New York Forex Report: Oil Softens As Production-Cut Hopes Fade

New York Forex Report: Oil Softens As Production-Cut Hopes Fade

New York Forex Report: After a solid rebound higher yesterday, Oil prices have turned sharply lower over the early European session today driven by reports that the Saudi Arabian Oil Minister is supporting a freeze, not a reduction, in current output levels. These comments have been met with disappointment by investors hoping for a firm resolution to finally tackle the huge over-supply in Oil markets. Consequently, equity markets are moving sharply lower in the wake of these developments.

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

Fundamental: EUR was a little firmer over the European morning as a change in risk-appetite has stemmed the recent decline. Yesterday Mario Draghi said that the ECB “will be ready to act” in response to concerns on health of European banks, hinting that further monetary stimulus may be on the cards when the central bank meets next week.

Technical: While 1.1220/40 rejects intra-day upside reactions expect a test of pivotal support at 1.1050/30 as the next downside objective. A breach of 1.1260 opens 1.1350 offers.

Interbank Flows: Bids 1.1150 stops below. Offers 1.1250 stops above
Retail Sentiment: Bearish
Trading Take-away: Short

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

Fundamental: Initial strength in Sterling was sharply reversed on the release of the latest inflation data. MoM CPI was below expectations in January as was YoY Core inflation, whilst headline printed in-line with expectations. This data is a disappointing blow to those beginning to turn bullish GBP

Technical: While 1.4510/30 caps the upside expect a retest of bids towards 1.4350/30. A breach of 1.4550 opens a retest of February highs a 1.4660’s

Interbank Flows: Bids 1.4350 stops below. Offers 1.45 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: JPY strengthened over the European morning as risk sentiment soured in the wake of fresh Oil declines. JPY strength persists despite growing expectations or further BOJ easing.

Technical: While 113.40/20 supports downside rotations expect a grind higher to retest the broken neckline resistance at 115.80/116 where fresh selling interest should emerge

Interbank Flows: Bids 113.40 offers below. Offers 116 stops above
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: EURJPY weakened sharply over the European morning as resurgent safe-haven demand for the Japanese Yen weighed on price.

Technical: While 129 caps upside reactions expect a retest of year to date lows 125.77 a breach of this support opens a move down to 124 as the next downside objective. A close over 129.74 would ease immediate downside pressure and open a rotation higher yo test 132.30

Interbank Flows: Bids 126 stops below. Offers 128.50 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short

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

Fundamental: AUDUSD weakened over the European morning as fresh risk-off flows weighed on rate. Flows are light however and price remains near yesterday’s highs. Tone of RBA minutes this morning was somewhat neutral. While the central bank reiterated that “continued low inflation may provide scope for easier monetary policy”, “there continued to be evidence that low rates were supporting household consumption and dwelling investment”, suggesting that they are in no hurry to cut rate anytime soon

Technical: While AUD continues to trade above the pivotal .7100 expect a retest of offers above .7200 en-route to .7310. Another failure at .7100 would suggest further weakness to retest year to date lows at .6820’s

Interbank Flows: Bids .6950 stops below. Offers .7250 stops above
Retail Sentiment: Bearish
Trading Take-away: Neutral

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

Fundamental: USDCAD reacted sharply higher over early European trading as Oil price declines weigh on the Canadian Dollar.

Technical: While USDCAD trades sub 1.3830 downside pressure remains the driver with bears fully focused on a retest of 1.3630 bids ahead of 1.3530. A close over 1.3850 suggests a retest of 1.40 offers in broader range trade.

Interbank Flows: Bids 1.3650 stops below. Offers 1.40 stops above
Retail Sentiment: Bullish
Trading Take-away: Short