Morning Report: Fitch Downgrades Japan Ahead Of BOJ

KEY DATA RELEASES TODAY (BST) :

15:00 USD CB Consumer Confidence 102.6 v 101.3

OVERNIGHT:

EURUSD continues to remain relatively sidelined for now content to whip around on a 1.08 handle. Appears to be little incentive for now to test a particular side with a mildly bullish bias. Market continues to monitor Greece developments for headline driven sentiment with a meaningful break down through 1.0765 now required to entice committed USD bulls to return to market. To the topside 1.1040 will continue to provide key medium term resistance.

Fitch has downgraded Japan’s sovereign rating to A from A+, citing insufficient structural fiscal measures. Flows from this should have a minimal impact given a significant majority of domestic bonds are held locally anyway. In the long run, this could serve as a wake ­up call for Abe and co. to push through with fiscal reforms. No change in USDJPY, looking for a range of 118.50­/119.60 to hold prior to the risk events..

GBPUSD ended the session above 1.52 as positive developments in the Greece saga coupled with weak US data (again) gave the pair a lift. Today we get Q1 GDP data, and a strong print should push the pair to another leg higher especially with US GDP data to be released tomorrow expected to be weak. 1.5080 is still the key support on the downside to lean on for GBP bulls, while resistance expected towards 1.5350

PRICE ACTION OVERVIEW:

EUR: 1.09 offers eroded en rout to fourth attempt at 1.10, below 1.0740 refocuses on 1.0620
GBP: While 1.5080/60 contains downside reactions target 1.5350 equality corrective objective
JPY:  While 118.60/80 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: While 124.50 contains upside target 120 test
AUD:  While .7860/80 contains upside anticipate third test of key .7550 failure here opens the bearish target of .72, above .7880 alleviates downside pressure

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutral Await new signal
GBPUSDBullishAwait new signal
USDJPYNeutralAwait new signal
USDCADNeutral Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • With 1.09 breached focus shifts towards a fourth test of 1.10 and a likely break here would target the 1.1150 equality swing objective. Bears require a break of 1.08 for renewed downside pressure
  • Order Flow indicators; OBV consolidating above lows, Linear Regression and Psychology pierce midpoints from below but lack momentum
  • Monitoring price action and Order Flow indicators to set shorts against 1.12

eu2015-04-28 07_31_50-

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

  • Focus now shifts towards an equality corrective target toward 1.5350, intraday 1.5080 to act as initial support for next leg higher
  • Order Flow indicators; OBV consolidates recent gains, Linear Regression and Psychology bullish but stalling at elevated levels
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension against 1.5350/1.54

gu2015-04-28 07_33_52-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • 118.80/60 trendline support a break here sets up another run at 118.30 bids as range trade persists, trading toward the lower end of the recent range so caution shorting into the 118.80/60 zone
  • Order Flow indicators; OBV ticking up, Linear Regression bearish, Psychology pierces midpoint from above
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

uj2015-04-28 07_35_01-

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

  • Monitoring potential daily year to date low double bottom pattern which may provide base for retest of 123 from below. Failure here opens 119/18 test
  • Daily Order Flow indicators; OBV ticking down from consolidation, Linear Regression and Psychology rejected at midpoint tests form below
  • Monitoring price action and Order Flow indicators on retest of 123/124 from below

uc2015-04-28 08_15_49-

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

  •  .77 to .7850 range trade persists, while .77 contains downside reactions intraday expect further upside pressure, failure at .77 opens fourth test of key .7550
  • Order Flow indicators; OBV consolidating recent gains, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

au2015-04-28 08_17_59-

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