New York Forex Report: Article 50 Announced

New York Forex Report: Article 50 Announced

New York Forex Report: The USD is starting the week off on the defensive. Markets, from spot FX through commodities bonds and rate futures, were all leaning heavily of the Fed nudging the rate dial a little more to the hawkish end of the scale last week and we are liable to continue seeing the positioning overhang hamper the USD for some time to come. Little, however, has changed from a broader perspective; the Fed will tighten steadily, other central banks remain far from tightening and perhaps further from even thinking about adjusting policy settings than last week’s ECB and BoE related comments might have suggested. The US economy is performing relatively well, optimism and confidence readings are high and key rate spreads remain at very USD supportive levels. The GBP remains well-supported following the hawkish tilt to the BoE minutes last week and the announcement of the immenent triggering of Article 50 on the 29th March. Headwinds remain,however, with traders unable to ignore the risks around the impending Brexit decision as well as mounting domestic political risks (renewed calls for a Scottish referendum on independence, speculation that PM May might go for a snap election).

FX Majors: EUR capped a third straight weekly gain after the Fed stuck to its interest rate hike path and amid improving sentiment following the result of the Dutch elections. This week, the Euro area’s current account and consumer confidence readings, along with Germany’s manufacturing figures, are likely to be key. GBP · Last week, a softer USD tone and better than expected unemployment readings likely supported the GBP. Moreover, the BoE kept its benchmark rate unchanged, though signalled a less dovish stance. This week, developments regarding ‘Brexit’ and the UK’s inflation and retail sales readings are likely to be key for the GBP. JPY Last week, the JPY gained some ground after the Fed disappointed expectations of a faster rate hike trajectory. Further the Bank of Japan kept its monetary policy unchanged. This week, the Bank of Japan’s meeting minutes, along with the country’s manufacturing and trade figures, are likely to be in focus

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

Technical: As 1.07 supports 1.0830 is the primary upside objective ahead of 1.0985 equidistant swing objective. A close back below 1.0620 would concern near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: The breach of 1.2330 stems selling pressure as 1.23 supports 1.2450 become the next upside objective only below 1.2240 concerns near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Failure below 113.80 concerns near term bullish bias as this level contains corrective moves, symmetry swing target at 112.20 becomes the downside objective.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 122.50 the primary upside objective achieved profit taking has developed. Only below 121 concerns near term bullish bias and opens a test of pivotal 120. As 121 survives on a closing basis expect a retest of 122.80
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD Last week, gold prices advanced after the Fed reiterated plans to gradually tighten its monetary policy, reducing speculation it may quicken the pace of rate hikes. This week, speeches by various Fed policymakers, including Chair Janet Yellen, could affect demand. OIL Last week, crude oil prices rose after the Energy Information Agency showed a decrease of 531,000 barrels in US crude oil stockpiles in the week ended 10 March. AUD Last week, higher iron ore prices and the Fed’s expectations of only gradual rate hikes could have lifted the AUD. This week, the RBA’s meeting minutes, along with the country’s house price index, will likely affect the AUD. CAD Last week CAD jumped to a two-week high against the greenback and enjoyed its best single-day performance in a year after the Fed’s less hawkish than expected guidance on Wednesday and following the first decline in U.S. crude oil inventories since the start of the year. A busy week ahead on the Canadian data front will bring closely watched gauges of retail sales and CPI to bookend the week

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

Technical: Pivotal .7740 test achieved near term support is sited at .7630 as this level supports downside reactions bulls look for a test of weekly symmetry resistance sited at .7870

Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Symmetry swing objective sited at 1.3480 achieved, bulls target 1.3598 . Only a close below 1.33 concerns the near term bullish bias and opens a move back to test the base break at 1.32
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: The close below 1215 invalidates bullish bias opening a retest of 1200 as 1225 caps upside corrections 1180 becomes the next downside objective, over 1233 suggests a broader correction to develop retesting 1241

Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Price is now testing primary trend line support from the February 2016 lows at 48.70 while this are supports there is an opportunity to retest range support at 51.00 as this level caps upside reactions bears target 45.20 as he next downside objective
Retail Sentiment: Bullish
Trading Take-away: Short

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