New York Forex Report: Muted Markets Ahead of FOMC Minutes

New York Forex Report: Muted Markets Ahead of FOMC Minutes

New York Forex Report: Markets are quiet and most of the G10 currencies are consolidating following Tuesday’s apparent stabilization hinting to a moderation in the broader tone of risk aversion. Global equity indices are showing modest gains and U.S. equity futures are steady. EUR is quiet, consolidating for third consecutive session with a remarkably tight range in the upper 1.06 area. GBP is strong, up 0.3% and outperforming all of the G10 currencies, its gain driven by the release of stronger than expected services and composite PMI’s. The upside surprise should help to mitigate some of the recent concerns that had accompanied the broad, downward turn in PMI’s from their December peaks. JPY is quiet, trading flat from Tuesday’s close. The broader tone remains dominant and the moderation in risk aversion has delivered some modest weakness in JPY over the past 24 hours.

USD traders anticipate more clues on unwinding the $4.5 trillion balance sheet during the March meeting minutes which New York Fed Dudley said that will “substitute for short-term rate hikes”. Commerce Department said on Tuesday that trade deficits slipped 9.60% to $43.6billion as exports rose to the highest level in more than two years. In tandem with decline in core capital goods orders, factory orders growth softened to +1.00% MoM in February (January: +1.50% MoM).

EUR traded marginally firmer overnight. Euro zone retail sales were stronger than expected in February coming in at (0.7% MoM, 1.8% YoY vs 0.5% and 1% expected). French Presidential elections are once again fresh on the mind for traders although the second presidential debate between French candidates (11 other candidates) did little to move the need on polling.

GBP UK’s Markit/ CIPS construction PMI edged down from 52.5 in February to 52.2 in March. Even with the softer reading, expansion in the building industry remained at healthy pace

JPY Tankan survey suggests there could be more strength in store for JPY. Core yields among the majors likely to be strongest driver otherwise, where limited growth on wages should keep yields under control.

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 – Pivotal test of 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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