London Forex Report: Dollar In Post FED Doldrums

London Forex Report: Dollar In Post FED Doldrums

London Forex Report: Markets are still digesting the FOMC outcome, China “retaliated” with a 10bps increase in its market based interest rates i.e. reverse repos and medium-term lending facility (MLF), marking its second hike within two months in attempts to ensure financial stability. USD extended its decline against 60% of its G10 counterparts as markets continue to unwind bullish bets amid the lack of hawkish signals from the Fed. The Dollar Index slipped in US session, closing 0.38% lower at 100.36

FX Majors: EUR Eurostat’s final estimate of February Eurozone inflation confirmed the flash reading with the CPI inflation rate increasing to 2.0% from 1.8% in January. The release was in line with expectations as prices rose 0.4% on the month. The annual rate has increased sharply over the past three months from 0.6% in November and was the highest rate since January 2013. GBP In the latest BOE meeting, the MPC voted 8-1 to keep benchmark rate unchanged at 0.25% and unanimously to hold asset purchase target at £435bn as expected. One policy maker surprisingly voted to hike rate by 25bps amid the rise in price pressure. Inflation was expected to increase close to 3.00% later in the year due to Sterling’s depreciation but the central bank reiterated that it would tolerate a period of above-target inflation to sustain GDP and job growth to dampen downside risks from Brexit negotiation. JPY BOJ voted 7-2 to maintain its monetary policy, keeping policy rate at -0.10% and target for its 10-year government bond yield at zero. Asset purchase target will be kept at ¥80 trillion and macroeconomic outlook has been largely unchanged as the economy is expected to continue “to recover moderately as a trend”. Inflation has shown some signs of picking up but is no where close to the central bank’s target of 2.00%.

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

Technical: The closing breach of 1.0650 arrests near term bearish bias and resets attention on upside objectives, as 1.07 supports 1.0830 is the primary upside objective ahead of 1.0985 equidistant swing objective. A close back below 1.06 suggest continuation of trade environment and a false upside break
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: The breach of 1.2330 stems selling pressure as 1.23 supports 1.2450 become the next upside objective only below 1.2240 concerns near term bullish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Failure below 113.80 concerns near term bullish bias as this level contains corrective moves, symmetry swing target at 112.20 becomes the downside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 122.50 the primary upside objective achieved profit taking has developed. Only below 121 concerns near term bullish bias and opens a test of pivotal 120. As 121 survives on a closing basis expect a retest of 122.80
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD climbed after the Fed signalled only gradual rate tightening and the dollar slid to its lowest in a month. OIL prices traded little changed on Thursday, as support from a weaker dollar was offset by a stubbornly high level of US inventories near record highs that suggested OPEC output cuts were starting to drain supplies. AUD Australia’s sovereign bond yields declined amid an unexpected increase in Australia’s unemployment rate in February. The 10-year yield closed 10bps lower. CAD As there is little in terms of Canadian domestic data this week, CAD is using the FOMC decision for direction.

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

Technical: The breach of .7650 resets attention on upside targets primarily offers above .7740 near term support is sited at .7630
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Symmetry swing objective sited at 1.3480 achieved, bulls target 1.3598 . Only a close below 1.33 concerns the near term bullish bias and opens a move back to test the base break at 1.32
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close below 1215 invalidates bullish bias opening a retest of 1200 as 1225 caps upside corrections 1180 becomes the next downside objective, over 1233 suggests a broader correction to develop retesting 1250
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price is now testing primary trend line support from the February 2016 lows at 48.70 while this are supports there is an opportunity to retest range support at 51.00 as this level caps upside reactions bears target 45.20 as he next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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