New York Forex Report: Post Election Consolidation Continues

New York Forex Report: Post Election Consolidation Continues

New York Forex Report: A day of low level data releases will leaves the FX market in a ‘hangover’ consolidation mode after the volatile “risk-on” euphoric start to the week on the back of the French election results. While on French politics, an interesting move yesterday by Le Pen to temporarily stand-down as NF party leader to focus on the presidency campaign and stand as a “free” agent. In terms of the data, French business and manufacturing confidence showed resilience ahead of the French elections. The ECB’s quarterly Bank Lending Survey may generate interest ahead of Thursday’s policy announcement. The previous survey showed a moderation in the percentage net balances for expected loan demand, particularly among firms, and policymakers will be watching to see if this reverses. In the UK, limited attention on the public finances figures printing 4.365bln vs previous -0.656bln revised. 1.500bln expected, with the first estimate of Q1 GDP on Friday far more interesting. US new home sales and the Conference Board’s consumer confidence index are due in the New York session. Confidence surged last month to the highest level since 2000, our economists look for a pullback to around 123.5 from 125.6.

USD On the macro front, US Chicago Fed National Index came in below estimates with reading of 0.08 in Mar versus market expected level of 0.50 and a sharp drop from 0.27 in Feb. Manufacturing activity in the Dallas Fed district expanded at a softer pace in Apr, registering a reading of 16.8 compared to 16.9 in Mar and grossly missing an expected acceleration to 17.5. The Dollar Index gaped lower was mostly sideways and closed 0.89% weaker at 99.09.

EUR In Germany, the IFO institute said that business morale has risen in the largest euro economy. Its index jumped to 112.9 in April from 112.4 in March. This was the highest reading since July 2011. France will head into a second round presidential elections on 7 May with candidates Emmanuel Macron and Marine Le Pen. Markets staged a relief rally amid the passing of this risk event; europhile Macron led the polls as markets reacted positively to diminishing prospects of potentially destabilising events should two euroskeptic leaders prevail.

GBP In the UK, factory orders appear to be slowing after peaking through Feb-Mar period. CBI gauge for balance of total orders slipped to 4 in April, sliding from 8 previously and overshot the expected decline to 6. In the latest polls, British Prime Minister Theresa May has a lead of more than 20% over the Labour Party.

JPY Japan leading CI index expanded with a reading of 104.8 versus prior level of 104.4 thanks to improved new manufacturing orders, gained 6.3% versus previous contraction of -10.7% in February.

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

Technical: 1-3 Day View – 1.0860 achieved, as 1.0780 supports corrections expect a grind higher to test 1.0982 as the next upside objective. Only below 1.0680 resets focus on downside objectives

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Testing 1.2880 equidistant swing resistance as 1.2770/50 supports bulls will focus on a test of psychological 1.30 magnet , only below 1.2560 concerns near term bullish bias.

1-3 Week View – While below 1.2880 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2880 opens 1.30 as the next upside objective ahead of symmetry swing objective sited at 1.3238
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Near term resistance sited at 109.58 removed, price testing 110.50 as 1.0940 supports potential to test 111.75 pivot, only over 112 stems selling pressure

1-3 Week View – as 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – Near term support sited at 117.80 as price prepares to test pivotal 120.50 a close over this level arrests near term selling pressure, opening a move to test 121.20/40

1-3 Week View – The weekly close below symmetry swing support sited at 117.69 sets a bearish tone with 113.70 the medium term downside objective , a weekly close above 118.50 would arrest the immediate downside risk, resetting focus on pivotal 124.40.
Retail Sentiment: Bearish
Trading Take-away: Long

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