New York Forex Report: April FOMC In Focus

New York Forex Report: April FOMC In Focus

New York Forex Report: Markets mostly quiet and range-bound ahead o the FOMC later today. Yesterday the rebound in US durable goods orders brought little cheer as it was driven by higher demand for defense aircraft and not an increase in capital spending, confirming that weak business spending will continue to keep a lid on growth prospects ahead. Consumer data was also less robust as consumer confidence index softened more than expected to 94.2 in April. S&P CaseShiller house prices and Richmond Fed manufacturing index also turned in softer. The only bright spot was PMI services that showed an uptick to 52.1 in April. The generally subdued data is expected to keep the Fed on a cautious stance in the upcoming FOMC statement. USD extended its losses on risk aversion going into FOMC policy decision.

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

Fundamental: Pre-FOMC oscillation continues amidst lack of key EZ data drivers. EZ inflation comes into focus later in the week.

Technical: 1.1220 is the pivotal support zone ahead of this evening risk event while this area holds expect another test of offers towards 1.1400 a break higher here targets 1.1487 as the next upside objective. Failure at 1.1220 opens 1.1140.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: Sterling continues to appreciate fuelled by hopes that the Britain is set to stay in the EU as a result of the upcoming June referendum. Q1 GDP Printed above expectations adding further support for the currency.

Technical: While 1.43 supports bulls target a broader symmetry swing objective at 1.4684. Failure at 1.43 opens a near term base test at 1.4240 next.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: USD edged up to 111.47 against the JPY yesterday as markets believe that the BoJ could ease further, while the US central bank would keep the interest rate at the current level. Markets believe the monetary easing would likely focus on boosting purchases of stock trust fund this time and BoJ also can combine other steps like more government bond purchase or even another cut in interest rates.

Technical: While 110 now acts as supports expect a test of 112 offers, breach of 110 support suggests false upside break and opens a move to retest year to date lows.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: Japan’s GPIF, USD1.2tn ,national pension reserve fund – the largest pension fund in the world of its kind – doesn’t need to change its basic allocations at this time as the country’s government and central bank are still committed to lifting growth and inflation, the fund’s head has said in an interview with the WSJ.

Technical: Bears now target weekly symmetry objective at 120.60, resistance is sited at 126. Only a close over 126.80 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: Low inflation gives RBA a green light for a pre-election rate cut . If the Reserve Bank is inclined to cut interest rates but is hesitant because of the election campaign, it now has the perfect excuse. The most widely quoted measure of underlying inflation is running at an annual rate of just 1.3%, which is below the RBA’s target and well short of expectations

Technical: Failure at .7650 opens a move back to test .7470/90. .7700 now becomes intraday resistance
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: CAD strengthened against the USD as oil prices rose, but the loonie jammed to a tight range as traders looked ahead to a rate decision from the Federal Reserve. Weaker-than-expected US figures weighed on the US dollar and traders were betting that the Fed will strike a dovish tone in its policy statement.

Technical: While prior support at 1.2740/60 acts as resistance expect a test of bids at 1.2560 as the next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short