Apr, spot at 0.7015) wherein only a “NY close below 0.7005 would open up the way for AUD to move to 0.6950”. After about a week of trading sideways to slightly higher, AUD closed at 0.7000 yesterday (-0.22%), the second lowest daily closing this year (AUD closed at 0.6985 on 02 Jan). In other words, AUD is expected to move to 0.6950 from here even though lackluster momentum suggests any decline would be at a slow pace. On the upside, only a break of the 0.7060 ‘key resistance’ (level was at 0.7080 yesterday) would indicate that the current downward pressure has eased. Looking further ahead, the next support below 0.6950 is closer to 0.6910.

NZD/USD:

24-HOUR VIEW: NZD could continue to drift lower to the next support at 0.6595.

We expected NZD to “drift lower” yesterday but indicated that a “break of the solid 0.6610 support would come as a surprise”. However, NZD dipped one pip below 0.6610 (low of 0.6609) before ending the day on a soft note. While downward momentum has not improved by much, NZD could continue to drift lower to the next support at 0.6595 before a recovery can be expected. Resistance is at 0.6640 followed by 0.6655.

1-3 WEEKS VIEW: Short-term bottom in place, NZD has likely moved into a consolidation phase.

NZD tested the bottom of our expected 0.6610/0.6730 sideway-trading range as it touched 0.6609. The underlying tone has clearly softened even though it is unclear at this stage whether NZD is ready to challenge last week’s 0.6581 low. For now, we continue to hold the view that 0.6581 is a short-term bottom and that the current movement is part of a consolidation phase. However, a NY close 0.6595 would greatly increase the odds for further NZD weakness to 0.6550.

USD/JPY:

24-HOUR VIEW: USD is expected to trade sideways, likely within a 111.25/111.75 range.

We highlighted yesterday “USD could move above the overnight high of 111.61 but a move beyond 111.85 appears highly unlikely”. USD subsequently rose to 111.66 before easing off to and traded sideways. Momentum indicators are mostly neutral now which suggest USD is likely to trade sideways for today, expected to be within a 111.25/111.75 range.

1-3 WEEKS VIEW: USD has likely moved into a consolidation phase. No change in view from yesterday, see reproduced update below.

We have held the same view since last Friday (26 Apr, spot at 111.65) wherein USD is deemed to “have moved into a consolidation phase” and is expected to trade sideways within a broad 111.00/112.30. USD tested the bottom of the range yesterday (01 May) but rebounded strongly after touching 111.03. The price action reinforces our view and we continue to expect USD to trade sideways within the range mentioned above for now.

Source:efxdata

While EUR dipped to 1.1169 during late-NY hours, the current soft patch in EUR is not showing sign of stabilizing. In other words, EUR is not ready to...

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EUR/USD:ahead of US NFP

Eur_bearish_NFP_Forex_FXPIG
  • EUR/USD is on the defensive, having charted a bearish lower high at key trendline hurdle earlier this week.
  • Recent lows near 1.10 will likely be put to test if the US wage growth tops forecasts.

EUR/USD will likely revisit the recent low of 1.1110, as suggested by technical charts, if the US non-farm payrolls and more importantly, the wage-price inflation, scheduled for release at 12:30 GMT today, blows past expectations.

The currency pair faced rejection at the trendline connecting March 20 and April 17 highs earlier this week after the Fed kept the interest rates unchanged and Chairman Powell pushed back expectations that the central bank's next move would be a rate cut by associating low inflation with transitory factors. Powell added further that the policymakers see no strong case for a move in either direction.

More importantly, EUR/USD closed well below 1.1187 on Thursday, validating the post-Fed sell-off. With a bearish lower high in place along the descending trendline, the path of least resistance appears to be on the downside.

The recent lows near 1.11, therefore, stand exposed and could be put to test if the US data surprises on the higher side. The Nonfarm Payroll figure is expected to show the economy added 185k jobs in April, following the addition of 196K jobs in March. Meanwhile, the average hourly earnings are forecasted to increase by 0.3% month-on-month in April, following a 0.1% rise in March.

An above-forecast wage growth data would force markets to scale back expectations of Fed rate cut in December, leading to a broad-based rally in the US Dollar.

Ahead of the Fed, the EUR/USD could take cues from German Bundesbank President Weidmann's speech (due at 08:00 GMT) and the preliminary Eurozone consumer price index for April, scheduled for release at 09:00 GMT.

Source: fxstreet

EUR/USD will likely revisit the recent low of 1.1110, as suggested by technical charts, if the US non-farm payrolls and more importantly, the wage-price inflation, scheduled for release at 12:30 GMT today, blows past expectations...

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Asia Markets

Asia_market_fx_forex_FXPIG

According to ANZ analysts, for the Asian economies, there has been considerable improvement in the trade balances of India, Indonesia, and the Philippines.

Key Quotes

“Weak energy as well as non-energy imports underlie this correction, with the latter symptomatic of sluggish domestic activity and investment in particular.”

“Existing fiscal policies and anticipated monetary easing measures will be unable to reverse the weakness in non-energy imports. On the other hand, as the three economies are all net oil importers, a sustained oil price rally can moderate or even reverse this progress.”

“Overall, the improvement in the trade balances is a positive development. Even though symptomatic of weak investment activity, we need to bear in mind that large current account deficits were a key source of currency weakness in 2018.”

Source: fxstreet

According to ANZ analysts, for the Asian economies, there has been considerable improvement in the trade balances of India, Indonesia, and the Philippines.

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Gold Technical Analysis

Gold_falls_Forex_fxpig

  •  The precious metal extended overnight post-FOMC rejection slide from the $1287-88 supply zone and remained under some heavy selling pressure for the second consecutive session on Thursday.

  •  The bearish momentum, also marking the third down day in the previous four, has now dragged the commodity to over one-week lows, around the $1270 region amid fading safe-haven demand.

 •  Meanwhile, the overnight slide confirmed a bearish break through an important $1278 horizontal support and hence, the ongoing downfall could further be attributed to some fresh technical selling.

  •  Oscillators on 4-hourly/daily charts maintained their bearish bias but are already pointing to slightly oversold conditions on the 1-hourly chart, warranting some consolidation/modest rebound.

  •  However, the set-up remains in favor of bearish traders and hence, any attempted recovery move might still be looked upon as a selling opportunity for an eventual slide to $1260 support area.

