Morning Report: Positions Pared Ahead Of Headline Risk

KEY DATA RELEASES TODAY (BST) :

09:00 EUR German Ifo Business Climate 108.5 v 107.9
11:15 EUR Eurogroup Meetings
13:30 USD Core Durable Goods Orders m/m 0.2% v -0.4%
13:30 USD Durable Goods Orders m/m 0.7% v -1.4%

OVERNIGHT:

After initially pushing back down to the previously mentioned 1.0660 support level as the European PMIs came in on the soft side we witnessed a swift turn in USD sentiment as we pushed back to the top end of the range resulting in a 1.0848 high. For now we basically remain in the 1.0650­1.0860 medium term range with thin whippy trading conditions in between. Investor nerves appear slightly less frayed with regards the Greek debt drama as we move into this weekend’s European Finance ministers meeting but we have to continue to focus on the wires for developments which will determine short term price sentiment. Caution on any technical break and close above 1.0880.

UK March retail sales disappointed the markets, printed at -0.5% MoM against the forecast +0.4% MoM. GBPUSD dropped to an intraday low of 1.4957 from 1.5069 high after the release of weak retail sales data before stabilising late on. market has turned less bearish on GBP but caution is advised as we head into UK elections as we will likely witness some near term position adjustment which may add to volatility.

USDJPY had traded up to the high of 120.09 in European session while it dropped below 120 handle post the release of soft U.S. data. Market participants have reduced expectations of additional easing on the policy meeting held on 30 April. Next week should be quite a pivotal one (with FOMC, US GDP, PCE and BOJ), and levels to watch on both sides are 118.30 and 120.90. A break side can trigger a good healthy move.

PRICE ACTION OVERVIEW:

EUR: Above 1.09 opens fourth test of 1.10 offers
GBP: 1.5130/60 key resistance for trend resumption
JPY:  While 118.30 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: 123/24.50 former support now becomes key resistance
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
GBPUSDNeutralAwait 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

  • 1.0840/60 key resistance under pressure a break here would likely target a fourth attempt at 1.10 offers, targeting 1.1150 equality corrective target beyond
  • Order Flow indicators; OBV consolidating above lows, Linear Regression and Psychology bearish but ticking up to test midpoints from below
  • Monitoring price action and Order Flow indicators to set shorts against 1.12

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

  • 1.5130/60  is the key resistance a failure here should see resumption of trend only a close above 1.5150 negates medium term bearish bias
  • Order Flow indicators; OBV consolidates recent gains and ticks higher, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • As 120 offers stand firm an intraday failure at 119.30 opens the potential  for another run at 118.30 bids as range trade persists
  • Order Flow indicators; OBV consolidates below highs, Linear Regression and Psychology pierce midpoints from below but lack momentum
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

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

  • 124.50 is near term resistance while this area caps upside reaction expect a retest of 120 from above, below 120 opens 117.50 and forewarns a more significant top in place.
  • Daily Order Flow indicators; OBV ticking down from consolidation, Linear Regression and Psychology rejected ar midpoint tests form below
  • Monitoring price action and Order Flow indicators to reset long positions targeting 1.30

uc2015-04-24 08_10_01-

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 break midpoint from below.
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

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