London Forex Report: EUR Up on USD, EUR Data Divergence

London Forex Report: EUR Up on USD, EUR Data Divergence

London Forex Report: USD shifts in data trends in the US and the Eurozone, the former turning a tad softer recently while the latter showing signs of firmer traction. Against expectations for higher readings, both US PMI manufacturing and services retreated somewhat in March but remained expansionary nevertheless. On the contrary, PMI prints continued to push higher in the Eurozone, reflecting broad-based pickup in both the manufacturing and services sectors. This augurs well with our believes that the ECB is tracking the Fed in policy normalisation. US durable goods orders also disappointed. Orders ex aircraft reversed January’s gain and fell 0.1% MoM in February even though the headline orders continued to expand albeit at a slower pace of 1.7% MoM. There were little fresh insights from Fed speaks. Fed Dudley said the US economy is in a “pretty good place” now while Fed Bullard cautioned against three rate hikes this year. Markets instead focus on Republicans’ backdown from a vote to overhaul the US healthcare system and the concerns around the implementation of Trump’s Tax Reform agenda. The Dollar Index however, fell 0.13% to 99.62, weighed down by firmer major components EUR and CHF

EUR The EUR rose against the USD on Friday amid improving economic activity figures in the Euro area, , manufacturing and services PMI prints climbed to a record high of 56.2 and 56.5 in March as economic momentum in the single currency bloc quickened. The upbeat data will give room for ECB to end its monetary policy easing. Last week, the EUR advanced against the USD amid uneasiness regarding Trump’s pro-growth agenda and optimism over the French presidential debate. This week, the Euro area’s preliminary inflation and economic sentiment readings, along with Germany’s preliminary inflation, retail sales and labour data, will likely be key

GBP Last week, the GBP rose against the USD amid optimism regarding the UK’s better than expected retail sales and inflation in February. This week, developments regarding ‘Brexit’, along with the UK’s GDP and house prices, will likely attract traders’ attention. The official Brexit process finally gets underway this week, with the triggering of Article 50 by the UK on Wednesday. While the UK’s relationship with the EU will not change until it actually leaves the EU, probably in March 2019, this week’s formal declaration will still likely attract considerable attention

JPY Japan’s data was lacklustre, affirming that growth will likely remain modest in the first quarter of the year. Nikkei manufacturing PMI ticked down from 53.3 in February to 52.6 in March, reflecting softer pace of expansion. Leading index was unchanged at 104.9 and coincident index slipped to 115.1 in January (December: 115.6) as economic outlook remained modest. Last week, the JPY strengthened as traders hedged against concerns regarding the ability of the Trump administration to implement its economic policies. This week, Japan’s inflation, retail sales and industrial activity figures, along with the US GDP, might be in focus

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

Technical: 1.0830 primary upside objective bulls now target the corrective 1.0985 equidistant swing objective. Near term support is sited at 1.0820 A close back below 1.07 would concern near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.2570 upside objective achieved potential for profit taking pullback to test symmetry swing support sited at 1.2470 as this area supports expect a test of triangle resistance sited at 1.2630 only below 1.2370 concerns near term bullish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 111.75 range support breached the daily close below here suggests downside range break and opens 108.43 equidistant swing objective to the downside, near term resistance is sited at 110.75. Only over 112 stems near term selling pressure
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: Anticipated test of 119.30 attracts profit taking as 121 caps upside attempts bears target a test of 118.22 as the next downside objective. Only over 121.80 arrests near term selling pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

Posted in Forex Analysis, London Forex Report, tagged with on