Source: fxstreet

The precious metal extended overnight post-FOMC rejection slide from the $1287-88 supply zone and remained under some heavy selling pressure for the second consecutive session on Thursday.

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FOREX Tech Targets

Bulls-and-bears_FXPIG_forex_02.05.2019

EUR/USD:

24-HOUR VIEW: Weakness in EUR could test 1.1170 first before a recovery can be expected. After edging to a high of 1.1265, EUR plunged and hit a low of 1.1186 during late-NY hours. While the sharp and rapid decline appears to be running ahead of itself, the down-move is not showing sign of stabilizing. From here, EUR could test the 1.1170 support first before a recovery can be expected. For today, the next support at 1.1145 is not expected to come into the picture. On the upside, only a move above 1.1240 would indicate that the current weakness has stabilized (minor resistance is at 1.1220).

1-3 WEEKS VIEW: EUR is expected to trade sideways. EUR cracked the 1.1210 ‘key resistance’ on Tuesday (30 Apr) before extending its gain to a 2-week high of 1.1265 yesterday (01 May). The up-move was however short-lived as it dropped sharply after FOMC announcement and ended the day lower by -0.18% (NY close of 1.1194). The inability to extend its weakness below 1.1100 (last week low of 1.1110) and the rapid pull-back from the 1.1265 trend-line resistance suggest the current movement is likely part of a consolidation phase. In other words, EUR is expected to trade sideways.

GBP/USD:

24-HOUR VIEW: GBP is expected to trade sideways, likely within a 1.3010/1.3090 range. The swift drop from an overnight high of occurred amidst overbought conditions. The late-NY peak of 1.3102 is deemed as a short-term top and GBP is expected to stay below this level for today. That said, it is too soon to expect a sustained pull-back. GBP is more likely to consolidate and trade sideways at these higher levels, expected to be within a 1.3010/1.3090 range.

1-3 WEEKS VIEW: Rebound in GBP has scope to extend to 1.3130. The strong advance in GBP over the past couple of days took out several strong resistance levels with ease. The price action suggests GBP has likely made a short-term bottom at 1.2866 last Thursday (25 Apr). While upward momentum is not exactly strong, the rebound from the low has room to extend higher towards 1.3130. At this stage, the prospect for a move to the April’s peak of 1.3196 is not high. All in, GBP is expected to trade with a positive bias from here and only a break of the 1.2975 ‘key support’ would indicate that the current upward pressure has eased.

AUD/USD:

24-HOUR VIEW: AUD could continue to move lower but weakness could be ‘limited’ to a probe of last week’s 0.6988 low. While the rapid drop during late-NY hours appears to be overdone, the weakened underlying tone suggests AUD could continue to move lower from here. That said, in view of the lackluster momentum, any weakness could be ‘limited’ to a probe of last week’s low at 0.6988 (a sustained drop below this level is not expected). Resistance is at 0.7030 followed by 0.7045. The 0.7060 high registered early yesterday is not expected to be challenged.

1-3 WEEKS VIEW: A NY close below 0.7005 would open up the way for AUD to move to 0.6950. After the sharp decline in AUD last week, we indicated last Thursday (25 Apr, spot at 0.7015) that only a “NY close below 0.7005 would open up the way for AUD to move to 0.6950”. Since then, AUD staged a mild recovery and touched 0.7069 on Tuesday (30 Apr) before dropping back quickly yesterday. The underlying tone remains soft and we continue to hold the same view that AUD could extend its weakness to 0.6950. Only a break of the 0.7080 ‘key resistance’ (level was previously at 0.7100) would indicate that last week’s 0.6988 low is a short-term bottom.

NZD/USD:

24-HOUR VIEW: NZD could drift lower but a break of the solid 0.6610 support would come as a surprise. Despite the sharp overnight decline, downward momentum has not improved by much. That said, the soft underlying tone suggests NZD could drift lower from here but a break of the solid 0.6610 support would come as a surprise. Resistance is at 0.6645 followed by 0.6660.

1-3 WEEKS VIEW: Short-term bottom in place, NZD has likely moved into a consolidation phase. There is not much to add to the update from Monday (29 Apr, spot at 0.6660). As indicated, NZD has likely moved into a consolidation phase and is expected to trade sideways, likely within a 0.6610/0.6730 range.

USD/JPY:

24-HOUR VIEW: USD could move above the overnight high of 111.61 but a move beyond 111.85 appears highly unlikely. After dropping to a low of 111.03, USD soared to an overnight high of 111.61. While upward momentum has not improved by much, USD could move above the overnight high. That said, a move beyond the next resistance at 111.85 appears highly unlikely. On the downside, support is at 111.20 followed the solid support at 111.00.

1-3 WEEKS VIEW: USD has likely moved into a consolidation phase. We have held the same view since last Friday (26 Apr, spot at 111.65) wherein USD is deemed to “have moved into a consolidation phase” and is expected to trade sideways within a broad 111.00/112.30. USD tested the bottom of the range yesterday (01 May) but rebounded strongly after touching 111.03. The price action reinforces our view and we continue to expect USD to trade sideways within the range mentioned above for now.

Source: efxdata

Weakness in EUR could test 1.1170 first before a recovery can be expected. After edging to a high of 1.1265, EUR plunged and hit a low of 1.1186 during late-NY hours. While the sharp and ...

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Forex Week Ahead

Dollar_rally_FOMC_storm_Forex_FXPIG

The US dollar rallied for most of the trading week, but gave back gains on Friday after the US first quarter GDP strong beat was supported by transitory factors and softer core PCE.  The headline showed US economic growth accelerated much faster than the high end of economists’ forecasts.  Net trade inventories and inventories were responsible for half the gains of GDP and personal consumption dropped sharply.  The kneejerk rally in the dollar was short-lived as rate cut expectations grew slightly.

  • FOMC meeting and Jobs data on tap next week
  • Big tech and Pharma highlight earnings on tap
  • Trade talks continue and China PMIs due
  • Loss of liquidity from Japan’s observance of Golden Week

USD

What is next for the US dollar?  After approaching two-year highs, with the last leg mainly being attributed to weakness in Europe, the dollar will look to take queues from the Wednesday’s Fed meeting and Friday’s nonfarm payroll report.  No change in policy is expected from the Fed, but investors will look for clues if they will say what is needed to occur for them to make a policy move.   The Fed is expected to make this meeting a non-event, but it could become one if they become optimistic on the economy.  On Friday, the April nonfarm payroll report is expected to see hiring create 185,000 new jobs, down from 196,000 in March.  The labor market remains the strong part of the economy, but we are starting to see some signs of weakness with job openings and jobless claims.

