Morning Report: USD Correction Complete?

KEY DATA RELEASES TODAY (BST) :

09:30 GBP Trade Balance -8.9B v -8.4B
12:00 GBP Official Bank Rate 0.50% v 0.50%
12:00 GBP Asset Purchase Facility 375B v 375B
12:03 GBP MPC Rate Statement
13:30 USD Unemployment Claims 283K v 268K

OVERNIGHT:

After the FOMC & NFP sponsored declines the USD appears to be completing its corrective phase while the FED negotiate details on how and when to tighten the ECB and BOJ remain entrenched within their respective QE programs for the foreseeable future as the USD index trades above the downward trendline form its March/April highs this move likely signals the resumption of the USD grind higher.

The EURUSD was under some pressure and hit 1.0763 low after Greece’s IMF representative has decided to resign ahead of EUR270bln debt bill for the IMF. Greek PM Tsipras visited President Putin in Moscow on Wednesday. Putin claimed that Greece did not ask for financial aid but Russia could provide credits for large joint projects in the future. More market talk that reserve managers are quietly moving out of EUR and back into USD on negative Eurozone short-term yields and the likelihood of further EUR weakness due to ECB QE efforts and uncertainty over Greece.

GBPUSD was slightly stronger against the USD and EUR on talk that foreign bids for two major British firms would bolster demand for the pound GBPUSD surged to 1.4972 high but later on slid back to 1.4860s level due to broad-based increase in the USD.

USDJPY stood above 120 handle post FOMC minutes as Nikkei registered 15 year highs overnight. The BOJ kept policy unchanged, vowing to keep expanding the monetary base at an annual pace of 80 trillion yen. Governor Kuroda said the economy faces less risk now than it did last year when the central bank boosted monetary stimulus to an unprecedented level.

PRICE ACTION OVERVIEW:

EUR: While 1.09 contains upside expect continued pressure on 1.0740/60, en route to 1.06, above 1.09 refocuses on fourth 1.10 test
GBP: While 1.4970/90 contains upside expect retest of 1.4740 as prelude to trend resumption, only above 1.5060 alleviates immediate bearish pressure
JPY:  While 119.30/50 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: While 124.50 contains downside target retest of year to date highs en route to 130.00
AUD:  While .7760/80 contains upside anticipate third test of key .7550 failure here opens the  bearish target of .72, above .7880 alleviates immediate downside pressure

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutral Await new signal
GBPUSDNeutralAwait new signal
USDJPYNeutral Await new signal
USDCADNeutralBuy/Apr 09 1.2585Open1.2345 Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • 1.08  support level eroded bringing 1.0740/60 back into play a failure here would see a bear assault on the pivotal 1.06, while 1.0740/60 survives likely further consolidation only above 1.09 relieves immediate bearish pressure
  • Order Flow indicators; OBV consolidating above lows, Linear Regression and Psychology bearish
  • Monitor price action and Order Flow to reset shorts against 1.12

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

  • While 1.4970/90 caps upside reactions intra day expect test of 1.4740 bids, above 1.5050 alleviates downside pressure.
  • Order Flow indicators; OBV consolidating recent gains form lows, Linear Regression and Psychology piercing midpoints from above
  • Monitoring price action and Order Flow against 1.5030/50 targeting 1.46/45

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • Continued bullish consolidation below year to date highs while 118.30 supports expect retest and break of highs, below 118 negates pattern and suggests broader range trade towards 117. Intraday look for 119.30/50 support to maintain near term upside pressure
  • Order Flow indicators; OBV continues to consolidate below recent highs, Linear Regression and Psychology pierce midpoints from below
  • Monitoring price action and Order Flow indicators for longs targeting 124

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

  • Continues to test trendline support at 124.50, while this holds on a closing basis expect further gains en route to 128.00 retest below 1.2350 concerns bullish bias.
  • Daily Order Flow indicators; OBV retesting consolidation support below recent highs, Linear Regression testing midpoint from below, Psychology bearish
  • Monitoring price action and Order Flow indicators to reset long positions targeting 1.30

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

  • Potential double bottom in play while 7550 holds on a closing basis potential for broader corrective price action towards .79 initially with 8050 upside objective beyond, a breach of 7550 on a closing basis targets .72
  • Order Flow indicators; OBV ticking up form lows, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72

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