New York Forex Report: EURUSD Testing Last Weeks Lows

New York Forex Report: EURUSD Testing Last Weeks Lows

New York Forex Report: A busy week ahead from a data and event perspective, with the week culminating in the latest US employment figures. Ahead of that the week is full of the latest PMI statistics, which started today across Europe and the UK with manufacturing PMIs. In the UK the weaker than expected PMI data has had limited impact on GBP, which is holding near range highs post the triggering of Article 50 last week. Services PMIs will be far more important later in the week. While the European data was more in focus and should have had more impact on the EUR and European rates, post the seemingly flip flop messages from the ECB in regards to rates, more attention will be on the release of the ECB minutes on Thursday. The EUR is on the back foot, within its ranges, at the moment, the inline print today, the highest levels since 2011 failed to prompt even a mild rebound.The US ISM manufacturing report completes the run today with some economists looking for a pullback to 57.0 in March, a little lower than consensus, from 57.7, but again this would still show a solid pace of growth.

USD Data flow out of the US Friday remained largely positive even though personal income and personal spending increased at a slower pace. Core PCE climbed to 1.8% YoY in February, nudging closer to the Fed’s 2.0% target and marked its highest since July 2014. A final print of the University of Michigan consumer sentiment index came in slightly higher in March (96.9 vs 96.3) as Trump’s rhetorics continued to buoy equities and the broad economy. Separately, Chicago purchasing manager index climbed to 57.7 in March (February: 57.4) ticking up to its highest level in more than two years. The Dollar Index rallied in US afternoon to narrow accumulated losses but nonetheless closed 0.06% lower at 100.41, weighed down by firmer GBP, JPY and CAD. CFTC IMM CTA data shows Speculators cut net USD longs in latest week, EUR net shorts lowest since May 2014, 7.9k contracts, JPY net shorts 53.1k, GBP 104k.

EUR In March, Eurozone’s consumer inflation softened to 1.50% YoY after rising at its quickest pace in two years at 2.00% YoY in February. The softer reading signalled that it might be too soon to unwind the ECB’s stimulus program. Core inflation softened to 0.70% YoY in March (February: +0.90% YoY).

GBP Britain’s economy expanded at its quickest pace in a year in 4Q (0.70% QoQ vs 0.50% QoQ), according to the final report from the Office of National Statistics. Despite pullback in household spending (0.40% QoQ vs 0.50% QoQ), a weaker Sterling had revived exports growth in 4Q (+1.40% QoQ vs -0.70% QoQ). Ahead of Brexit’s negotiation, data was showing deceleration in economic momentum in the first quarter of 2017. An index tracking the services sector climbed 0.60% in the three months through January after growing 0.80% the three months through December. In addition, Gfk consumer confidence index remained in negative territory (March: -6 vs February: -6). .

JPY Japanese data released this morning was quite upbeat as economic indicators showed that sentiments in the manufacturing (1Q: 11 vs 4Q: 8) and non manufacturing (1Q: 16 vs 4Q: 16) sectors remained at optimistic level as global growth prospect brightens. Outlook somewhat offset a softer print of the manufacturing PMI which ticked down to 52.4 in March (February: 53.3), the lowest in three months.

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

Technical: 1-3 Day View – 1-3 Day View – The breach of 1.07 support resets a downside bias with 1.0570 symmetry swing support the immediate downside objective, near term resistance is sited at 1.0738, over 1.0860 opens 1.0969 equidistant swing objective.

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 – 1.2570 upside objective achieved potential for profit taking pullback to test support sited at 1.24 as this area supports expect a test of triangle resistance sited at 1.2640 only below 1.2370 concerns near term bullish bias.

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: Bearish
Trading Take-away: Long

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

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: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Bears target a test of 118.22 as the next downside objective ahead of pivotal symmetry swing support sited at 117.69. 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

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