Morning Report: Post FOMC Consolidation Continues

KEY DATA RELEASES TODAY (GMT) :

1400 EUR ECB President Draghi Speaks
1400 USD Existing Home Sales 4.91M v 4.82M

OVERNIGHT:

Last weeks EURUSD rally of 3.1% was the eight largest in the history of the Euro registering its best weekly gain in 18 months, boosted by the sell-off in USD and the reversal in US yields after last weeks doveish FOMC. This week the shift in focus returns the Greek debt saga over the weekend EU leaders said Greece has agreed to deliver a new list of reforms that will be implemented in the coming months, in exchange for securing the additional bailout funds from EU, Greek PM Tsipras is set to meet German Chancellor Angela Merkel for the second time in five days, at the start of a week that may prove decisive for Greece’s future in the euro area. As reported on Bloomberg, the meeting in Berlin with the leader of the biggest contributor to Greece’s stalled €240bn ($259bn) bailout is a precursor to make-or-break decisions Tsipras faces as his country’s financial predicament. Technically while 1.06 remain supported we will likely witness further consolidation in a broader 1.06 -1.10 range, while 1.10 caps upside bias remains bearish with a break of year to date lows targeted.

GBPUSD recovered the sharp losses witnessed last Thursday in the post FOMC positioning flows and closed Friday towards 1.5000 level, rising 1.8 percent against the USD, UK public finances improved sharply in February, net borrowing excludes state-controlled banks is 6.9bln pounds, down 34 percent from a year earlier. The mounting political ambiguity is the the biggest near term headwind for GBP advances, this factor coupled with the BOE rhetoric mirroring the FED’s doveish stance suggest we likely witness sideways to lower in the near terms in the GBP while the 1.5030/50 area contains upside attempts expect a retest of year to date lows.

Last weeks announcement that three Japanese big pension funds, totalling 250 bln worth, have confirmed to combine their model portfolio with the Government Pension Investment Fund supported the USDJPY rallying from 120.72 to 121.19 high on the announcement, however the pair dropped back to 120.20s level when the US session started Friday and has since retreated further on broader USD weakness over the weekend BoJ Governor Kuroda reiterated CPI in Japan will likely reach 2% in or around 2015. Technically the USDJPY like the other major’s is likely in a near term period of consolidation while 119 supports ultimately expect the consolidation to resolve to the upside targeting a break of year to date highs and 124 beyond

PRICE ACTION OVERVIEW:

EUR: While 1.0910/30 contains upside target 1.0460
GBP: While 1.5030/50  contains upside target 1.4630
JPY:  While 119.70/90 contains downside target 124.00
CAD: While 126.60/40 contains downside target 130
AUD:  While .7840/60 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
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • While 1.06 supports potential for further consolidation in a broader 1.06-1.10 range, in the near term bearish pressure remains while 1.09 caps upside attempts. a breach suggests a test of 1.12 equality corrective target
  • Order Flow indicators; OBV consolidates at lows, Linear Regression retesting midpoint from above, Psychology bullish but retreating form best levels
  • Monitoring price action and Order Flow below 1.09 to reset short positions targeting 1.03

eu2015-03-23 07_31_18-

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

  • While 1.5030/50 caps upside expect a break of 1.47 to confirm trend resumption, above 1.51 suggests a test of 1.52 in broader corrective pattern
  • Order Flow indicators; OBV consolidating at lows, Linear Regression pierces midpoint from below, Psychology rejected at midpoint from below
  • Monitoring price and Order Flow against 1.5030/50 targeting 1.46/45

gu2015-03-23 07_37_15-

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

  • While 119.70/90 supports expect retest and eventual break of year to date highs en-route to 124, only below 118 concern bullish bias
  • Order Flow indicators; OBV continues consolidation, Linear Regression pierces midpoint from above, Psychology rotates at midpoint
  • Monitoring price action and Order Flow indicators for longs targeting 124

uj2015-03-23 07_40_17-

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

  • While 1.2450 supports a close above 1.28 will target key 1.30 only below 1.2350 concerns bullish bias
  • Daily Order Flow indicators; OBV at highs, Linear Regression pierces midpoint from above Psychology supported at midpoint retest
  • Monitoring price action and Order Flow indicators to set longs  targeting 1.30

uj2015-03-23 07_40_17-

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

  • Retest of trendline and horizontal resistance while .7840/60 caps upside expect retest of year to date lows above .79 suggests a retest of .8050 in broader corrective phase.
  • Order Flow indicators; OBV ticks up from lows, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72

aud

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

Posted in Forex Analysis, tagged with on