China

Two big risks for Asia will come from the next round of trade talks and another round of Chinese PMI readings.  This will also occur during Japan’s observance of Golden Week, which could mean exaggerated moves with yen crosses.

Treasury Secretary Mnuchin and US Trade Representative Lighthizer return to Beijing for another round of talks that will focus on intellectual property, forced technology transfer, non-tariff barriers, agriculture, services, purchases and enforcement.  President Xi delivered many assurances with his speech at the Belt and Road Forum in Beijing.  If President Trump signals to his team he is content with the latest concessions, we could see a final meeting setup later in May.

China’s Government PMI readings are also expected to remain in expansion territory, with the manufacturing reading rising from 50.5 to 50.6.

Earnings

So much for negative earnings forecasts.  Roughly a third of the way through earnings season and markets are happily surprised with the results.  Financials were mixed but optimistic on the consumer, tech has surprised to the upside and the consumer stocks have been mostly positive.  The next batch of results focus heavily on tech, pharmaceuticals, energy and transportation results.

Google parent company Alphabet Inc. delivers results on Monday, while Apple Inc. reports on Tuesday.  Healthcare results are expected from Pfizer, Merck, Eli Lilly, Amgen, GlaxoSmithKline, and Gilead.

Oil
Crude prices continued to slide from the six-month high made earlier in the week after President Trump tweeted “Spoke to Saudi Arabia and others about increasing oil flow. All are in agreement.”  The biggest fall with oil prices in four months is occurring despite the US ending sanction waivers for Iranian crude and a Russian supply outage.

The problem for oil bulls is that the market has been overly bid and there were hardly sellers in place.  The path of least resistance may be to the downside in the short-term.

Gold

The precious metal finished higher for a third consecutive day after markets dissected the US first quarter GDP beat that was accompanied with softer inflation and with components that suggest weakening consumer demand.

The broad-based dollar weakness also provided some much-needed support for gold prices.  Dovish expectations grew for the Fed following the data dump, but if we continue to see record highs in stocks, it will be most difficult for gold to break out much higher.

Source: marketpulse

The US dollar rallied for most of the trading week, but gave back gains on Friday after the US first quarter GDP strong beat was supported by transitory factors and softer core PCE. The headline showed US economic growth accelerated much

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Forex Week Ahead

Dollar_Easter_rate-decison-Forex_FXPIG

The US dollar ended the week higher after mixed data and earnings reports provided a slightly optimistic tone for the US economy.  With thin conditions persisting due to the observance of Easter, choppy price moves could be expected over the next couple of sessions.  All eyes will be on a barrage of US data with the focus on Friday’s advance reading of first quarter GDP.  Earnings season also enters high gear with results from Boeing, Caterpillar, Microsoft, Tesla, Amazon and Exxon.   The Bank of Canada is also expected to keep rates unchanged at the Wednesday meeting.  The Bank of Japan is also expected to keep policy unchanged while providing small cuts to their economic forecasts.

  • Earnings season enters high gear – 150 companies on S&P 500 report
  • US Q1 Advance GDP expected to remain steady at 2.2%
  • BOC and BOJ Interest Rate Decisions expected to see no changes in policy

BOJ

The Japanese yen could see volatile moves from both the BOJ’s rate decision on Thursday, but more importantly, ahead of Japan’s 10-day holiday break, aka shutdown that begins next week for the Golden Week holiday.  The BOJ is pleased global yields have stabilised and their policy meeting is unlikely to see any majors with their yield curve control.  The BOJ could downgrade their outlook report, like what the rest of the world has been doing.

BOC

The Bank of Canada is widely expected to keep rates unchanged at the Wednesday policy meeting.  Most forecasters see no change for the rest of 2019 and are unsure which direction they may go in 2020.  The outlook for Canada has deteriorated over the past month, as the mandatory production cut is hurting their exports, housing market is worrisome, and sentiment remains weak due to uncertainty with global trade relations.  Concerns for economy are growing as the probability for a recession in the next 12 months has increased to 20%, with the next 24 months having a 27.5% chance

US GDP

US first quarter GDP is expected to remain steady at 2.2%, despite dealing with the longest-ever partial federal government shutdown and flurry of softer data for the first couple months of the year.   Thursday’s retail sales reading for the month of March showed the best reading in 18 months.  The narrowing of the trade deficit also bodes well that growth may not weaken from the prior period.

Both economists for JP Morgan and Goldman Sachs have raised their forecasts to 2.5% and 2.1% respectively.

Earnings

The big financials kicked off earnings season and so far the results were mixed.  A clearer take on the first quarter is expected after we see results from 150 of the 500 companies in the S&P 500.  Investors will closely follow the results and earnings calls from Amazon, Microsoft, Visa, Facebook, Boeing, Caterpillar, Halliburton, Hasbro, Lockheed, Tesla, Coca-Cola, Twitter, eBay, United Tech, Harley-Davidson, AT&T,  Chipotle, Ford, Intel, Mattel, Southwest, Starbucks, Exxon and Chevron.

Abe/Trump

On Friday, President Donald Trump and Japanese Prime Minister Shinzo Abe meet at the White House to discuss trade and North Korea.  Trump has also planned a visit to Japan at the end of May to meet the new emperor.  So far, Trump has not imposed tariffs on Japanese cars as both countries have begun trade talks.

Source: marketpulse

The US dollar ended the week higher after mixed data and earnings reports provided a slightly optimistic tone for the US economy. With thin conditions persisting due to the observance of Easter, choppy price moves could be expected over the...

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AUD/USD inches higher

AUDUSD_inches-higher-Forex_FXPIG
  • DXY eases, helps the Aussie recovery.
  • But upside appears limited amid bearish technical bias and thin trades.
  • Focus shifts to US housing data for fresh trading impetus.

The AUD/USD pair picked up fresh bids and broke its Asian range trade to the upside, clinching fresh session highs near 0.7160 region, as the US dollar extends its pullback from two-week tops against its major rivals after the Mueller report revealed the US President Trump actions to impede the inquiry.

The greenback rallied to the highest levels since end-March at 97.48 after the US March retail sales report showed that the American consumer spending witnessed the fastest expansion in 18 months. The recent slew of upbeat US fundamentals quelled concerns over a slowing US economy and collaborated to the broad USD strength.

