New York Forex Report: Slow Start EUR Underperformer

New York Forex Report: Slow Start EUR Underperformer

New York Forex Report: Little data and event risk week this week (with the exception of Presidential Tweets perhaps!), which leaves the markets in a confused state and probably set to remain in choppy ranges. While it seems the Fed wants to raise rates again, they are wary about what impact the Trump administration’s policies will have on the economy. Inflation is picking up pretty much everywhere, but that’s due to the catch-up effect of energy prices recovering last year. Core inflation is still somewhat subdued. While US headline non-farm payrolls did come out stronger than expected, wages disappointed. In Europe, while data has broadly continued to improve, election worries continue to overshadow. The EUR has been under pressure this morning but who will trust a poll anymore after last year? In the UK, the Bank of England raised their economic forecasts, but again here we are overshadowed by “Brexit” uncertainties. It’s difficult to see what the fundamental driver will be to push the USD and US yields out of their current ranges, despite a US administration focus on undervalued currencies versus the USD, recently naming Europe and Japan in this regard, alongside longer standing comments regarding the Chinese Renminbi.

FX Majors: EUR Eurozone’s services PMI was unchanged at 53.7 in January and retail sales extended its decline in December (-0.30% MOM) after a revised 0.60% MOM drop in November. GBP UK Markit/CIPS services PMI fell from 56.2 in December to 54.5 in January. JPY BOJ intervened in markets The Japanese Central Bank disappointed, and then surprised bond markets at the end of last week. The BOJ initially offered limited expansion of debt purchases and the market sold off, with 10 year JGB yields rising up to 0.15%. The BOJ responded by offering to buy unlimited amounts of 5-10 year debt with their bids at yields lower than the market rate. The 10 year yield promptly retreated to 0.1%.

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

Technical: Near term support sited at 1.0670 maintains bullish bias and sets 1.0873 as the next upside objective, only a close back below 1.0580 resets near term bearish bias.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: Equidistant swing objective at 1.2679 encourages profit taking ahead of 1.2772. Near term support sited at 1.2435 as this survives bullish momentum persists. A close below 1.24 opens 1.2236 symmetry swing support.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: 112 achieved profit taking pullback ensues, a breach here will open 110.70 symmetry swing support underpinned by 109.90 50% retracement of the move from August 2016 lows. Near term resistance is sited at 114.50 only over 116.20 reasserts upside targets.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Symmetry swing support at 120.40 defended sets sights on, 124.42 symmetry swing resistance. Near term resistance is sited at 122.76. A failure below 120.40 opens 118.70
Retail Sentiment: Neutral
Trading Take-away: Neutral

Commodities FX: GOLD erased earlier losses as the dollar came under pressure from a US payrolls report that flagged up weak wage growth last month, weakening the case for near-term interest rate hikes. OIL gave up much of their gains after jumping on Friday as the United States imposed sanctions on some Iranian individuals and entities, days after the White House put Tehran “on notice” over a ballistic missile test. AUD The Reserve Bank of Australia (RBA) rate decision is on Tuesday. At the last RBA policy meeting in December, the RBA hinted that it is done easing for now as it balances the pros and cons of easing. That said, the overall tone of this coming statement will be very important. In particular, markets will be looking at the policy bias and whether the RBA will leave open the possibility of cutting interest rates further. Within the statement, comments on the AUD will also be eyed. CAD totally reliant on the broader USD tone post-payrolls, flows and technical factors. Oil remains at the top end of its 2017 range as tensions over possible sanctions on Iran from the US have escalated in recent days.

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

Technical: The next upside objective is sited at .7750. Near term support is sited at symmetry swing level .7600 ahead of pivotal .7449
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1.3150 becomes resistance while this level contains upside reactions bears target a sustained breach of 1.30 targeting a move to 1.2820, over 1.32 opens a move back to test 1.3370.

Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: As 1206 supports intraday 1220 symmetry swing retest developing with the potential for a double top, a break below 1206 opens a move back to 1195. Over 1225 opens 1240.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Technical: Rejection from equality objective area at 55.30, a close below symmetry support at 50.68 confirms a medium term high and opens a retest of pivotal 49.00. Near term resistance is sited at 54.50.
Retail Sentiment: Bearish
Trading Take-away: Long

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