Morning Report: USD Advance Pauses As FOMC Remain ‘Patient’

KEY DATA RELEASES TODAY (GMT) :

1230 EUR ECB Monetary Policy Meeting Accounts
1330 USD Unemployment Claims exp 293K v 304K
1500 USD Philly Fed Manufacturing Index exp 8.8 v 6.3
1600 USD Crude Oil Inventories exp -1.8M v 4.9M
1630 EUR German Buba President Weidmann Speaks

OVERNIGHT:

The USD continues to trade with an offered tone on the back of surprisingly doveish FOMC policy meeting minutes. USD longs were pared promptly on the basis of headlines from the FOMC minutes, perhaps the most concerning USD longs was that ‘…many Fed officials were inclined to stay zero interest rates for longer.’ External concerns, specifically slowdown in China and global disinflationary pressure, as well as geopolitical issues in the Middle East, Ukraine and Greece were also increasingly more visible in the language perceived to be rather cautious by the markets. Individually, these concerns have only been exacerbated in the last few weeks since the Fed’s January meeting,

In G10 FX EURUSD extended its gains in Asia to print a high of 1.1424 while USDJPY tested a low of 118.44 before option related bids provided support overall though, volumes were sub-par given much of the region was closed for Lunar New year. GBPUSD continues to grind higher towards teh 1.55 resistance zone stronger wage growth, upbeat employment data, and continued hawkish murmurings out of the BOE. Besides the Fed, the BOE has set itself up as the 2nd most hawkish G10 bank. Overall, the short to medium term bias appears to be turning higher but expect 1.55 to be a crucial pivot and not to give way easily on initial probes.

Elsewhere,report from S&P that strained Australian budget puts ratings at risk saw AUDUSD dip from 0.7835 to 0.7786, Later the same S&P analyst Craig Michaels in a separate interview commented that S&P doesn’t see large risk of rating change over 2 years and that overall AAA rating outlook hasn’t changed. All in all AUDUSD playing out a 0.7760-0.7840 range

Looking ahead the Greek saga is playing out in full with a proposed loan extension request due to get submitted today and we are due to receive the first ever ECB meeting minutes in the European session.

PRICE ACTION OVERVIEW:

EUR: While 1.1270 supports focus on 1.17 upside corrective equality target, below 1.12 targets 1.10
GBP: 1.5330 supports for correction targeting 1.55/5550
JPY:  Anticipated final corrective phase in broader bullish consolidation while 117.50 supports expect break of 120.50
CAD: Bullish consolidation continues to develop while 1.2350 trendline supports 1.28 next upside objective ahead of 1.30 key resistance
AUD:  0.79 remains the key hurdle to further corrective upside objective of .8050.

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDBullishBuy/18th Feb1.5386OPEN1.5236
USDJPYNeutral Await new signal
USDCADBullish Buy/19th Feb1.2485 1.301.2335
AUDUSDNeutralBuy/ 16Feb 0.78 0.8050 0.77Counter-trend

ANALYSIS:

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

  • Consolidation continues with potential headline risk ahead the broader theme remains while 1.1270 holds as support the EURUSD is on track to test a daily corrective equality target at 1.17, below 1.12 suggest early resumption of downtrend
  • Order Flow indicators; OBV consolidates at  lows, Linear Regression and Psychology bearish but no clear momentum
  • Monitor price action at 1.16/17 or a break of 1.12 to reset short positions to target 1.10

eu2015-02-19 07_05_05-

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

  • While 1.55/5550 caps upside there is potential for downtrend to resume, above 1.5550 targets 1.58 next
  • Order Flow indicators; OBV drifting up from lows, Linear Regression bearish attempting to recapture midpoint form below, Psychology pierces midpoint from below but lacking upside momentum
  • Risk free longs in play, monitoring price action in the 1.55/5550 area to reverse short

gu2015-02-19 07_09_15-

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

  • 118 acts as base now for potential resumption of uptrend, while 119.40 caps upside potential for 117 test remains a possibility before higher, over 119.40 targets 120.40 next
  • Order Flow indicators; OBV testing recent consolidation lows, Linear Regression attempting to recapture midpoint form below, Psychology bearish
  • Monitoring price action at 117/118 to set longs to target 2014 highs

uj2015-02-19 07_11_41-

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

  • 1.2350 attracts buyers and supports expect retest and break of 1.28 on route to key 1.30 resistance.
  • Daily Order Flow indicators; OBV retesting highs, Linear Regression and Psychology pierce midpoints from below
  • Long orders in play, please see key trades for details

uc2015-02-19 08_27_33-

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

  • .79 the key upside hurdle to further corrective upside below .77 threatens retest and potential break of lows for early trend resumption targeting .75 next
  • Order Flow indicators; OBV rolling back over, Linear Regression and Psychology upside momentum failure, retesting midpoints from above
  • Longs in play will look to reverse at corrective targets to rejoin broader trend, please see key trades for details

au2015-02-19 08_30_17-

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

Posted in Forex Analysis, tagged with on