Morning Report: USD Reinvigorated After Stellar Jobs Data

KEY DATA RELEASES TODAY (GMT) :

2100 USD FOMC Member Powell Speaks

OVERNIGHT:

Despite extremely weak trade data from China and more Greek headline risk over the weekend, the FX market has been somewhat subdued so far, with most G10 pairs obeying relatively tight ranges. The DXY is slightly softer this morning, but still remains above 94.50 support.

Ffollowing on the back of the impressive US non farm data reported late Friday the EURUSD appears content to consolidate close to the range lows around 1.1330 level for now. In the short term USD story definitely appears to be back in play and expect fast money to enter market on any rally opportunity at favourable entry levels. To the downside 1.1270 will be key technical support and any breach of said level will encourage momentum players to look towards 1.11 as next target.

Bullish positions in USDJPY pre NFP were rewarded, and the pair climbs aggressively before topping out at 119.20. This morning has brought out better domestic sellers, presumably for profit-taking and corporate hedging purposes, but we anticipate dips to be shallow in the pair, especially given the lightening up of positions we’ve seen in the past weeks. 118.50 and 118.20 are the initial supports, while a close above 119.20/30 should strengthen the topside momentum.

Big week this week for GBP traders, with the BOE Inflation Report due to be released on Thursday. Market is widely expecting a significant downgrade of inflation projections, but it does feel like there is a risk that Carney and co. may be less doveish with regards to the growth forecasts and the effects of the slump in oil prices.

Looking ahead, its fairly quiet on the data front this week. On Thursday we get the B0E inflation report and on Friday we have Eurozone GDP.

PRICE ACTION OVERVIEW:

EUR: 1.1250 key support, a break here targets retest of year to date lows
GBP: 1.5325 trendline resistance caps upside while this contains expect bearish trend resumption
JPY:  Two week range resolves to the upside, while 118 supports expect 120 test next
CAD: 1.28 caps advance for now, 1.2350 support being retested, while this area holds bullish trend remain intact
AUD: Stalls ahead of 0.79 resistance, while this area contains expect retest of last weeks lows

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutralAwait new signal
GBPUSDNeutralAwait new signal
USDJPYNeutral Await new signal
USDCADBullishAwait new signal
AUDUSDBearishShort Jan 29.7878 OPEN.7878Intraday Signal

ANALYSIS:

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

  • Currently retesting previous trendline resistance as potential support in the 1.1250 area, while this holds 1.16 is the next upside objective, a break of 1.12 brings 1.10 back into sight in the downside.
  • Order Flow indicators; OBV drifting up from lows, Linear Regression pierces midpoint from above, Psychology has a bullish bias but is stalling
  • Monitor price action at 1.1590 or a break of 1.12 to reset short positions to target 1.10

eu2015-02-09 07_13_00-

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

  • Trendline resistance at 1.5325 caps the upside advance for now a breach of Fridays lows would suggest resumption of bearish trend. A break of trendline resistance opens up a retest of lows of the December range towards 1.55/1.5550
  • Order Flow indicators; OBV ticking up from lows, Linear Regression bullish but stalling, Psychology bullish.
  • Monitoring price action to reset short positions to target retest of year to date lows

gu2015-02-09 07_22_06-

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

  • Sharpe reversal on Friday with range resolving to the upside while 118 supports anticipate 120 test next
  • Order Flow indicators; OBV still consolidating below recent highs, Linear Regression pierces midpoint from below, Psychology rotating at midpoint
  • Monitoring price action for a retest of recent range highs to set long positions

uj2015-02-09 07_26_33-

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

  • 1.2350 support continues being tested, while 1.26 caps expect further corrective price action with a trend line test at 1.22 above 1.26 targets retest of 1.28
  • Daily Order Flow indicators; OBV consolidating at highs, Linear Regression pierces midpoint from below and Psychology pierce midpoints from above
  • Monitoring price action to set long positions targeting 1.30

cad2015-02-09 08_49_48-

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

  • While 0.79 contains the upside expect a retest of last weeks lows
  • Order Flow indicators; OBV retesting recent lows, Linear Regression and Psychology bearish
  • Risk free shorts in play, see key trades for details

aud2015-02-09 09_05_18-

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