Morning Report: Will Yellen Provide Some Last Minute Volatility?

KEY DATA RELEASES TODAY (GMT) :

1030 USD FOMC Member Fischer Speaks
1230 USD Final GDP q/q 2.4% 2.2%
1400 USD Revised UoM Consumer Sentiment 92.5 91.2
1945 USD Fed Chair Yellen Speaks

OVERNIGHT:

EURUSD had a firm rejection of the topside overnight. Interbank flow reports suggest high turnover at the 1.1000 handle with decent offers re­-emerging for the  third day running. It is this persistent replenished supply which eventually won over and again it happened as NY entered the fray. The market could not take out 1.1060 and that failure looked to have had the biggest impact. Clearly a lot of EURUSD bearish strategies have been pared back but that level should now prove to be an interim line in the sand on future attempts higher. A close below 1.0860 would be key tonight and with Yellen speaking later we could be in for an interesting close. US GDP revisions are also on the agenda.

The selloff in USDJPY continued in the early London session, marking a low of 118.33. The USD, however, found fresh legs in the NY session. Inflation data continued to show weakness, with core CPI ex­food falling to 0 pct. This has also lifted some expectations of further BOJ policy easing needed. Short ­term and tactical trading is clearly the way to go for now, with a bias being to the downside, 119.60 serves as the initial resistance to the topside, while 119.00 and 118.80 are the initial supports.

Price action after the stronger­ than ­expected retail sales figures was indicative of the path of least resistance for cable. Decent selling interest ahead of the psychological 1.5000 level was enough to cap the pair’s rally, and the broad USD recovery brings the pair back in the ever ­familiar 1.48 handle. Anticipating real money lightening up ahead of the elections, given the doveish profile of the BOE. The pair however needs a break of 1.4800 to get bears excited again

PRICE ACTION OVERVIEW:

EUR: While 1.0760/40 supports target 1.1190/1.1210 equality corrective target
GBP: While 1.5030/50  contains upside target 1.4630
JPY:  While 118 contains downside target 124.00
CAD: While 123.50/124 contains downside target 130
AUD:  While .7940/6- 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
AUDUSDBearishAwait new signal

ANALYSIS:

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

  • 1.1060 the near term bearish line in the sand while this area hold potential for further consolidation and retest 1.0760/40 but while this level supports there is potential for a broader corrective phase which has an equality target at 1.1180/1.12. Only below 1.06 suggests trend resumption
  • Order Flow indicators; OBV ticks back down, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow below 1.12 to reset short positions targeting 1.03

eu2015-03-27 07_20_45-

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

  • Third rejection towards 1.50, 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 retesting lows, Linear Regression and Psychology bearish
  • Monitoring price and Order Flow against 1.5030/50 targeting 1.46/45

gu2015-03-27 07_23_50-

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

  • Below 118 concern bullish bias and would suggest a retest of 117, while 118 supports potential for continued consolidation before trend resumption.
  • Order Flow indicators; OBV ticking down, Linear Regression and Psychology bearish but ticking up from low levels
  • Monitoring price action and Order Flow indicators for longs targeting 124

uj2015-03-27 07_26_51-

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 consolidates at highs, Linear Regression and Psychology bearish but ticking up from low levels
  • Monitoring price action and Order Flow indicators to set longs targeting 1.30

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

  • Rejected at .79 a break below .77 suggests false break from bearish channel and early return to trend. Potential for throwback support at previous bearish trend line at .7720
  • Order Flow indicators; OBV at lows, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72

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