However, the further upside appears to lack follow-through amid Easter holiday-thinned trades and a lack of fresh catalysts while the technical indicators continue to back the case for the downside bias.

In the day ahead, the spot will continue to get influenced by the sentiment around the US dollar, as attention turns towards the US housing starts and building permits data due later today at 1230 GMT. Note that the US data is likely to have limited impact on the dollar trades, as most traders are already out on a 4-day Easter holiday season.

Source: fxstreet

The AUD/USD pair picked up fresh bids and broke its Asian range trade to the upside, clinching fresh session highs near 0.7160 region, as the US dollar extends its pullback from two-week tops against its major rivals after the Mueller report revealed the US President Trump actions to impede the inquiry.

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USD/JPY frozen

USDJPY_frozen_Forex_FXPIG
  • Yen little moved despite BOJ bond buying cut, better Japanese CPI.
  • Markets await a range break out, US housing data unlikely to help.

The USDJPY pair extends its side-tend into the European session, wavering back and forth in a 10-pips extremely narrow range just below the 112 handle.

A tug of war between the bulls and bears continue tor the sixth straight session, despite some volatility witnessed on Thursday after the Yen hit fresh weekly tops at 111.76 against its American peer following the disappointing German and Eurozone PMIs induced broad risk-aversion.

The spot pulled back sharply from the weekly trough and reverted to the familiar ranges near the 112 level following upbeat US retail sales data release the lifted the US stocks alongside the greenback across its main competitors.

On the JPY-side of the equation, a minor uptick in the Japanese CPI figures combined with the Bank of Japan’s (BOJ) decision to cut the purchases of the long duration JGBs failed to move a needle on the USD/JPY pair.

“Japan’s March month national consumer price index (CPI) (YoY) matched expectations of 0.5% increase versus 0.2% earlier while national CPI ex-fresh food, also known as national core CPI, ticked up from 0.7% forecast and prior to 0.8%. It should also be noted that national CPI ex-food and energy remained unchanged at 0.4%,” Anil Panchal, FXStreet’s Analyst noted.

Further, the spot holds steady ahead of the 10-day Golden Week holidays, in anticipation of huge JPY flows, as markets resort to repositioning heading into the shutdown. Looking ahead, the pair will continue its flat action amid holiday-thinned quiet trades and the US housing data is also likely to have little impact on the Yen pair, as markets await a strong catalyst for the 112.15-111.75 range break out.  

Source: fxstreet

The USDJPY pair extends its side-tend into the European session, wavering back and forth in a 10-pips extremely narrow range just below the 112 handle...

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Forex Today

FX-Today_Forex_FXPIG

Good Friday/ Easter holiday sleep mode trading seeped into the Asian markets, as Australian, New Zealand and Hong Kong markets were closed. Rest of the Asian equity markets traded mixed amid a lack of fresh catalysts and thin liquidity.

Across the fx space, the Japanese Yen failed to react to a minor uptick in the Japanese CPI figures and also ignored the Bank of Japan’s (BOJ) routine bond market operation. Therefore, the USD/JPY pair stuck to its tight range just under the 112 handle.

Both the Antipodeans remained on the front foot amid stalled USD buying across the board but held on to the familiar ranges. The Aussie consolidated the minor bounce near 0.7150 while the Kiwi remained capped below the 0.67 handle. The EUR/USD pair regained the bids near 1.1240 region while the Cable circled around the 1.3000 level despite strong UK retail sales report.

Main Topics in Asia

US Pres. Trump: Russia did not affect 2016 US presidential election - Twitter

US ITC: USMCA trade deal would raise US GDP by 0.35%

Gold Technical Analysis: Eyes corrective bounce on bullish 4H RSI divergence

USD/JPY seesaws around 112.00 as Japan National CPI matched expectations

Labour MPs to urge Jeremy Corbyn not to 'torpedo' Brexit deal - The Guardian

Saudi Arabia’s oil exports fall below 7 million Bpd in February

BOJ trims long duration JGB purchases by JPY 20 billion

PBOC sets yuan reference rate at 6.7043

Japan’s Suga: Japan will invite US President Trump to visit Japan May 25-28

Japan’s Aso: No change of plan to raise sales tax

Key Focus Ahead

The Good Friday European calendar remains data-empty as all the major European markets are closed today, except for the Italian markets. Therefore, the EUR, GBP traders could look forward to the Italian business and consumer confidence figures due at 0800 GMT for some trading incentives.

Meanwhile, the NA docket remains a thin-showing, with the US housing starts and building permits only of note, dropping in at 1230 GMT. The US data is unlikely to have any impact on the dollar trades, as the US and Canadian markets are out on a four-day Easter holiday break, leaving quiet trading across the fx board until Tuesday.

EUR/USD Technical Analysis: Bid in holiday-thinned trade, bullish channel breakdown confirmed

The repeated failure to close above 1.13 followed by the bullish channel breakdown indicates the path of least resistance is now to the downside and the recent lows near 1.1170 could soon come into play.

GBP/USD: On the defensive despite strong UK retail sales

The path of least resistance for the GBP/USD appears to be on the downside. The British Pound slipped below 1.30 and closed under the April 5 low of 1.2987 yesterday, validating the bearish lower high of 1.3133 created last Friday.

USD/TRY: One to watch

The long weekend is fast approaching, and traders are slowly winding down. So, I won’t waste your time with a lengthy report. But I just came across this chart of the USD/TRY, which you may want to keep in your watch list.

Source: fxsteet

Good Friday/ Easter holiday sleep mode trading seeped into the Asian markets, as Australian, New Zealand and Hong Kong markets were closed. Rest of the Asian equity markets traded mixed amid a lack of fresh catalysts and thin liquidity...

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EUR/USD consolidates

Eur-cpnsolidates_forex-FXPIG
  • Dismal Eurozone data refuel global growth worries.
  • The Euro hammered broadly alongside risk assets.
  • Some consolidation likely ahead of US economic releases.

The bears appear to have taken a breather last hour, allowing a brief consolidative mode in the EUR/USD pair near the midpoint of the 1.12 handle, as they await the US macro releases for the next push lower.

The spot stalled its sell-off but remains within a striking distance of fresh weekly lows reached at 1.1244 after the much-awaited German and Eurozone manufacturing PMI numbers disappointed markets and re-ignited Euro area growth concerns that intensify global economic slowdown fears.


