New York Forex Report: US CPI Up Next

New York Forex Report: US CPI Up Next

Markets are becoming increasingly cautious as the two-day FOMC meeting approaches, no US data on the deck yesterday. Data elsewhere were mostly positive, but did little to soothe nervousness among traders with whipsaw price action in many asset markets. Industrial production prints out of both Eurozone and Japan were better. Attention today is firmly on the US CPI print which is to be the last key data point before the market learns outcomes of the Fed’s two-day rate-decision meeting tomorrow.

EURUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: EURUSD was weaker over European trading today despite positive data releases. EuroZone employment ticked up to 1.1% from 1% YoY whilst EuroZone ZEW Economic sentiment improved to 33.9 from 28.3 previous. Key data focus for today’s US session will be US CPI at 1330 GMT expected to improve to 0.5% YoY and 2% core YoY.

Technical: While 1.09 caps intraday downside corrections expect a grind higher to retest last weeks high and onwards towards the pivotal 1.11. A failure at 1.0850 opens a retest of 1.0790 next

Interbank Flows: Bids 1.09 stops below. Offers 1.11 Stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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GBPUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental:  GBP was very choppy over European trading today as traders digested the latest CPI data which saw the UK climb out of negative territory to print 0.1% on the headline and 1.2% on the core, both in line with expectations.

Technical:  While 1.5150 supports intraday downside corrections expect a move to test symmetry resistance at 1.5297. A failure at 1.51 opens a retest of pivotal 1.5050.

Interbank Flows: Bids 1.51 stops below. Offers 1.5250 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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USDJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Fundamental: USD edged higher over the European morning as JPY weakens ahead of the FOMC decision tomorrow with firmer equities and Oil seeing les safe-haven demand for JPY.

Technical: While 120.05 supports downside reactions, expect a retest of 122.50. A failure at 120 opens a test of 119 support.

Interbank Flows: Bids 120 stops below. Offers 122 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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EURJPY
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental: Decent EURJPY selling pressure in Asia before the Tankan data yesterday but the pair still holds in the broad range that we have been in for well over a week now with resistance into 134.15 on the topside  and support into the 131.00 region where we based early last week.

Technical:  While 132.50 caps intraday downside reactions, expect a grind higher to test upside symmetry objective at 134.86, a failure at 132 opens a test of pivotal 131 next.

Interbank Flows: Bids 132 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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AUDUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Fundamental:  Australia’s central bank reiterated that there was “some scope” to ease monetary policy if needed, but highlighted recent positive economic trends that suggested there was no need to offer additional stimulus any time soon in the minutes of its 1 December policy review. Rate was lower over the European morning as Commoity prices continue to slide ahead of the FOMC.

Technical: While .7150 supports intraday downside expect a test of .7230/50 ahead of .7320, while this area caps upside attempts pressure remains to the downside

Interbank Flows: Bids .7150 stops below. Offers .7250 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Sidelines

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

Fundamental: USDCAD at eleven year highs as oil prices stumbled further. Brent crude settled at $37.92 after falling as low as $36.33 a barrel, its weakest since December 2008, while US crude settled up 1.9 percent at $36.31 after earlier falling to $34.53. Canada’s finance minister said the weaker Loonie will probably face more pressure from persistently low commodity prices that also complicate the fiscal situation.

Technical: Bulls have the ball while 1.3450 supports intraday downside expect a grind higher to test stops above 1.3780. A close below 1.3389 would ease the near term bullish bias.

Interbank Flows: Bids 1.3450 stops below. Offers 1.3780 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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