Morning Report: EUR Under Pressure Ahead of ECB & NFP’s

KEY DATA RELEASES TODAY (GMT) :

0930 GBP Services PMI exp 57.6 v 57.2
1000 EUR Retail Sales m/m exp 0.2% v 0.3%
1315 USD ADP Non-Farm Employment Change exp 219Kv 213K
1500 USD ISM Non-Manufacturing PMI exp 56.5 v 56.7

OVERNIGHT:

The EUR Asian session produced a low of 1.1167 so far as we look to test the recent support level at 1.1150 which should provide increased volatility if broken and potentially a test of the 1.1098 years low. To the topside look towards 1.1260/80 as key resistance. Traders await the ECB policy meeting on Thursday and the implementation of its government bond buying programme.

FX Momentum trader are getting punished by choppy markets USDJPY’s drop from 120.27 yesterday is a testament to this,it seems pretty intentional that certain BOJ officials do not want USDJPY sitting above 120 handle for various reasons most important of which is the local elections in April. USDJPY traded down to 119.495 where macro bids were reported. Stops are reported building below 119.40 and 119.20. In the options space, there are several strikes at 120.00 maturing today and next few days as well.

GBP suffering from reported real money selling GBP in crosses, this is likely to continue along with corporate hedging as we approach the election in May. We have services PMI out this morning, and believe the near term path of least resistance is to the downside. 1.5400 and 1.5430 are the resistance levels, while key support comes in at 1.5330.

AUD GDP came in only slightly weaker at 0.5% QoQ vs. 0.6% expected with the last quarter being revised higher to 0.4% from 0.3%. Aussie’s initial reaction was to move lower but the dip was shallow and the 0.7795 support held once again to propel the pair higher towards the 0.7840 resistance once again, since drifting back.

Looking ahead we get UK Services PMI and Eurozone Retails sales this morning, with US ISM Non Manufacturing the highlight of the US session this afternoon.

PRICE ACTION OVERVIEW:

EUR: While 1.1270 caps upside targets year to date lows and 1.09 beyond
GBP: While 1.5480 contains upside reaction, down trend to resume targeting 1.49
JPY:  While 118.50 supports expect break of 120.50 and target 2014 highs beyond
CAD: While 1.2350 trendline supports 1.28 next upside objective ahead of key 1.30
AUD: While .7860/80 contains, downtrend to resume targeting .75

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearishSell/02 Mar 1.1165Open1.1285
GBPUSDBearishSell/03 Mar 1.5362 Open1.5562
USDJPYNeutral Await new signal
USDCADNeutralAwait new signal
AUDUSDNeutral Sell/02 Mar .7760 Open.7860

ANALYSIS:

EURUSD Short Term (1-3 Days): Bearish  – Medium Term (1-3 WeeksBearish

  • While 1.1280 caps any upside corrections immediate focus is on a retest of year to date lows. A break of 1.1280 suggests return to broader 1.12 -1.15 range.
  • Order Flow indicators; OBV retesting lows, Linear Regression and Psychology bearish
  • Shorts in play

EU2015-03-04 07_26_54-

GBPUSD: Short Term (1-3 Days): Neutral – Medium Term (1-3 WeeksBearish

  • While 1.5460/80 caps upside there is the potential for downtrend to resume and target year to date lows, 1.5330 next downside objective a break here will inject some momentum to the downside
  • Order Flow indicators; OBV consolidates at lows, Linear Regression and Psychology bearish
  • Shorts in play

GU2015-03-04 07_28_00-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish

  • While 118.50 supports, the next upside objective is a close above 120.50 to target stops above 2014 highs.
  • Order Flow indicators; OBV continues drifting back towards recent highs, Linear Regression and Psychology testing midpoints form above
  • Monitoring price action and Order Flow indicators to set longs to target 2014 highs

UJ2015-03-04 07_30_36-

USDCAD: Short Term (1-3 Days): Neutral  – Medium Term (1-3 Weeks) Bullish

  • While 1.2350 support remains intact the next upside objective is a break of 1.26 to confirm bullish consolidation pattern targeting 1.28 and 1.30 beyond, below 1.22 trendline support negates bullish bias
  • Daily Order Flow indicators; OBV consolidates at highs, Linear Regression and Psychology retesting midpoints from below
  • Monitoring price action and Order Flow indicators to set long positions targeting 1.30

UC2015-03-04 08_51_39-

AUDUSDShort Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBearish

  • .79 the key upside hurdle to further corrective upside below .77 threatens retest and potential break of lows for early trend resumption targeting .75 next
  • Order Flow indicators; OBV ticking up, Linear Regression and Psychology bullish but no follow through
  • Short in play

AU2015-03-04 08_53_36-

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