On the data release, the Euro eroded as much as 50-pips against its American counterpart and finally broke its range trade around the 1.13 handle witnessed so far this week. From a technical perspective, the major remained exposed to downside risks given the repeated failure to close above the 1.13 handle and the double top formed at the 1.1325 key resistance.

As explained by Haresh Menghani, FXStreet’s Analyst, “oscillators have been gaining negative traction on 4-hourly/daily charts but are already pointing to slightly oversold conditions on the 1-hourly charts, warranting some consolidation. However, the set-up now seems to have turned firmly in favor of bearish traders and hence, a follow-through weakness, towards testing the 1.1200 mark, remains a distinct possibility.”

Looking ahead, all eyes remain on the US data flow, including the key retail sales, Philly Fed manufacturing gauge and jobless claims, for further trading momentum, as the US dollar remains in weekly tops vs. its major peers amid souring risk appetite.

Source: fxstreet

The bears appear to have taken a breather last hour, allowing a brief consolidative mode in the EUR/USD pair near the midpoint of the 1.12 handle, as they await the US macro releases for the next push lower...

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Forex Tech Targets

Bulls-and-bears_Forex_FXPIG

EUR/USD: A NY close above 1.1330 would suggest EUR is ready to tackle 1.1400.

The strong 1.1330 resistance first indicated on Monday (15 Apr, spot at 1.1300) remains ‘unchallenged’ as EUR eased off after touching 1.1324 during London hours. As highlighted earlier yesterday, EUR has to “start cracking and move above 1.1330 soon (say within these few days) or a prolonged consolidation around current levels would lead to a rapid loss in momentum”. In other words, while we continue to hold the view that “a NY close above 1.1330 would suggest EUR is ready to tackle 1.1400”, the prospect for such a scenario has diminished after yesterday’s price action. On the downside, a break of the 1.1255 ‘key support’ (level previously at 1.1240) would suggest that the current upward pressure has eased.

GBP/USD: GBP is expected to continue to trade sideways. No change in view from yesterday, see reproduced update below.

After trading in a quiet manner for several days, GBP slipped and closed lower by -0.39% (NY close of 1.3048). While downward pressure has ticked up, it is too soon to expect a sustained decline. From the perspective of several weeks, we continue to view the current price action in GBP as part of a sideway-trading phase (we have held the same view for about 2 weeks now). That said, the slight uptick in downward pressure suggests GBP could drift lower and probe the bottom of the expected 1.2950/1.3200 range within the next few days. At this stage, the prospect for a sustained drop below 1.2950 is not high.

AUD/USD: AUD strength could extend to 0.7210.

We have held the same view since Monday (15 Apr, spot at 0.7170) wherein the strength in AUD “could extend to 0.7210”. AUD came within a few pips of this level as it touched 0.7206 yesterday (17 Apr) before easing off quickly to end the day little changed at 0.7179 (note that AUD has closed little changed for the past 4 days). While we continue to hold the view that “0.7210 is a rather critical resistance and a clear break of this level would suggest AUD is ready to move even higher in the coming weeks”, the lackluster price action suggests that the odds for a sustained rise above 0.7210 are not high. That said, only a break of the 0.7130 ‘key support’ (level was at 0.7115 yesterday) would suggest that a short-term top is in place. Looking ahead, a clear break of 0.7210 would shift the focus to 0.7260 followed by the year-to-date high at 0.7296.

NZD/USD: Negative phase has been ‘revived’; NZD is expected to move below 0.6660. No change in view from yesterday, see reproduced update below.

We highlighted on Monday (15 Apr, spot at 0.6770) that “while our 0.6785 ‘key resistance’ is still intact, the price action suggests that the risk of a short-term bottom has increased”. We added, “meanwhile, NZD could attempt to move towards 0.6700 but the odds for such a move have diminished considerably”. The ‘key resistance’ remains intact as NZD nose-dived this morning (after the release of weaker than expected NZ inflation data) and sliced through 0.6700 (low of 0.6668 at the time of writing). The low of 0.6668 is not far above a relatively strong 0.6660 support but below 0.6660, the next significant support level is about another 70 pips lower at 0.6591 (the year-todate low in early-Jan when USD/JPY was hit by a ‘flash crash’). All in, the price action this morning suggests that the ‘negative phase’ that started 3 weeks ago (27 Mar, spot at 0.6830, after RBNZ hint of a possible rate cut) has been ‘revived’. Oversold short-term indicators suggest NZD could consolidate for a few days first but as long as the 0.6785 ‘key resistance’ remains intact, NZD is expected to move below 0.6660. Further weakness to 0.6591 is not ruled out but at this stage, the odds are not that high.

USD/JPY: USD is expected to trade with a positive bias but 112.60 could be out of reach. No change of view from yesterday, see reproduced update below.

USD had another quiet day and traded within a tight range before ending the day largely unchanged (NY close of 111.99, -0.03%). For now, we continue to hold the same as on Monday (15 Apr) wherein USD “is expected to trade with a positive bias but 112.60 could be out of reach”. All in, we expect USD to trade with a positive bias and only a break of the 111.40 ‘key support’ (level was at 111.20 previously) would suggest that the current ‘positive phase’ in USD has ended.

Source:efxdata

The strong 1.1330 resistance first indicated on Monday (15 Apr, spot at 1.1300) remains ‘unchallenged’ as EUR eased off after touching 1.1324 during London hours. As highlighted earlier...

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Easter Trading Schedule

Easter_Trading_Forex_FXPIG

Please note the below upcoming Easter trading schedule for Instruments on our SPA and SFL feed


18th of April

Forex            Normal Hours                                  

Metals          Normal Hours                            

GER30          Normal Hours                             

GBR_100      Early Close 22:00                            

SPX500         Normal Hours                             

US30              Normal Hours                           

EUR_50         Normal Hours                                

FRA_40         Normal Hours                              

NAS100         Normal Hours                          

AUS_200       Early Close 16:00                                 

NGAS             Normal Hours               

19th of April 

Forex             Normal Hours                                  

Metals          Closed                           

GER30          Closed                           

GBR_100      Closed                            

SPX500         Closed                           

US30              Closed                          

EUR_50         Closed                               

FRA_40         Closed                             

NAS100         Closed                           

AUS_200       Closed                                 

NGAS             Closed 

22nd of  April

Forex            Normal Hours                                  

Metals          Normal Hours                           

GER30         Closed                           

GBR_100     Closed                            

SPX500        Normal Hours                           

US30             Normal Hours                          

EUR_50        Closed                               

FRA_40        Closed                             

NAS100        Closed                           

AUS_200      Closed                                 

NGAS           Closed 

25th of April

Forex          Normal Hours                                  

Metals         Normal Hours                           

GER30        Normal Hours                          

GBR_100    Normal Hours                           

SPX500       Normal Hours                           

US30           Normal Hours                         

EUR_50      Normal Hours                      

FRA_40       Normal Hours                         

NAS100       Normal Hours                       

AUS_200     Late Open 09:10                       

NGAS          Normal Hours

*all times are server time (GMT+2) 

  
Wishing you peace, love, happiness and safe trading at Easter and always!

