London Forex Report: Yellen Sees Neutral Policy Stance

London Forex Report: Yellen Sees Neutral Policy Stance

London Forex Report: USD Fed Chair Yellen’s speech overnight reaffirmed the Fed gradual rate normalization outlook, somewhat in line with Bullard’s less hawkish view that balance sheet reduction potentially beginning later this year could reduce the need to raise the official interest rate. According to Yellen, the Fed is on track to raise interest rate as gradual interest rate increases will set the path for moderate economic growth this year as raising rates rapidly “could conceivably cause a recession”. The central bank chair Janet Yellen also said that “The appropriate stance of policy is now closer to, let me call it neutral”. On top of the Fed, IMF Chief Christine Lagarde’s comment on a more upbeat global growth outlook this and next year also failed to infuse much positive vibes into the markets as the IMF Chief warned against inherent risks beyond the near term.

EUR Sentix investor confidence in the Eurozone climbed more than expected to 23.9 in April, its highest in a decade as investors continued to turn more optimistic over current situtations as well as outlook in the next six months. This should augur well with business investment and be supportive of overall growth in the region that could eventually pave the way for ECB to normalize its monetary policy.

GBP data-heavy week ahead of the Easter long weekend; CPI this morning, jobs and house price data all figure this week, along with a speaking engagement for Governor Carney Wednesday. A strong inflation report will further buoy the GBP, which seems to have been unaffected by the triggering of Article 50

JPY Eco Watcher surveys surprisingly turned softer in March, with the current situation reading pulled back from 48.6 to 57.4 and the outlook index from 50.6 to 48.1 in March, indicating a still soft macro environment in Japan. On a more positive note, current account surplus rose more than expected to a one-year

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

Technical: 1-3 Day View – 1.0570 symmetry swing support the immediate downside objective achieved, near term resistance is sited at 1.0639 as this contains corrections 1.05 should be tested next, over 1.07 opens 1.0860.

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Breach of 1.2370 concerns near term bullish bias as 1.2430 acts as resistance 1.23 becomes the next downside objective, only over 1.25 suggests return to range trade

1-3 Week View – While below 1.2864 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2660 will set up a move to test the weekly bearish line in the sand

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View 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 112. A daily close over 112 stems near term selling pressure.

1-3 Week View – as 110 weekly symmetry swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 which represents an equidistant swing from the cycle, negates the broader bullish theme.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 1-3 Day View – pivotal symmetry swing support sited at 117.69 under pressure a failure here open trend line support at 116.57. Only over 120.50 arrests near term selling pressure.

1-3 Week View – As symmetry swing support sited at 117.69 survives on a closing basis bulls will continue to target weekly symmetry swing resistance sited at 124.42, a weekly close above here would set a broader base for further upside.
Retail Sentiment: Bullish
Trading Take-away: Short

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