London Forex Report: GDP Beat Boosts Buck

London Forex Report: GDP Beat Boosts Buck

London Forex Report: The USD firmed against most of its major rivals as many traders, who had bet against the greenback for much of the first quarter, looked to cash in on its losses ahead of the month-end and quarter-end. The mild bounce in the dollar came a bit early with traders likely looking to flatten up their books ahead of the long Easter weekend. Broadly, the dollar has found some marginal support this week from moderating concerns about a looming global trade war

NORTH AMERICA Nascent signs that the U.S. and China are actively working to avoid further escalation in trade tensions helped bolster risk appetite (yesterday’s tech-induced stock selloff notwithstanding). Yesterday’s much better than expected reading of the third and final revision to Q4 GDP highlighted an economy that was on stronger footing than expected heading into 2018 and helped add to the greenback’s slightly improved tone.

EUROPE comments from an ECB official that were consistent with the idea of monetary policy normalisation in the 19-member bloc. Ewald Nowotny, member of the ECB’s Governing Council, said the bank would likely decide around the summer when to wind down its monthly asset purchase program. The comments were in-line with expectations for the bank to end its bond-buying scheme in September and then likely lift borrowing costs sometime in mid-2019. The euro looks set to put in its fifth-straight quarter of gains against the dollar in Q1. Reports that the U.K. was imminently going to announce a new proposal to avoid a hard border between Norther Ireland and the Republic of Ireland, a prerequisite for Britain’s securing a post-Brexit transition deal last week, was offset by a surprise drop in a retail sales measure for March. The first drop in the CBI’s sales index in five months was largely the result of heavy snowfall in the U.K. this month.

ASIA JPY skidded to a one-week low against the dollar amid month-end and quarter-end positioning and thanks to a further unwinding of safe-haven trades in the wake of news this week that has reduced worries about a looming global trade war. While socks fell sharply again yesterday, its was mostly a tech-driven selloff and not the result of a broader pullback in investor risk appetite that drove the move in equities.

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

Technical: 1-3 Day View – As 1.24 now acts as support expect a test of 1.2530, a close below 1.24 opens a retest of 1.2330 and return to range.

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 1.19 neutralises bullish objectives opening a test of 1.14.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 1.4160 supports 1.4340 is the next upside objective. Only a close below 1.40 concerns near term bullish bias

1-3 Week View – As 1.3650 supports 1.45 becomes the next upside objective, only a close back below 1.34 would jeopardise the bullish advance.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – As 108.44 acts as resistance 103.22 is the next downside objective, near term resistance is sited at 105.50

1-3 Week View – The close below 108 negates the broader bullish theme and opens the psychological 100 magnet as the next downside objective, only a close above 108.50 stabilises the pair, opening 112.50
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – Breach of 131 sets a top to target 128.25 as 131 acts as resistance. A close over 132.30 stabilises the pair opening a retest of 135

1-3 Week View – The closing breach of 131 concerns the bullish consolidation bias opening a test of 128.50 while this area supports there is a window to retest and breach cycle highs above 137
Retail Sentiment: Neutral
Trading Take-away: Neutral

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