Morning Report: USD Profit Taking Correction Continues

KEY DATA RELEASES TODAY (GMT) :

0930 GBP PPI Input m/m 1.6% v -3.7%
0930 GBP RPI y/y 0.9% v 1.1%
0930 GBP CPI y/y 0.1% v 0.3%
1230 USD CPI m/m 0.2% v -0.7%
1230 USD Core CPI m/m 0.1% v 0.2%
1345 USD Flash Manufacturing PMI 54.9 v 54.3
1400 USD New Home Sales 466K v 481K

OVERNIGHT:

In hindsight, the melt higher in EURUSD on Wednesday was too fast for a proper position cleanse with the market taking too much comfort in the subsequent sell off believing the worst was over. The sustained squeeze on Friday/Monday has finally brought the market to its knees with a variety of names stopping out of cash shorts clearing order books. This is a continuation of the “weak hands to strong hands” positioning. The FOMC was obviously damaging to the broader USD trend and we are in a holding pattern for now, but markets still believe the euro will underperform other currencies on the back of the same supply that we’ve seen in months past. While there will be some fluctuations in European fixed income as the market adjusts to the ECB QE program, market believes European yields have more room to run lower and should weigh on the single currency. Euro zone consumer confidence jumped more than expected to -3.7 in March against -6.7 the previous month. Rallies on the day towards 1.0960/80 should meet resistance with support at 1.0850

GBPUSD consolidated in range between 1.4800 to 1.5000; the possibly of deflation and the uncertainty risk of general election in May still weigh the pair, EURGBP printed a three-week high as investors have pushed back their expectation of the time in rising interest rates.The market is waiting for the release of inflation data

USDJPY lost 0.25 percent overnight. Japan’s government raised its overall economic assessment for the first time since July 2014; Japan’s economy is recovering moderately, with improvement seen in the corporate sector, Cabinet Office said in March’s report. With Japan fiscal year end looming large market positioned for selling into rallies as player anticipate more supply on breaks lower.

PRICE ACTION OVERVIEW:

EUR: While 1.0960/80 contains upside target 1.0460
GBP: While 1.5030/50  contains upside target 1.4630
JPY:  While 119.60/40 contains downside target 124.00
CAD: While 124.60/40 contains downside target 130
AUD:  While .7910/30 contains upside target .72

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutral Await new signal
GBPUSDBearishAwait new signal
USDJPYNeutral Await new signal
USDCADNeutralAwait new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • While 1.0760/40 supports there is potential for a broader corrective phase which has an equality target at 1.1180/1.12. Corrective consolidation continues above 1.06, below 1,06 suggests trend resumption
  • Order Flow indicators; OBV consolidates at lows, Linear Regression and Psychology bullish but retreating form best levels to attempt midpoint tests from above
  • Monitoring price action and Order Flow below 1.12 to reset short positions targeting 1.03

eu2015-03-24 07_30_17-

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

  • While 1.5030/50 caps upside expect a break of 1.47 to confirm trend resumption, above 1.51 suggests a test of 1.52 in broader corrective pattern
  • Order Flow indicators; OBV consolidating at lows, Linear Regression and Psychology pierce midpoints from below but are stalling
  • Monitoring price and Order Flow against 1.5030/50 targeting 1.46/45

gu2015-03-24 07_33_12-

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

  • While 119 supports expect retest and eventual break of year to date highs en-route to 124, only below 118 concern bullish bias
  • Order Flow indicators; OBV continues consolidation, Linear Regression pierces midpoint from above, Psychology has a bearish break from midpoint rotation
  • Monitoring price action and Order Flow indicators for longs targeting 124

uj2015-03-24 07_35_37-

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

  • While 1.2350/1.24 supports a close above 1.28 will target key 1.30 only below 1.2350 concerns bullish bias
  • Daily Order Flow indicators; OBV retreats from highs, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set longs  targeting 1.30

uc2015-03-24 08_35_21-

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

  • Above .79 suggests a retest of .8050 in broader corrective phase, expect consolidation to continue above .7760 below suggest false break from bearish channel and early return to trend
  • Order Flow indicators; OBV continues ticking up from lows, Linear Regression and Psychology bullish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72

au2015-03-24 08_38_46-

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