Morning Report: Positions Pared Ahead of FOMC

KEY DATA RELEASES TODAY (GMT) :

1000 EUR German ZEW Economic Sentiment 58.9 v 53.0
1000 EUR ZEW Economic Sentiment 58.2 v 52.7
1000 EUR Final CPI y/y -0.3% v -0.3%
1230 USD Housing Starts 1.05M v 1.07M
1230 USD Building Permits 1.07M  v 1.05M
1400 USD Treasury Sec Lew Speaks

OVERNIGHT:

Typical vacillating pre FOMC markets as thin whippy conditions persist for now but overall EURUSD profit taking bias as we push back towards the 1.0620 handle. Market continues to favour selling rallies and will look at the initial 1.0620­/40 area as an entry point for shorts with caution above 1.0700 for now. To the downside sub 1.05 remains pivotal and expect acceleration of momentum on any move through the key 1.0460 support area. Expect market to remain whippy with position adjustments ahead of tomorrow’s main event dictating price action for now.

USDJPY absorbs another round of USD selling overnight in spite of the broadly weaker USD data, and the Nikkei at highs not seen since April 2000. Can’t deny the trade in Japan at the moment is really in the stock market, while FX has grinded to a halt on the back of lack of trading interest and significant option interest around current levels. BOJ stands pat today as expected, and focus shifts to tomorrows FOMC decision. Ahead of that, expect consolidation to continue, with support levels of note at 121.10 and 120.70, with resistance at 121.60 and 122.05 initially. Trading ranges are getting tight… Expect a breakout soon

GBPUSD bounces back above the 1.48 handle on broad USD weakness and ahead of today’s Budget announcement… Election campaigning is also underway and PM Cameron has announced a 3pct increase in minimum wage, the biggest since 2008. Anticipate a lot of political back­ an d­forth to continue, and after Carney’s doveish comments days ago, markets still believes the pound should be sold on rallies. Resistance at 1.4860/1.4900 initially.

The RBA minutes failed to take AUD away from the 0.76 handle, but the market believes a rate cut (or cuts) remain in play as early as April given the lack of economic momentum domestically and of its trading partners. With this type of backdrop, remain bearish especially given the performance of commodities and the USD. Bullish USDCAD views are also supported as the further plunge in oil prices coupled with BOC’s Poloz’ doveish statements over the weekend fall in line with the technical potential for the pair to break and close above 1.2800, which will increase bullish sentiment.

PRICE ACTION OVERVIEW:

EUR: While 1.0610/30 contains upside target 1.03
GBP: While 1.4840/60 contains upside target 1.46
JPY:  While 120.60/40 contains downside target 124.00
CAD: While 126.60/40 contains downside target 130
AUD:  While .7760/80 contains upside target .72

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearish Await new signal
GBPUSDBearishAwait new signal
USDJPYBullish Await new signal
USDCADBullishAwait new signal
AUDUSDBearish Sell/02 Mar .7760 Open.7760

ANALYSIS:

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

  • While 1.0610/30 caps upside pressure remains on the downside, with 1.03 the next downside objective, above 1.0650 suggests 1.0760 test in broader correction
  • Order Flow indicators; OBV ticking up from lows, Linear Regression and Psychology pierce midpoints from below
  • Monitoring price action and Order Flow below 1.0840/60 to reset short positions targeting 1.03

eu2015-03-17 07_11_54-

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

  • While 1.4840/60 caps upside 1.46 is the next downside objective only a break  above 1.4940/60 suggests a broader correction
  • Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish but ticking up to test midpoints from below
  • Monitoring price and Order Flow below 1.4940/60 to reset short positions targeting 1.46/45

gu2015-03-17 07_13_07-

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

  • Continued bullish consolidation just below 2014 highs and double top, watching for correction to 120.20/40 previous resistance to act as support and base for sustained break of 2014 highs, only below 118.50 concerns bullish bias
  • Order Flow indicators; OBV continues consolidation, Linear Regression and Psychology pierces midpoint from above
  • Monitoring price action and Order Flow indicators on retest of 120.00/120.50 to set longs targeting 124

uj2015-03-17 07_16_25-

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

  • While 1.2640/60 contains downside reaction expect a sustained break of 1.28 with 1.30 the next key objective, only below 1.2350 concerns upside bias
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology pierce midpoints from above
  • Monitoring price action and Order Flow indicators to set long positions at 1.2550 targeting 1.30

uc2015-03-17 08_25_17-

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

  • While .7740/60 caps upside reactions next downside objective is .75 with .72 beyond only above .7860 concerns bearish bias
  • Order Flow indicators; OBV ticking up from lows, Linear Regression and Psychology pierce midpoints from below
  • Risk free shorts in play

au2015-03-17 08_27_26-

Want exclusive access to Intraday Morning Report trade set-ups? Visit the LFX Trader Forum.

Posted in Forex Analysis, tagged with on