London Forex Report: EUR Long Positioning At Record Highs

London Forex Report: EUR Long Positioning At Record Highs

London Forex Report: Further hawkish rhetoric by ECB’s Hansson who suggested that it would “certainly be conceivable and also appropriate to end the purchases after September” and that he favoured a “timely, gradual exit”. He also noted that the EUR strength “is not a threat to the inflation outlook” up to now and one “shouldn’t over-dramatise” it. The ascent of oil prices to fresh highs, with Brent above US$70 per barrel for the first time in three years, may also add to inflationary concerns.

NORTH AMERICA The US was out for Martin Luther King Jr Day holiday. USD sentiment has soured generally as investors consider strengthening growth and improving prospects for policy accommodation to be reversed in Europe, and elsewhere. More broadly, markets are refocussing on US structural deficits is making its mark on the USD’s performance while shifting political risks away from the Eurozone, after a year of general elections in the Eurozone, is helping support the EUR. The risks of a US government shutdown this week may not be too significant but may not be helping the USD’s cause either.

EUROPE Bank of England (BOE) MPC member Tenreyro said the UK economy probably needs two more rate hikes over next three years, if its November forecasts were proven correct. She added that an upside risk to productivity would affect that policy rate path.

ASIA Machine tool orders in Japan grew at a faster pace of 48.3% YoY in Dec, up from 46.8% in previous month, suggesting a rise in business capital spending, which indicates stronger business confidence and a better employment outlook. Meanwhile, Japan’s PPI grew 3.10% YoY in Dec, slowing from 3.60% after revision from 3.50%. Exports prices rose at a softer rate of 2.3% compared to previous month of 6.8% YoY while imports prices climbed 7.1% YoY in Dec.

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

Technical: 1-3 Day View – 1.2276 swing objective achieved anticipate profit taking and consolidation on a test above 1.23 as 1.21 survives on a closing basis, 1.2635 descending trendline from all time highs becomes the upside magnet

1-3 Week View – As 1.2130 now acts as support expect a test of 1.2635 as the next upside objective. Weekly close below 1.16 neutralises bullish objectives opening a test of 1.14
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – 1.3657 achieved as this level now acts as support expect a test of the pivotal 1.3836 next

1-3 Week View – 1.3836 achieved as 1.35 supports 1.45 becomes the next upside objective, only a close back below 1.30 would jeopardise the bullish advance.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Anticipated retest of pivotal 110.80/60 underway a failure here opens a move to 109.85 next, near term resistance is sited 111.20

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – 136 the primary upside objective is achieved expect 136.70/137 to cap advance on initial test, pivotal 133.30 support test survives as it does there is potential for a platform to develop to test 141, a failure to recapture current cycle highs in the next couple of sessions may see a broader correction before higher

1-3 Week View – 136.10 is the principle upside objective , rotation within the broader range persists breach of 132.20 sets a retest of 131.50, a closing breach of 131 concerns the bullish consolidation bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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