London Forex Report: Frexit Fears Fading Into First Round French Elections

London Forex Report: Frexit Fears Fading Into First Round French Elections

London Forex Report: Markets appeared to have turned towards a temporary reprieve rally ahead of the first round of French presidential election this Sunday, where Macron is leading the poll by thin margin, perceived as lower odds for a Frexit.

USD US data remained on the soft side. Iniital jobless claims rose more than expected by 10k to 244k for the week ended 15-Apr wile Philly Fed business outlook retreated more than expected to 22.0 in April. Leading index which moderated by 0.1ppt to 0.4% in March also showed the US economy will expand at a slightly slower pace in the next 3-6 months. Markets are beginning begin to have reservations if the Fed can maintain its rate hike path (total of three hikes for the year) as fundamental data starts to soften. The Dollar Index shrugged off losses in US session to close at 99.77, up from 99.73.

EUR Eurozone continued to signal better economic condition and outlook. Consumer confidence improved more than expected to -3.6 in April, its best level in two years, adding to signs the region is on the mend. Constrution output in the Eurozone rebounded with a 7.1% YOY increase in February, marking its biggest gain since April14 and proving last month’s decline as just a blip. Strong rebounds in building and civil engineering works offer positive signs of pick-up in the construction and housing sectors in the region.

GBP trades in a tight range, as it consolidates its post election call gains. The U.K. Parliament backs Prime Minister Theresa May’s call for a general election solidifying the June election. Polling shows PM May’s Conservatives well ahead of Labour (a YouGov poll in the Times shows a 48- 24% split in support), implying that she will win a significant majority in the June 8th election.

JPY In Japan, trade surplus narrowed sharply to ¥172.2bn in March as exports fell 3.5% MoM, and compounded by a 3.4% MoM increase in imports. From an annual perspective, the trade picture was however positive as exports jumped 12.0% YoY, extending its double-digit gain from the preceding month thanks to recovery in global demand. In a separate release, nationwide departmental store sales extended its 13th straight month of losing streak albeit at a slower rate of 0.9% YoY in March, on broad-based declines across all except sundries/ cosmetics category.

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

Technical: 1-3 Day View – 1.07 becomes support as this contains corrections next upside objective is 1.0860, below 1.06 resets focus on downside objectives 1.05 should be tested next.

1-3 Week View – While 1.10 contains corrective attempts higher focus remains on a retest of 1.03 ahead of 1.0118 extension objective form 2015/17 consolidation. Only over 1.14 sets upside focus on 1.1876
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Testing 1.2880 equidistant swing resistance as 1.2770 supports bulls will focus on a test of psychological 1.30 magnet , only below 1.2560 concerns near term bullish bias.

1-3 Week View – While below 1.2880 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of symmetry swing objective sited at 1.3238
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View 108.43 equidistant swing objective to the achieved, near term resistance is sited at 109.58, only over 112 stems selling pressure

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

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

Technical: 1-3 Day View – , 114.65 becomes the next downside objective as 117.50 contains upside reactions. Only over 120.50 arrests near term selling pressure.

1-3 Week View – The weekly close below symmetry swing support sited at 117.69 sets a bearish tone with 113.70 the medium term downside objective , a weekly close above 118.50 would arrest the immediate downside risk.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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