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EUR/USD is holding steady

EUR_steady_FOREX-FXPIG

According to Karen Jones, analyst at Commerzbank, EUR/USD pair is holding steady at the 55 and 100 day moving averages at 1.1308/48, and they view it as consolidating.

Key Quotes

“The 1.1176 recent low is regarded as an interim low and we suspect that the market is trying to base but needs to do more work (we note the 13 count on the weekly chart and this adds weight to the idea of a potential base).”

“Initial resistance is the 100 day ma at 1.1348 and the resistance line at 1.1391 ahead of the 200 day ma at 1.1441. The cross should target the 1.1570 January high, together with the 55 week ma at 1.1551. We have conflicting Elliott wave counts intraday and recently tightened our stops.”

On the economic side, higher than expected claimant count change and soft average earnings excluding bonus from the UK confronted with the US industrial production which dropped to -0.1% versus +0.2% expected.

Moving on, March month consumer prices index (CPI) from the UK and February month trade balance figures from the US will be up on the market’s radar.

The British inflation figure is expected to increase by 2.0% from 1.9% on a YoY basis whereas the US trade balance could register higher than the previous $-51.1 billion deficit of $-53.7 billion.

It should also be noted that market risk tone has been positive recently due to China’s upbeat data-dump. The US 10-year government bond yields are near to the highest since mid-NMarch by being around 2.56%.

GBP/USD Technical Analysis

An upward sloping support-line stretched since February 14, at 1.3030, restricts the pair’s near-term declines, a break of which can highlight 200-day simple moving average (SMA) level of 1.2970 and 1.2950 including 100-day SMA.

Alternatively, 50-day SMA and a five-week long descending trend-line around 1.3100 – 1.3105 seems a tough resistance on the upside. In a case where prices rally beyond 1.3105, 1.3130 and 1.3200 may come back on the chart.


Source:fxstreet


According to Karen Jones, analyst at Commerzbank, EUR/USD pair is holding steady at the 55 and 100 day moving averages at 1.1308/48, and they view it as consolidating.

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GBP/USD Recovers

GBP-USD_recovery_Forex_FXPIG
  • Recent risk-on and likely positive outcome of the UK inflation helps the British Pound (GBP) to recover.
  • 1.3100/05 resistance-area seems to be on the buyers’ radar.

GBP/USD recovers from a nine-week-old ascending trend-line as it trades near 1.3055 ahead of the London open on Wednesday. Absence of negative Brexit news reports and support from data front seemed to have played their roles while traders await the British inflation numbers.

Off-late the flow of Brexit updates has been light due to the Easter recess in the UK parliament. However, chatters of slow progress in the cross-party talks and members of the parliaments (MPs) to get a vote to over the EU customs union pact gained market attention.

On the economic side, higher than expected claimant count change and soft average earnings excluding bonus from the UK confronted with the US industrial production which dropped to -0.1% versus +0.2% expected.

Moving on, March month consumer prices index (CPI) from the UK and February month trade balance figures from the US will be up on the market’s radar.

The British inflation figure is expected to increase by 2.0% from 1.9% on a YoY basis whereas the US trade balance could register higher than the previous $-51.1 billion deficit of $-53.7 billion.

It should also be noted that market risk tone has been positive recently due to China’s upbeat data-dump. The US 10-year government bond yields are near to the highest since mid-NMarch by being around 2.56%.

GBP/USD Technical Analysis

An upward sloping support-line stretched since February 14, at 1.3030, restricts the pair’s near-term declines, a break of which can highlight 200-day simple moving average (SMA) level of 1.2970 and 1.2950 including 100-day SMA.

Alternatively, 50-day SMA and a five-week long descending trend-line around 1.3100 – 1.3105 seems a tough resistance on the upside. In a case where prices rally beyond 1.3105, 1.3130 and 1.3200 may come back on the chart.

Source: fxstreet

GBP/USD recovers from a nine-week-old ascending trend-line as it trades near 1.3055 ahead of the London open on Wednesday. Absence of negative Brexit news reports and support from data front seemed to have played their roles while traders await the British inflation numbers...

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Forex Today

FX-Today_Forex_FXPIG

Forex today witnessed a volatile Asian session this Wednesday, with key macro news from across the Asia-pac regions offering fresh trading incentives. A miss on New Zealand’s Q1 CPI figures dumped the Kiwi to 0.6670 region but the bulls were rescued by a huge beat on the Chinese industrial production numbers and steady GDP data, taking the rates back towards 0.6740 levels. The Aussie also caught a fresh bid-wave following upbeat Chinese data dump and jumped to fresh eight-week highs ahead of the 0.72 handle. But the Antipodeans lacked upside follow-through, in the wake of the recent dovish tilt by the RBA and RBNZ.

Meanwhile, the USD/JPY pair spiked to fresh 2019 highs at 112.17 and from there quickly reversed below the 112 handle, as mixed sentiment on the Asian equity markets and broad-based US dollar weakness kept the bulls unmotivated. The EUR/USD pair regained the 1.13 handle, partly tracking the bounce in gold prices while the Cable jumped back on the 1.3050 barrier, despite slightly positive Treasury yields and US equity futures.


The Canadian dollar recovered some ground after the USD/CAD pair jumped to 1.3372 highs, possibly due to the United Conservatives projected to win in the Canadian Alberta province and higher oil prices.

Main Topics in Asia

Japanese Ecomin Motegi: A good start to trade discussions with the U.S

Spain’s Socialists seen winning April 28 election with 31.3% of vote, falling short of majority – GAD3 Poll

NZ CPI: Arrives as a miss at 0.1% Q/Q and a miss Y/Y at 1.5%

Statement From USTR on U.S./Japan trade agreement

BoJ’s Amamiya speaking in Parliament – RTRS

USD/IDR: Flat lined below 14,100, voting begins in Indonesia Presidential Elections

China’s GDP steadies at +6.4% y/y in Q1, industrial output jumps 8.5% y/y (Aussie bounces)

New Zealand PM Arden rules out a tax on capital gains

Canadian Alberta Province Election: United Conservative party projected to win - CTV

BHP cuts iron ore production outlook, will it help boost iron-ore prices, Aussie?

