London Forex Report: Oil Slide Stalls Sentiments

London Forex Report: Oil Slide Stalls Sentiments

London Forex Report: Risk sentiments stalled as the recent rally in oil prices underwent a consolidation and economic data was downbeat overall. Traders were also cautious ahead of ECB meeting tomorrow where a cut in the deposit rates and additional stimulus are widely expected. China’s exports extended its decline in Feb, tumbling 25.4% YoY to USD 126.14 billion. The worst contraction since May 2009 was driven by steep declines in shipment to major exports destinations. Imports print was equally disappointing, sliding 13.8% YoY last month. The underlying trend suggests that domestic demand is unlikely to pick up anytime soon. USD jumped after US mid-day to reverse all early losses and closed higher, the USD Index was lifted by defensive demand amid tumbling oil prices and equities, climbing at the start of US mid-day to gain 0.13% to 97.20.

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

Fundamental: Euro Zone Q4 GDP growth rose to 1.6 percent year over year, beating the forecasts of 1.5 percent. However, Euro did not respond to the data as the whole markets await the ECB meeting due this Thursday. China trade data raised the concerns of global economy outlook, some trader’s brought back Euro’s to square their previous carry trades.

Technical: Only a close over 1.1080/1.11 eases immediate downside pressure. Intraday support is sited at 1.0955/35 while this survives expect a further grind higher to test pivotal resistance at 1.11. Failure at 1.09 opens retest of bids towards 1,08

Interbank Flows: Bids 1.0950 stops below. Offers 1.11 stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: GBP dropped slightly against USD on Tuesday, the pair last traded just below 1.4200 handle. Carney, the Bank of England Governor, warned on Brexit risks, saying that a vote of leaving European Union could harm the UK’s economy and prompt some banks to move away from London. His speech is the strongest intervention so far about Britain’s EU referendum. Another BoE member Weale said rates still likely to rise while BoE has scope to stimulate the economy if needed

Technical: While 1.4130 acts as intraday support expect a continued grind higher with the next corrective objective at 1.4424. A failure at 1.41 opens base support test at 1.4030

Interbank Flows: Bids 1.41 stops below. Offers 1.4250 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: JPY back in favor as worse trade data from China hit risk appetite. USDJPY dropped from 113.51 to an intraday low of 112.41, having slid about one point one percent. The JPY spot-week ATM volatility rose to 15.84, the highest since mid-February

Technical: Bulls will be looking for 112.50/30 to continues to support expect a further leg of corrective gains, to retest the broken neckline support at 115/116. Failure at 112.50 open 11 again.

Interbank Flows: Bids 112 offers below. Offers 113.10 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: The Eurozone sustained a 0.3% QOQ growth in 4Q, as slower growth in household consumption was offset by quicker government spending and fixed investment. Growth will likely remain modest in Japan according to the slew of Japanese data. Surveys by Eco Watchers on current and future economic conditions indicated that activities remained below the expansion threshold.

Technical: While 124.20 provides intraday resistance bears look to test bids back at 123 ahead of the pivotal psychological 120 en route to a weekly downside objective at 118/117, only a close over 125.10 eases bearish bias.

Interbank Flows: Bids 123 stops below. Offers 124.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: AUD pulled away from multi-month highs to 0.7407 due to disappointing China trade figures and lower industrial metal prices. The Aussie drifted lower with a relatively soft data today. Australia’s home loans was -3.9 percent of January, downward revised from previous 2.7 percent.

Technical: While .7330/10 supports intraday expect further upside pressure targeting .7530 next. Only a failure at.7150 pivotal support threatens bullish bias.

Interbank Flows: Bids .7350 stops below. Offers .7500 stops above
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: USDCAD advanced to four day highs as oil prices plummeted overnight in a risk-off mood, with US stock markets down. The Bank of Canada will hold its regular monetary policy meeting today. Although rate cuts is unlikely, but the central bank might try to verbally push USDCAD back towards 1.40 after an almost 10 percent surge in the Canadian against the US dollar since its last meeting, as a continuation of currency appreciation will hurt the country’s exports.

Technical: While 1.3460/80 contains the recovery, downside pressure remains the driver with bears focusing on a AB=CD ultimate downside objective at 1.2966, the next interim support level to watch is is 1.3176. Only a close over 1.3650 negates the bearish bias.

Interbank Flows: Bids 1.3250 stops below. Offers 1.3500 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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