New York Forex Report: Markets Digest Major Moves – Key US Data Next

New York Forex Report: Markets Digest Major Moves – Key US Data Next

New York Forex Report: Following the broadly muted affair which was the FOMC yesterday, with the Fed striking a tone of cautious optimism whilst keeping their cards close to their chest, we then had fireworks overnight as the BOJ surprised traders by refraining from any further easing, a move which saw the Japanese Yen explode higher. As expected, trading has been fairly muted over the European morning today as traders digest this latest volatility and await the release of key US data later today with both US GDP and PCE on deck. PCE is a closely watched gauge of inflation for the Fed and is a key focal point for markets.

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

Fundamental: EUR gained over the European morning as USD remains soft following yesterday’s FOMC meeting. German Unemployment rate remained in line over April., German CPI up next at 1300 GMT1

Technical: 1.1220 is the pivotal support zone ahead 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: Long

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

Fundamental: Sterling remains well bid today following yesterday’s better-than-expected GDP print. Price is also tracking the moves in risk assets which rallied in the wake of the FOMC meeting yesterday.

Technical: While 1.4440/60 supports bulls target a broader symmetry swing objective at 1.4670. Failure at 1.44 opens a near term base test at 1.4240 next.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: BOJ stands pat, and USDJPY reprices itself lower by three big figures in a matter of seconds. The pair has dropped to a low of 108.75 briefly before settling just above 109 as we await the Kuroda press conference. 109.80 was the first point of liquidity in the gap, and should be the pair’s first resistance level, after which 110.

Technical: The violent breach of 110 support suggests false upside break and opens a move to retest year to date lows, en-route to the weekly downside objectives of 106.50/105.50. Only over 111.80 eases immediate downside pressure
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: European Central Bank President Mario Draghi commented in an interview that the euro region countries would be well advised to take advantage of low interest rates to implement reforms but would be undemocratic if ECB dictates such as policy. He added that ECB is doing everything in order to restore inflation.

Technical: Bears now target weekly symmetry objective at 120.60. Only a close over 126.80 eases immediate downside pressure.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: Australian dollar suffered a massive sell-off yesterday after an inflation report fell way short of expectations. Headline CPI for Q1 only managed to rise 1.6% YoY, way below RBA’s target band of 2-3%. The disappointing data has fueled speculations of a rate cut by RBA in May with a fifty-fifty chance. AUDUSD further dropped to an intraday-low of 0.7545 after the somewhat hawkish Fed commentary.

Technical: While .7550 supports expect a grind higher to retest.7830 highs. A failure at .7550 opens pivotal .7470/50 support.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: CAD continued to post gains against the USD and was up 0.1.% in response to the rise in oil prices to reach fresh high at levels not seen since early July 2015. Oil prices were up 3% due to the soft USD overnight, with Brent future reaching year-high of $47.75. BoC Governor Poloz stated that it would take a ”shock of some significance” for the BoC to consider more rate relief, while the fiscal stimulus will more than offset the renewed downward pressure on the economy.

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