New York Forex Report: Fed Acknowledge Global Risks In Cautious Outlook

New York Forex Report: Yesterday the FED held rates unchanged in the range of 0.25-0.50% as expected but the accompanying press statement highlighted prevailing downside risks this year, pushing back expectation of a hike in March. The central bank will “closely monitor global economic and financial developments” and reiterated that “economic conditions will evolve in a manner that will warrant only gradual increases in Fed funds rate”. USD has traded weaker following the FOMC decision with markets increasingly sceptical about the four projected rate-increases this year. Attention now shifts to the BOJ meeting ahead with some players highlighting an increased risk that the BOJ will announce further action.

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

Fundamental: EUR traded higher over the European morning driven by USD weakness ad European equity weakness alike. German CPI and US Durable goods are the key data over the US session today with German CPI expected to improve.

Technical: Trading mid to upper range, a sustained breach of 1.08 bids opens 1.07 range lows. A breach of 1.0990 trend resistance opens a broader 1.1240 symmetry corrective objective.

Interbank Flows: Bids 1.08 stops below. Offers 1.0950 Stops above.
Retail Sentiment: Bearish
Trading Take-away: Neutral

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

Fundamental: Sterling was driven higher over the European morning as Preliminary Q4 GDP Came in as expected at 0.5%, allaying fears that growth might have slowed further in the end of last year.

Technical: A breach of 1.42 opens a retest of last weeks seven year lows. Over 1.44 eases immediate downside pressure and sets up a broader correction.

Interbank Flows: Bids 1.42 below. Offers 1.44 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: USDJPY upside is being tempered by US & Chinese equity losses and lower US treasury yields. Flows stemmed by upcoming BOJ meeting which, although not expected to see further BOJ action, runs the risk of seeing JPY downside.

Technical: While 117.90 caps downside attempts expect a retest of 119 offers. Only above 119.30 eases immediate downside pressure. A breach of 117.40 resets the bearish tone.

Interbank Flows: Bids 117.50 stops below. Offers 119 stops above
Retail Sentiment: Bullish
Trading Take-away: Long

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

Fundamental: Japanese Retail trade unexpectedly fell in December after dropping sharply in November, adding to concerns about the state of Japan’s economy and what the BoJ are doing to avoid another recession. All eyes on the upcoming CPI print followed by the BOJ monetary policy statement.

Technical: A close over 129.50 eases immediate bearish tone bulls target 131 next while 127.50 supports, a breach of 127.30 opens a retest of year to date lows.

Interbank Flows: Bids 127.50 stops below. Offers 129.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: A rebound in Oil prices over the European morning saw AUD trading higher, benefiting also from USD weakness in the wake of a Dvsh Fed yesterday. Into the US crossover upside was tempered however as Oil started to give back some its gains on the session.

Technical: While .6930/50 caps intraday downside expect a test .7050. Only a breach of .7150 eases immediate downside pressure.

Interbank Flows: Bids .6900 stops below. Offers .7100 stops above
Retail Sentiment: Neutral
Trading Take-away: Sidelines

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

Fundamental: USDCAD remained range-bound over the European morning with USD weakness and better Oil prices keeping pressure on the downside.

Technical: While 1.4310/30 caps upside reactions expect a broader corrective phase to test 1.40 support. Only above 1.44 eases immediate downside pressure and opens a retest of 2016 highs.

Interbank Flows: Bids 1.4050 stops below. Offers 1.4350 stops above
Retail Sentiment: Bullish
Trading Take-away: Short