Morning Report: Markets Await Mario

KEY DATA RELEASES TODAY (BST) :

12:45 EUR Minimum Bid Rate 0.05% v 0.05%
13:30 USD Empire State Manufacturing Index 7.2 v 6.9
13:30 EUR ECB Press Conference
14:15 USD Industrial Production m/m -0.3% v 0.1%
14:15 USD Capacity Utilization Rate 78.7% v 78.9%
15:00 USD NAHB Housing Market Index 55 v 53
15:30 USD Crude Oil Inventories 3.5M v 10.9M
00:30 USD FOMC Member Lacker Speaks

OVERNIGHT:

Another calm Asian session for the pair following a volatile New York session as weaker than expected US data provided the catalyst for a sharp USD sell off resulting in a high of 1.0704 on the day .Would expect markets to remain quiet as we await ECB later today with players continuing to favour bearish views especially after last night’s positional clear out as we could retest the yearly 1.0460 lows again. Following last night’s high the 1.0710/­20 should provide initial resistance area with expected volatility on any break above there.

Market maintains a bullish USDJPY view, as evidenced by the domestic demand the pair has seen this morning after the sharp move lower yesterday. Abe’s adviser Hamada has retracted his statements against the weak JPY overnight and has turned neutral, which is representative of how the BOJ as well feels about the currency. Nonetheless, without the US story, topside traction should also remain quite limited for the pair. Technically, the pair needs to close above 120.05 to give further encouragement to bulls, while we anticipate some further weakness below the base and trendline support around 118.95.

UK’s core CPI printed fresh multi­year lows, but a weak USD coupled with good real money demand boosted the pair through the 1.4740 resistance to a high of 1.4802 briefly. This level should serve as the pair’s initial support now, followed by 1.4680. We remain neutral the pair, but still in the view that election risk should keep the pair’s rise capped, the question now is how consensus that view is and the potential for weak hands to be squeezed from poor positioning.

PRICE ACTION OVERVIEW:

EUR: While 1.0730/60 contains upside expect 1.05 test en rout to 1.0460, above 1.0810 refocuses on fourth 1.10 test
GBP: While 1.4850/70 contains upside reactions target 1.45 en route to 1.43/42
JPY:  While 118.70/90 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 downside target retest of year to date highs en route to 130.00
AUD:  While .7760/80 contains upside anticipate third test of key .7550 failure here opens the  bearish target of .72, above .7880 alleviates immediate downside pressure

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearish Await new signal
GBPUSDBearishAwait new signal
USDJPYNeutral Await new signal
USDCADBullish Await new signal
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • While 1.0730/60 caps any further upside reaction expect retest of 1.0530 en route to year to date lows over 1.0770 targets 1.0810 in extension of corrective price action
  • Order Flow indicators; OBV off lows, Linear Regression and Psychology bearish but attempting midpoint tests from below
  • Monitor price action and Order Flow for shorts positions targeting 1.0460 initially and 1.0240 in extension

eur2015-04-15 07_23_40-

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

  • As suggested Monday reversal bar at year to date lows produced further corrective action and potential double bottom, until 1.5050 is reclaimed on a closing basis trend remains down. First resistance comes in at 1.4850/70
  • Order Flow indicators; OBV consolidating above recent lows, Linear Regression pierces midpoint from below and Psychology rejected at midpoint
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension

gbp2015-04-15 07_34_01-

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • 118.70/90 holds to maintain near term upside pressure targeting a 121, only below 118.30 concerns immediate bullish bias.
  • Order Flow indicators; OBV continues to consolidate below recent highs, Linear Regression bearish, Psychology bearish but attempting midpoint test from below
  • Monitoring price action and Order Flow indicators for longs targeting 124

jpy2015-04-15 07_38_07-

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

  • Bids at 124.50 continue to support for now while 123.50 remains intact on a closing basis the bias remains to the upside. Caution on headline risk event today 
  • Daily Order Flow indicators; OBV consolidates at highs, Linear Regression and Psychology bullish but pulling back to test midpoints from above
  • Monitoring price action and Order Flow indicators to reset long positions targeting 1.30

cad2015-04-15 08_27_17-

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

  • Continuing to pressure .7550 bids failure here will open up a bearish assault on the key .72 area. Only above .78 alleviates immediate downside pressure.
  • Order Flow indicators; OBV consolidates off lows, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72

aud2015-04-15 08_32_20-

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