Morning Report: USD Pauses As FOMC Eyed

KEY DATA RELEASES TODAY (GMT) :

0930 GBP Prelim GDP q/q exp 0.6% v 0.7%
0930 GBP BBA Mortgage Approvals exp 36.6K v 36.7K
1330 USD Core Durable Goods Orders m/m exp 0.6% v -0.4%
1330 USD Durable Goods Orders m/m exp 0.6% v -0.7%
1500 USD New Home Sales exp 452K v 438K
1500 USD CB Consumer Confidence exp 95.3 v 92.6

OVERNIGHT:

Much quieter start in G10 FX this morning in comparison to recent days, with most of the majors confined to relatively tight ranges. The DXY has retraced from yesterday’s highs and now sits just below the 95 level. Not overly surprising to see calmer price action, given the plethora of risk events the market has battled through already this year plus the impending FOMC meeting tomorrow

USDJPY continues to struggle with offers in the late 118 area and larger orders ahead of 119.00. Japanese Economy Minister Amari’s remarks on inflation leeway and USDJPY took the pair back through 118.20’s, to test bids at 118, if stops are triggered below the figure then better bids are reported at and just below 117.50, which should act as decent support on first test, Tomorrow’s FOMC policy decision will likely be pivotal in resolving the recent range trade in the USDJPY.

We have had a collection of comments from Eurozone ministers on Greece; as the anti-austerity government comes into place, market participants have asked what’s next? PM Tsipras will send his new finance minister to Brussels in coming days to renegotiate the bailout terms. EURSUD did little on the news after reversing the spike lower in at the Asian open Sunday marking a break of the 2003 low EURUSD traded back to unchanged on the day but has pulled back in Asia trade weighed on by EURJPY. EURUSD offers are reported 1.1290-1.1305 and stops thereafter.Hawkish comments from BOE’s Forbes have helped underpin GBP, and the short covering in EURUSD has also brought GBPUSD a big figure higher from the Asian open Sunday. Currently,the pair has kept its bid tone and is hovering around 1.5100 ahead of today’s GDP release.

Elsewhere, only data release overnight came from Australia, where the NAB business numbers came in mixed with confidence slightly stronger and conditions slightly weaker. Results are consistent with still below-trend growth. AUDUSD reaction fairly muted as we currently lean against 0.7945 resistance.

Looking Ahead we get UK GDP in London session with US Durable goods and New Homes sales on the data slate during the New York session.

PRICE ACTION OVERVIEW:

EUR: 1.10 psychological support eyed as 1.1330/50 caps upside
GBP: 1.5050 resistance eroded now support targeting 1.5150 upside hurdle
JPY: 119 – 117 range, upside break targets 2014 highs
CAD: 1.25 next resistance, 1.2350 support for next leg higher
AUD: 0.80 broken support becomes resistance to target .7750

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearishAwait new signal
GBPUSDBearishAwait new signal
USDJPYNeutralLong Jan 16116.91OPEN116.91 Intraday Signal
USDCADBullishAwait new signal
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • 1.12 support remains intact on closing basis, while 1.1330/50 contains upside attempts 1.10 is the next downside objective. Above 1.1350 opens retest of 1.1460’s descending trendline resistance
  • Order Flow indicators; OBV ticking up from new lows, Linear Regression attempting midpoint retest, Psychology pierces midpoint from below
  • Monitor price action at 1.1320 and 1.1460 retest from below to set short positions to target 1.10

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

  • 1.5150 near term resistance ahead of 1.5250 horizontal and trendline resistance, support at 1.4950, while over head resistance contains expect test of 1.48
  • Order Flow indicators; OBV ticking up from lows, Linear Regression and Psychology attempting to recapture midpoints from below
  • Monitoring price action at 1.51/2.50 to reset shorts targeting 1.48 initially

gu2015-01-27 07_52_13-

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

  • 117 -119 range, topside break initially targets 120 ahead of 2014 highs. Failure at 117 opens retest/break of key medium term bullish support at 116
  • Order Flow indicators; OBV consolidating below recent highs, Linear Regression and Psychology rotating at midpoints
  • Risk free longs in play, please see key trades for details

uj2015-01-27 07_53_27-

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

  • 1.25 next resistance, 1.23 near term support, broad bullish trend remains intact above 1.2050
  • Daily Order Flow indicators; OBV consolidating at new highs, Linear Regression and Psychology bullish and testing recent extreme high readings
  • Monitoring price action to reset long positions around 1.2350

uc2015-01-27 08_20_56-

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

  • 0.80 broken support now key resistance, while this caps to the upside the next downside objective is .7750 projected channel support
  • Order Flow indicators; OBV ticking up from recent lows, Linear Regression and Psychology attempting to recapture midpoints from below
  • Monitoring price action at 0.80 retest from below to target 0.7750

au2015-01-27 08_47_27-

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