Morning Report: US Data Dampens Dollar

KEY DATA RELEASES TODAY (GMT) :

1900 USD FOMC Statement
1900 USD Federal Funds Rate exp 0.25% v 0.25%

OVERNIGHT:

The DXY has now come off over 1.5%, since printing a high above 95.50 on Monday, as expectations of a less hawkish Yellen have become consensus. EURUSD is the biggest mover, with two big figures from low to high

EURUSD has been trading firmer since the spike low in Asian trading Sunday evening in response to the Greek election results, the reversal has seen weak spec shorts cover, yesterdays less than stellar US durable goods data was a further catalyst for short covering as the recent weaker data set out of the US may well give the FED cover to wind back rate move expectations.Decent offers are reported at 1.1450 with bids back towards 1.1300.

GBPUSD has traded in tandem with EUR benefiting from the profit taking witnessed in the USD although it has pulled back from its best levels of 1.5228, it has found initial support in the mid 1.51’s and while this area contains the pullback a test of offers at 1.5250 looks likely. BOE Governor Mark Carney speaks today his comments will be eyed in light of recent reports where he said the central bank has the ability and the duty to return low UK inflation to its 2 percent target within the next two years.

USDJPY reversed during Asian trading after trading on the heavy side during yesterdays US session as US yield moves weighed on the USD and took the USDJPY back to test bids towards 117 which proved robust and have propelled the USDJPY back to 118 coupled with a bounce in US yields and firmer Nikkei. USDJPY has been trading in a tight 117-119 range for the past six days, tonight’s FOMC meeting will likely determine the range resolution. EURJPY traded firmer through the US and Asian session benefiting from short covering flows in the EUR and now looks sett to test offers towards 134.50

Elsewhere, Australian CPI data come out below consensus, at 0.2% qoq, 1.7% yoy, but not as low as the market was thinking. There was an upside surprise in the trimmed mean, which came in at 0.7% qoq vs. 0.5% exp. As a result, rate cut expectations got priced out and the market scrambled to cover their AUDUSD shorts, moving 1% higher and back onto an 0.80 handle for the first time since this week.

Looking ahead all eyes will be on this evenings FOMC decision and statement.

PRICE ACTION OVERVIEW:

EUR: 1.1450’s resistance eyed as 1.1300 supports near term
GBP: 1.5100 support area to target offers towards 1.53
JPY: Six day 119 – 117 range, upside break targets 2014 highs
CAD: 1.25 next resistance, 1.2350 support for next leg higher
AUD: 0.80 broken support becomes resistance to target .7750

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDNeutralAwait new signal
USDJPYNeutralLong Jan 16116.91OPEN116.91 Intraday Signal
USDCADBullishAwait new signal
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • 1.1350 resistance eroded opening retest of 1.1460’s descending trendline resistance. Break and close above 1.1460’s reduced downside pressure and sets base for correction to continue
  • Order Flow indicators; OBV continues ticking from recent lows, Linear Regression pierces midpoint from below , Psychology rejected at midpoint
  • Monitor price action at 1.1460 retest from below to set short positions to target 1.10

eu2015-01-28 07_17_25-

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

  • 1.5250 horizontal and trendline resistance eyed, support moves up to 1.5050
  • Order Flow indicators; OBV consolidating above recent lows, Linear Regression pierces midpoint from below, Psychology stalling ahead of midpoint
  • Monitoring price action at 1.5250 to reset shorts targeting 1.48 initially

gu2015-01-28 07_21_30-

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

  • 117 -119 range continues for the sixth day, topside break initially targets 120 ahead of 2014 highs. Failure at 117 opens retest/break of key medium term bullish support at 116/115.50
  • Order Flow indicators; OBV consolidating below recent highs, Linear Regression and Psychology rotating at midpoints reflecting range trade in price
  • Risk free longs in play, please see key trades for details

uj2015-01-28 07_26_26-

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

  • 1.25 next resistance, 1.23 near term support, broad bullish trend remains intact above 1.2050
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression to test midpoint from above, Psychology bullish
  • Monitoring price action to reset long positions around 1.2350

uc2015-01-28 08_26_15-

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

  • 0.80 broken support now key resistance being tested from below, while this caps to the upside the next downside objective is .7750 projected channel support
  • Order Flow indicators; OBV ticking up from recent lows, Linear Regression and Psychology pierce midpoints from below
  • Monitoring price action at 0.80 retest from below to target 0.7750

au2015-01-28 08_29_51-

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