Morning Report: USD May Day Call Arrests Decline, NFP’s Eyed

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
09:30 GBP Construction PMI 57.6 v 57.8
13:30 USD Trade Balance -41.2B v -35.4B
15:00 USD ISM Non-Manufacturing PMI 56.2 v 56.5

OVERNIGHT:

EURUSD rallied to print a 1.1224 high at the start of yesterdays European session but then slipped close to 100 pips and closed at 1.1144, principally on growing Greek concerns this time expressed by the IMF in and article by the FT which states that the IMF will be taking a hard line with Greek lenders to write down Greek debt. The ECB bought 10.047 bln euros worth of chiefly government bonds in the eighth week of QE programme, a slightly slower pace than a week earlier. The EUR has risen for the past seven days and retracement is likely in the near term 1.10 is key support.

GBPUSD remained heavy and consolidated at 1.5120 level ahead of the UK General Election, as cautioned last week volatility has picked up as we head into the polling week. According to polls, Prime Minister David Cameron’s Conservatives and the opposition Labour Party are tied at 33 percent, the near term bullish pressure would be alleviated below 1.5050.

USDJPY consolidated in a narrow range between 120.00 and 120.30. Japanese exports remain below pre-crisis level since producers have not reduced prices despite weaker yen, Finance Minister Aso said in a conference. Consolidation remains the driver near term with Tokyo traders off again tomorrow, rising UST yields will likely keep the USDJPY bid tone in play for now, bulls remain in charge above 119.50

PRICE ACTION OVERVIEW:

EUR: While 1.1050 supports expect test of 1.1350
GBP: While 1.5050 supports expect test of 1.5550
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:  While .8050 holds potential for medium term down trend resumption

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutral Await new signal
GBPUSDNeutralAwait new signal
USDJPYNeutralLong/30 Apr 119.35 OPEN119.35Intraday signal
USDCADNeutral Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • While 1.1050 stems intraday downside reactions expect a retest of and break of 1.1290 enroute to 1.1350 where we can expect some congestion on first test
  • Order Flow indicators; OBV ticking down, Linear Regression and Psychology pierce midpoints from above
  • Monitoring price action and Order Flow indicators to set shorts against 1.1350

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

  • While 1.5050 supports the advance expect a retest and break of 1.55 en route to 1.5560. Below 1.5050 sees retest of 14990 base, failure here renews medium term downtrend and retest fo year to date lows.
  • Order Flow indicators; OBV ticks down from recent highs, Linear Regression and Psychology bullish but rolling over to retest midpoints from above
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension against 1.5560

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • 118.60/80 produced anticipated upside reaction, now testing the 120 descending trendline resistance offers a break  and close above 120.50 opens April highs, failure suggests sterner test of 118.30 bids.
  • Order Flow indicators; OBV ticking up from recent lows, Linear Regression and Psychology bullish but pulling back to test midpoint form above
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

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

  • Bids at 120 continue to support on a closing basis, while this level survives anticipate a retest of 123/24 from below. A break of 120 target 118 next
  • Daily Order Flow indicators; OBV ticking up, Linear Regression and Psychology pierce midpoints from below
  • Monitoring price action and Order Flow indicators on retest of 123/124

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

  •  Offers at .8050 reject on the first attempt while .7860/40 support potential for another run at .8050, below .78 concern near term bullish bias
  • Order Flow indicators; OBV ticking up from recent low, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

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