RBNZ inflation data steadies at 1.7% y/y in Q1 2019

Fitch: New Zealand’s high household debt a key risk, but its stable

WTI targets $64.80 on China data, EIA report in the spotlight

Key Focus Ahead

There are plenty of event risks in the European session ahead, with the UK and Eurozone inflation the main highlights. The UK CPI report is due on the cards at 0830 GMT and the headline CPI rate is expected to accelerate 2.0% y/y in March vs. 1.9% previous. The upbeat data could trigger a fresh bullish run in the GBP/USD pair. Ahead of the UK data, the Eurozone current account data is due at 0800 GMT. Next of relevance is the Eurozone final CPI and trade figures slated for release parallelly at 0900 GMT. The core figures are likely to drop sharply in the reported month.

The NA session is also likely to be an eventful one, with the US and Canadian trade figures lined up for release at 1230 GMT. At the same time, the Canadian CPI figures will also be reported. Also, of note remains the US EIA weekly crude supply report due at 1430 GMT.

Apart from the macro news, the speeches from the following central bankers will hog the limelight.

1300 GMT: BOE Governor Carney.

1430 GMT: ECB’s Lautenschlaeger.

1645 GMT: Fed’s Bullard.

EUR/USD back above 1.13, focus on Eurozone inflation and trade numbers

EUR/USD jumped to 1.13, possibly on the back of upbeat China macro data and could rise further toward the 100-day moving average (MA) resistance at 1.1342 if the Eurozone inflation and trade numbers, due later today, beat estimates.

GBP/USD: Recovery towards 1.3100 on its way ahead of UK CPI

GBP/USD recovers from a nine-week-old ascending trend-line as it trades near 1.3055 ahead of the London open on Wednesday. Absence of negative Brexit news reports and support from data front seemed to have played their roles while traders await the UK CPI numbers.

UK inflation preview: Can a second positive piece of data lift GBP/USD?

The UK publishes its inflation report on Wednesday, April 17th, at 8:30 GMT. The headline Consumer Price Index (CPI) stood at 1.9% YoY in February, just below the Bank of England's 2% target.

Gold off 3.5-month lows, but bias remains bearish

The bounce from 3.5-month lows may be extended further to $1,281 (April 4 low), as the 4-hour chart relative strength index (RSI) is reporting oversold conditions with a below-30 reading at press time.

Source: fxstreet

Forex today witnessed a volatile Asian session this Wednesday, with key macro news from across the Asia-pac regions offering fresh trading incentives...

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ECB not to have discusses further

ECB_discusses_Forex_FXPIG

Citing sources familiar with talks, Bloomberg reported that the ECB had not discussed further rate cuts in its latest meeting. Earlier in the day, Reuters said that several ECB policymakers had raised doubts over projections for a growth rebound in H2 2019.

Key highlights

  • ECB officials are said to lack enthusiasm for sub-zero tiering.
  • Tiering debate it said to underline plenty tools till left.
  • ECB officials are said to doubt tiering will happen.

Source: fxstreet

Citing sources familiar with talks, Bloomberg reported that the ECB had not discussed further rate cuts in its latest meeting...

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Forex Today

Forex-today_FXPIG_Trading_aussie-trips

Forex today witnessed a quiet Asian affair amid a cautious risk tone, with most majors sticking to thin trading ranges while the US dollar attempted a tepid bounce broadly. The Asian stock markets traded mixed, as markets remained unnerved ahead of the key Eurozone and Chinese macro releases. Oil prices also traded on the back foot heading into the US weekly supply data release. Meanwhile, gold traded modestly flat near 1285, with the bias leaning towards the downside.

Amongst the G10 currencies, the AUD/USD pair was the worst performer, as the Aussie dollar incurred steep losses following the release of the RBA April meeting’s minutes that was widely read as dovish. Its OZ neighbor, the Kiwi, enjoyed some good two-way businesses, having tripped to near 0.6740 region on dovish remarks from the RBNZ Governor Orr before recovering to the familiar ranges around 0.6765 levels. The USD/JPY pair was stuck in 20-pips trading range near the 112 handle, with the JPY bulls unfazed by the BOJ Governor Kuroda’s willingness to ease the monetary policy further, if required. Both the Euro and the GBP remained confined within its recent trading ranges while the Loonie recovered losses and traded below the 1.34 handle.

Main Topics in Asia

Japan’s EcoMin Motegi: Already agreed on the FX (with US), frank and good trade talks

RBA minutes: Likelihood of near term rate hike is low, Aussie slips

Fed’s Rosengren: Not in favor of Fed using negative rates

China home prices ticked +0.6% higher in March

BOJ's Kuroda: ETF purchases are not aimed at stabilizing the stock market

BOJ’s Kuroda: Will consider additional easing if momentum towards 2% inflation is lost

Brent Technical Analysis: Bearish RSI divergence seen in 4H chart

USD/IDR: Indonesian Rupiah trades at 2-month highs ahead of Indonesian elections

RBNZ's Orr: NZD currently around "happy space", easing bias remains in place for now

Germany's Maas: No Brexit extension beyond October

Key Focus Ahead

The EUR calendar ahead remains relatively eventful, with the UK employment data and German ZEW survey to headline. The UK jobs and wage growth report will drop in at 0830 GMT and is expected to have a major impact on the GBP, given no fresh updates on the Brexit front. Meanwhile, the shared currency could be influenced by the German ZEW survey for April, with a rebound expected in the German economic sentiment.

In the NA session, the Canadian manufacturing sales will release at 1230 GMT, followed by the US capacity utilization and industrial figures due at 1315 GMT. Also, of note remains New Zealand’s GDT price index data that will be published around 1400 GMT.  Oil and Loonie traders will await the release of the US API weekly crude stocks data that is slated for release late-Tuesday at 2030 GMT. Meanwhile, the NZ inflation report will remain the key focus in the early Asian trading alongside the Indonesian Presidential elections.

EUR/USD: Drop in Greek 10-year yield to 13-year lows fails to put a bid under EUR, eyes on German ZEW

The shared currency is struggling to pick up a bid despite tighter Greek-German 10-year government bond yield spread. A better-than-expected German Zew survey, due at 09:00 GMT, could yield a sustained move above 1.1320.

