New York Forex Report: All Eyes On Yellen

New York Forex Report: All Eyes On Yellen

New York Forex Report: Markets appear in relatively upbeat mood ahead of the Fed. Broadly, a 25bp rise in the Fed funds target rate is widely factored in now and a rate hike in and of itself should not be a surprise for traders. However, the real risk in the policy decision is what the Fed says about the growth and inflation outlook and what it infers for the rate flight path going forward; three rate increases are more or less fully factored into the curve for 2017 at this point but markets are about 50bp shy of the median forecast reflected in the December FOMC dot plot for 2018 and nearly 100bp below the 2019 profile. Any additional rate increases assumed in the projections for the Fed funds target rate will force some re-pricing of shorter term rates and the USD. The biggest risk for the USD today as perhaps a “dovish hike” tightening with no change in the outlook. Aside from the Fed, the Dutch election is under way and we should see some exit polls after voting ends today.

FX Majors: EUR Eurozone’s industrial production expanded 0.90% MOM in January. The improvement was driven by higher output from Germany, Spain and Italy, and France, reversing drag from the1.20% MoM contraction in December. A second report showed that ZEW survey expectation surged to the highest reading in fifteen months (March: 25.6 vs February: 17.1) as asset purchase spurred domestic demand, leading to a pick up in domestic growth. GBP The UK Parliament’s approval of the ‘Brexit’ bill and plans by Scotland to hold another referendum on independence dragged on GBP yesterday,with short covering noted this morning. JPY Japanese government bond yields rose ahead of the BoJ’s monetary policy decision on Thursday. The 10-year yield climbed 1bp

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

Technical: The closing breach of 1.0650 arrests near term bearish bias and resets attention on upside objectives, with 1.0830 the primary upside objective ahead of 1.0985 equidistant swing objective. A close back below 1.06 suggest continuation of trade environment and a false upside break
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Only over 1.2330 stems selling pressure near term resistance is sited at 1.2250 as this level contains upside reactions bears target pivotal 1.1985
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: The close over 114.50 reasserts upside targets and 114.50 now becomes near term support as price primarily targets stops over 115.50. Failure below 113.80 concerns near term bullish bias.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 122.50 as the primary upside objective achieved profit taking has developed. Only below 121 concerns near term bullish bias, as 122 supports near term expect a test of of 123.30 as the next upside objective

Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD prices steadied, weighed down by expectations for a rise in US interest rates that boosted the dollar but supported at the margins by political risks in Europe. OIL fell 2% to hit a fresh three-month low after OPEC said oil inventories had continued to rise and Saudi Arabia surprisingly self-reported a jump in production, despite the start of a global deal to cut supply. AUD Australia Westpac consumer confidence index climbed to a four-month high reading of 99.7 in March (February: 99.6).The survey showed that longer term economic outlook improved, offsetting worries over family finances. CAD As there is little in terms of Canadian domestic data this week, CAD will look towards the release of CPI, retail sales, oil prices, and the FOMC decision for direction.

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

Technical: .7500 downside objective achieved as .7570 caps upside corrections .7450 becomes the next downside objective, only over .7650 resets attention on upside targets
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing objective sited at 1.3480 achieved, as 1.3390 supports bulls target 1.3598 . Only a close below 1.33 concerns the near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

XAUUSD
Outlook: Short Term (1-3 Days): Bearish – 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
Retail Sentiment: Bullish
Trading Take-away: Short

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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