London Forex Report: Kuwait Strike Keeps Oil Bid

London Forex Report: Kuwait Strike Keeps Oil Bid

London Forex Report: Markets were quick to return to risk-on mode as evident in continued rally in commodity and equities. Brent crude regained its $44/ barrel footing as an oil strike in Kuwait offset disappointment from OPEC’s meeting in Doha which yielded no freeze in production increase.The more upbeat market sentiments re-emerged despite downbeat data flow. US housing starts fell more than expected and forward looking building permits also staged a surprise contraction to a one-year low. This, coupled with weaknesses seen in recent consumer and business indicators, suggests overall growth will moderate further in Q1. USD weakened as markets continued to climb amid the rebound in oil. The USD Index fell 0.55% to 93.97 after sliding at the start of European trade before finding a bottom through the US session.

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

Fundamental: EUR extended its gain against USD yesterday due to a satisfying German ZEW Survey of Economic Sentiment. EURUSD touched a high of 1.1385 at the start of US session. Another reason accounting for the gain of the Euro was the relief of Brexit concerns due the latest polls. The upside of Euro is limited ahead of ECB meeting this Thursday. However, markets doubt what measures the ECB can implement to weaken the Euro.

Technical: While 1.13 supports downside reactions expect another test of offers at 1,1465. A failure at 1.13 opens a retest of bids at 1.1220.

Interbank Flows: Bids 1.13 stops below. Offers 1.14 stops above
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: GBP jumped above 1.4400 for the first time this month as nerves about Brexit were cooled down amid two polls showing more British support to stay in EU. Carney, the chairman of BoE said a vote for Brexit on 23 June will be the main domestic risk to Britain’s financial stability. He also said risks related to Brexit include pressures on UK’s high current account deficit, property markets, liquidity in financial markets and a potential impact on the rest of the EU.

Technical: While 1.43 supports downside reactions expect test of offers over 1.4450. Failure at 1.43 opens a near term base test at 1.4240 next.

Interbank Flows: Bids 1.43 stops below. Offers 1.4450 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: USD was back above 109.00 levels against the safe-haven JPY, pulling away from Monday’s trough of 107.75, as risk sentiment improved

Technical: The downside ratchet now targets 105.50 as the next major downside objective.Trend resistance is sited at symmetry and structure confluence at 110.70 which should attract fresh selling for renewed weakness.

Interbank Flows: Bids 107.50 offers below. Offers 110.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: BoJ Governor Kuroda reiterated that the economic condition in Japan has continued its moderate recovery trend and BoJ will not hesitate to add stimulus as long as it is necessary for maintaining price target in stable manner.

Technical: Bears now target weekly symmetry objective at 120.60, resistance is sited at 124.50. Only a close over 126.80 eases immediate downside pressure.

Interbank Flows: Bids 120.50 stops below. Offers 124.50 stops above.

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: AUD climbed to a 10-month peak yesterday after a reversal higher in oil prices boosted risk appetite. The AUDUSD ascended to 0.7826, its highest since June and got closer to the May 2015 peak of 0.8162. In minutes of 5 April policy meeting released yesterday, the RBA cautioned that a rising Aussie could tilt the economy off balance and it also reiterated that low inflation would provide scope to ease further if needed

Technical: .7770 upside objective achieved. While .7500 supports the advance bulls target .7880 as the next upside objective

Interbank Flows: Bids .7500 stops below. Offers .7800 stops above
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: CAD surged yesterday to a nine-month high against the USD, with the rising in oil prices. Governor Stephen Poloz did not update the economic outlook in response to questions at a parliamentary committee yesterday. Last week, the central bank cautioned the country’s improving economy faced downside risks, including a stronger currency exports that could drag on non-commodity.

Technical: While prior support at 1.2740/60 acts as resistance expect a test of bids at 1.2560 as the next downside objective.

Interbank Flows: Bids 1.26 stops below. Offers 1.28 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral

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