GBP/USD: 5-week old resistance-line in focus ahead of UK employment data

Traders may now concentrate on February month average earnings and unemployment rate from the UK, coupled with the British claimant count change for March, ahead of focusing on the US industrial production figure.

UK jobs report preview: With Brexit on the back burner, upbeat wages could lift the pound

The British labor market is doing quite well. The jobless rate dropped to 3.9% in January, with record employment. Wages grew at a satisfactory standard of 3.4%, including and excluding bonuses.

When are the Indonesian general elections and how could they affect USD/IDR?

The Indonesian general elections will be held on 17 April 2019. For the first time in the country's history, the president, the vice president, and members of the People's Consultative Assembly (MPR), will be elected on the same day with over 190 million eligible voters.

China GDP Preview: What you see is what you will get

China's annual gross domestic product (GDP) is expected to decline to 6.3% in the first quarter of 2019 from 6.4% in the final three months of 2018.  On the quarter it is projected to slide to 1.4% from 1.5%.

Source: fxstreet

Forex today witnessed a quiet Asian affair amid a cautious risk tone, with most majors sticking to thin trading ranges while the US dollar attempted a tepid bounce broadly. The Asian stock markets traded mixed, as markets remained unnerved ahead of the key Eurozone and...

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Forex Tech Targets

Bulls-and-bears_Forex_FXPIG-tech-analysis_16.04.2019

EUR/USD: A NY close above 1.1330 would suggest EUR is ready to tackle 1.1400.

There is not much to add as EUR traded in a quiet manner before ending the day marginally higher at 1.1307 (+0.06%). As highlighted yesterday (15 Apr, spot at 1.1300), upward momentum has improved and the risk for a higher EUR has increased. From here, if EUR could close above 1.1330 in NY within these few days, it would be a strong indication that EUR is ready to tackle the next resistance at 1.1400. On the downside, only a break of the 1.1240 ‘key support’ (no change in level) would suggest that the current upward pressure has eased.

GBP/USD: GBP is expected to continue to trade sideways.

Volatility decreases further as GBP continues to trade sideways within narrow ranges (the registered range of 49 pips yesterday was the third narrowest 1-day range this year). We have held the same view since earlier this month (04 Apr) that GBP is expected to trade sideways within a broad range. While the sideway-trading phase would likely persist, a 1.2950/1.3200 range is likely enough to contain the price action in GBP from here.

AUD/USD: AUD strength could extend to 0.7210.

There is not much to add as AUD registered the narrowest 1-day range this year (of 19 pips between 0.7164 and 0.7183). The muted price action and the largely unchanged closing in NY (0.7172, -0.01%) offer no fresh clues. In other words, there is no change in view from yesterday (15 Apr, spot at 0.7170) wherein the current strength in AUD could extend to 0.7210 in the coming days. 0.7210 is a rather critical resistance and a clear break of this level would suggest AUD is ready to move even higher in the weeks ahead (next significant resistance is at the Jan’s peak near 0.7295). On the downside, only a break of the 0.7115 ‘key support’ (no change in level) would suggest that a short-term top is in place.

NZD/USD: Risk of a short-term bottom has increased. No change in view from yesterday, see reproduced update below.

While NZD dropped to a low 0.6714 early last Friday (12 Apr), it staged a sudden and sharp reversal and hit 0.6782 before ending the day on a firm note in NY (0.6760, +0.47%). While our 0.6785 ‘key resistance’ is still intact, the price action suggests that the risk of a short-term bottom has increased. In other words, the ‘negative phase’ started in late March appears to be close to ending (confirmed upon a break of 0.6785). Meanwhile, NZD could attempt to move towards 0.6700 but the odds for such a move have diminished considerably.

USD/JPY: USD is expected to trade with a positive bias but 112.60 could be out of reach. No change in view from yesterday, see reproduced update below.

The ‘sideway-trading phase’ in USD that started in late March has ended as it hit a high of 112.09 last Friday before closing at a 4-month high of 112.02. The price action suggests the current USD strength could extend further in the coming days even though the major 112.60 resistance could be out of reach. All in, we expect USD to trade with a positive bias and only a break of the 111.20 ‘key support’ would suggest that the current ‘positive phase’ in USD has ended.

Source: efxdata

There is not much to add as EUR traded in a quiet manner before ending the day marginally higher at 1.1307 (+0.06%). As highlighted yesterday (15 Apr, spot at 1.1300), upward momentum has improved and the risk for a higher EUR has increased...

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EUR shorts increased

Eur-shorts-increased_Forex_FXPIG

According to the IMM net speculators’ positioning as at April 9, 2019, speculators increased their bearish bets on the euro further with short positions rising to the highest level since early December 2016 in early April, notes the research team at Rabobank.

Key Quotes

“While at this stage short EUR does look like a pain trade as EUR/USD has been trading relatively well so far in April, the bearish view on the single currency is still valid.”

“Essentially, the Eurozone continues to underperform the US economy by a mile and the interest rate differential is skewed firmly in favour of the dollar as reflected in an increase in USD net long positions to the highest level in four weeks. Looking further ahead, EUR/USD is likely to lean lower in the coming months with 1.10 as our 6-9 month target.”

“GBP net shorts have been trimmed further to the lowest level since June 2018.”

“With speculative positions almost neutral, market participants can keep their powder dry for next sharp move in GBP/USD. The pair is stuck between the upside trendline from the December low and the trendline resistance from the March high. In the coming days/week cable will approach an inflection point, i.e. it will break from this consolidation phase.”

“Fading market concerns about global slowdown led to a further rise in JPY net short positions. This coincided with a recent rebound in USD/JPY which has reached a crucial technical pivot: the resistance area formed by the Nov/Dec lows around 112.24 level and the March high at 112.14. This area must be cleared to improve the technical outlook for USD/JPY, which provides clues for other asset classes as well, including emerging markets.”

Source: fxstreet

According to the IMM net speculators’ positioning as at April 9, 2019, speculators increased their bearish bets on the euro further with short positions rising to the highest level since early December 2016 in early April, notes the research team at Rabobank.Key Quotes...

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PAMMs Weekly Update

 Forex_Trading_Fx_Trader_FXPIG_PAMMS_MANAGED_ACCOUNTS_PROFIT_15.04.2019

Find out more about our Managed PAMM Accounts here.

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