Morning Report: USD At Pivotal Level, All Eyes On The FOMC

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
13:30 USD Advance GDP Price Index q/q 0.4% v 0.0%
13:30 USD Advance GDP q/q 1.0% v 2.6%
15:00 USD Pending Home Sales m/m 1.1% v 3.1%
15:30 USD Crude Oil Inventories 2.1M v 5.3M
19:00 USD FOMC Statement
19:00 USD Federal Funds Rate 0.25% v 0.25%

OVERNIGHT:

USD remains weak ahead of the FOMC while the EUR has been boosted by optimism that Greece could secure extra funding for debt repayment. EURUSD traded around 1.0880 during most yesterday’s Asian session before the pair squeezed higher to 1.0990 upon the release of weak UK GDP.

UK GDP in Q1 only rose 0.3% QoQ, worse than expected 0.5%, while growth YoY printed at
2.4% against 2.6% expected. GBPUSD instantly dropped to 1.5174 low after the weak release of UK GDP but the sell off of USD during US session lifted the pair up to 1.5341 high as rate expectation continue to be pared back in the US while the IMF highlight the UK as the fastest growing G7 economy in 2014.

USDJPY drifted lower although was relatively stable among the other major currencies post disappointing US data. Market participants are unwilling to take on too much exposure ahead of today’s headlines risk event with the FOMC statement due later today and BOJ’s statements at 30 April monetary policy meeting.

PRICE ACTION OVERVIEW:

EUR: 1.09 offers eroded en rout to fourth attempt at 1.10, below 1.08 refocuses on 1.0620
GBP: 1.5350 equality corrective objective achieved above 1.54 open pivotal 1.55 test
JPY:  While 118.60/80 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: 120 test underway failure here opens  pivotal 118
AUD:  .8050 pivotal resistance being tested above here remove medium term downside pressure. While .8050 holds potential for medium term down trend resumption

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutral Await new signal
GBPUSDBullishAwait 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

  • With 1.09 breached focus shifts towards a fourth test of 1.10 and a likely break here would target the 1.1150 equality swing objective. Bears require a break of 1.08 for renewed downside pressure
  • Order Flow indicators; OBV consolidating above lows but ticking down, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow indicators to set shorts against 1.12

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

  • Equality corrective target 1.5350 achieved while offers from here to 1.5390 stem the upside advance potential to retest bids towards 1.5250. Above 1.54 targets pivotal 1.55
  • Order Flow indicators; OBV consolidates recent gains and ticks up, Linear Regression and Psychology bullish but stalling at elevated levels
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension against 1.5350/1.54

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • 118.80/60 trendline support a break here sets up another run at 118.30 bids as range trade persists, trading toward the lower end of the recent range so caution shorting into the 118.80/60 zone
  • Order Flow indicators; OBV consolidating at lower levels, Linear Regression bearish but ticking up to test midpoint from below, Psychology bearish
  • 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

  • Failure at 120 will open a 118 test, while 120 survives on a closing basis potential for upside correction towards 124 previous support now resistance
  • Daily Order Flow indicators; OBV ticking down from consolidation, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators on retest of 123/124 from below

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

  •  .8050 pivotal trend resistance failure here opens a move towards .8350. While .8050 survives on a closing basis potential for medium term down trend resumption
  • Order Flow indicators; OBV consolidating recent gains, Linear Regression and Psychology bullish but stalling at elevated levels
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

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