New York Forex Report: Markets Mute Following Friday’s big moves. US Data Eyed

New York Forex Report: The European morning saw a quiet start to the new trading month with fairly muted action as markets digest the major moves seen in the wake of the BOJ’S unexpected move to cut Japanese rates into negative territory. Weak Chinese manufacturing PMI data overnight is weighing on risk sentiment with concerns building further Chinese data to come this week. The latest data is the sixth consecutive month to see a contraction in Chinese factory activity, which contracted at its fastest pace in nearly three and a half years.

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

Fundamental: EUR grinded higher over the early European session as European equities sold off in the wake of weak China data and lower Oil prices. US PCE & ISM Manufacturing data are the key releases over today’s US session.

Technical: Trading mid to lower 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: Bullish
Trading Take-away: Neutral

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

Fundamental: Mixed domestic daya saw choppy trading in GBPUSD over the European morning as Net Consumer Credit (Dec) was lower than expected whilst mortgage approvals printed above expectations. All eyes are on the BOE this week with traders expecting further Dovishness.

Technical: Bias remains to the downside with primary resistance at 1.4250/80 and then 1.4380, a breach of 1.42 opens a retest of last weeks seven year lows. Over 1.4450 eases immediate downside pressure and sets up a broader correction.

Interbank Flows: Bids 1.42 below. Offers 1.4450 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: USDJPY rocketed two point four percent after the release of negative interest rate, reaching its highest since 18 December. The policy divergence between the Fed and BoJ has become more heightened since BoJ moved to negative interest rates, causing many to initiate long term bearish views on the JPY.

Technical: 121.66 is initial resistance an upside breach here opens a move to test 123.64 next, bulls have the ball while 120 supports intraday downside reactions.

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

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

Fundamental: he BOJ takes Japan into uncharted waters by surprisingly breaking down the lower bound in rates, and understandably, the JPY is broadly weaker as an effect. Market remains wary of the medium term implications of this move, but what is clear is BOJ remains in the middle of its easing cycle (rather than the end, as some BOJ watchers would have thought)

Technical: While 120.40 supports intraday downside reactions a close over 131.65 eases bearish pressure an opens a test of 134 next.

Interbank Flows: Bids 129 stops below. Offers 132 stops above
Retail Sentiment: Bearish
Trading Take-away: Neutral

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

Fundamental: Weak China data overnight sees AUD under modest pressure as we start the week. Main focus will be the RBA meeting on Tuesday and whilst rates are expected to remain unchanged, the RBA are expected to strike a Dovish tone given the recent detrioration in China and continued Oil price declines.

Technical: While .7000 caps intraday downside expect a test .7200. Only a closing breach of .7150 eases immediate downside pressure

Interbank Flows: Bids .7000 stops below. Offers .7150 stops above
Retail Sentiment: Neutral
Trading Take-away: Short

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

Fundamental: The recent correction higher in Oil prices, alongside the BOC suprising markets by keeping rates unchanged and delivering a rather nuetral outlook, has seen CAD correct sharply against the US Dollar in recent weeks. With Oil having stalled at the key $34.50 area resistance it is possible this correction is over, should price fail to break above that level.

Technical: While 1.4160 caps upside reactions expect a broader corrective phase to test AB=CD corrective swing target at 1.3750 support. Only above 1.4330 eases immediate downside pressure and opens a retest of 2016 highs.

Interbank Flows: Bids 1.3950 stops below. Offers 1.4150 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines