Morning Report: USD Pauses As FOMC Eyed

KEY DATA RELEASES TODAY (GMT) :

1230 USD Empire State Manufacturing Index 8.1 v 7.8
1315 USD Industrial Production m/m 0.3% v 0.2%
1315 USD Capacity Utilization Rate 79.5% v 79.4%
1400 USD NAHB Housing Market Index 57 v 55
1645 EUR ECB President Draghi Speaks

OVERNIGHT:

Overall a mixed Asian session, USD kicked off the weak firm but weakened into Asia open. As soon as the PBOC CNY fix was published, USD weakened further across the board. No follow through after all this is FOMC and markets are likely to consolidate ahead of Wednesday. With the FOMC mid week traders will pay attention to how fast the Fed moves this year since that will have greater implications for how the USD moves going forward as echoed by FT’s article “Five questions ahead of US Federal Reserve meeting”. The authors highlighted that the real question is really what comes next and how fast does the Fed tighten policy over the next year?

Nothing positive on Greece over the weekend. Non-stop jabs between Greece and Germany; Greek Defense Minister Panos Kammenos versus German Finance Minister Wolfgang Schaeuble. On Sunday, PM Alexis Tsipras said Greek state is not facing a cash shortage. EURUSD found buyers at the Asia open on profit taking, was trading in the 1.05-teens till the CNY fix sent EURUSD to 1.05355, larger stops eyed above 1.0550

USDJPY traded 121.30-48 and slapped down to 121.215 after the CNY fix. Large offers are reported above 121.75 and Japanese banks are fearful that further decline in JPY may prompt the government to change its tune.

GBP has become the latest currency to suffer at the mercy of the big dollar bid as GBP touches a low of 1.4700 a low not seen for 5 years. A big week ahead with the UK Budget,employment data and the much anticipated FOMC on Wednesday in the US. Expect further choppy conditions with the market biased to sell on bounces.

PRICE ACTION OVERVIEW:

EUR: While 1.0610/30 contains upside target 1.03
GBP: While 1.4840/60 contains upside target 1.46
JPY:  While 120.60/40 contains downside target 124.00
CAD: While 126.60/40 contains downside target 130
AUD:  While .7760/80 contains upside target .72

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearish Await new signal
GBPUSDBearishAwait new signal
USDJPYBullish Await new signal
USDCADBullishAwait new signal
AUDUSDBearish Sell/02 Mar .7760 Open.7760

ANALYSIS:

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

  • While 1.0610/30 caps upside pressure remains on the downside, with 1.03 the next downside objective, above 1.0650 suggests 1.0760 test in broader correction
  • Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish, but ticking up form depressed levels to attempt midpoint tests from below
  • Monitoring price action and Order Flow below 1.0760 to reset short positions targeting 1.03

eu2015-03-16 07_12_19-

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

  • While 1.4840/60 caps upside 1.46 is the next downside objective a break  above 1.4940/60 suggests a broader correction
  • Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish
  • Monitoring price and Order Flow below 1.4940/60 to reset short positions targeting 1.46/45

gu2015-03-16 07_19_19-

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

  • Continued consolidation at double top, watching for correction to 120.20/40 previous resistance to act as support and base for sustained break of 2014 highs, only below 118.50 concerns bullish bias
  • Order Flow indicators; OBV continues ticking up from consolidation, Linear Regression supported at midpoint Psychology pierces midpoint from above
  • Monitoring price action and Order Flow indicators on retest of 120.00/120.50 to set longs targeting 124

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

  • While 1.2640/60 contains downside reaction expect a sustained break of 1.28 with 1.30 the next key objective, only below 1.2350 concerns upside bias
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression and Psychology bullish but pulling back to test midpoints from above
  • Monitoring price action and Order Flow indicators to set long positions at 1.2550 targeting 1.30

uc2015-03-16 08_53_49-

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

  • While .7740/60 caps upside reactions next downside objective is .75 with .72 beyond only above .7860 concerns bearish bias
  • Order Flow indicators; OBV consolidates at lows, Linear Regression and Psychology bearish but ticking up form lows
  • Risk free shorts in play

au2015-03-16 08_55_13-

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