New York Forex Report: Trump Xi Meeting Begins

New York Forex Report: Trump Xi Meeting Begins

New York Forex Report: Markets are showing signs of stabilization following Wednesday’s FOMC minutes with all eyes on the two day Trump-Xi summit and the potential for headline risk into the weekend. Fed hike expectations are firming, with markets pricing in a nearly 60% probability of a June hike. The most recent speech from ECB President Draghi has delivered a forceful defence of the current policy stance, affirming the existing forward guidance in an attempt to push back on any doubts regarding the deposit rate and its near term path. GBP is consolidating in a tight range around 1.2480. Domestic developments have been limited, with near-term event risk centred on Friday’s industrial production data and BoE Gov. Carney’s speech. JPY is quiet, consolidating at the upper end of its multi-month range just below last week’s 2017 high. The broader tone remains dominant, with notable JPY strength observed in the immediate aftermath of Wednesday’s FOMC minutes release.

USD Minutes of the March FOMC meeting confirmed that the Fed is putting plans for balance sheet reduction on the table. As policy makers voted 9-1 to raise interest rate in last month’s meeting, the minutes also showed the FOMC committee broadly discussed whether to taper its $4.5 trillion balance sheet or to stop reinvestment at once. The Fed agreed that any change in balance sheet policy will be dependable on economic and financial conditions and that it “should be conducted in a passive and predictable manner”. Path of policy tightening will be gradual “to promote the Committee’s objectives of maximum employment and 2.00% inflation”. ADP job report surprised on the upside but services readings disappointed with both the ISM and PMI prints sliding lower in the US.

EUR Eurozone’s Markit services PMI climbed to a seventy-month high of 56.0 in March, ticking up from 55.5 in February. Ireland, France and Germany registered quicker growth last month as services providers accumulated the sharpest backlog of work for 70 months.

GBP UK’s services PMI surprised on the upside and rose to a threemonth high of 55.0 in March (February: 53.3) even as other economic data started to point to softening growth as the country kicked start its Brexit negotiation with the EU. Manufacturing PMI and construction PMI were softer last month, reiterating downside risks stemming from Brexit talks.

JPY Japan’s Nikkei services PMI surged to 52.9 in March (February: 51.3) as economic prospect brightened. With business optimism the highest in almost a year, the index climbed to the highest level in nineteen months as demand and new businesses picked up, allowing services providers to charge a higher price to customers

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 symmetry swing support sited at 117.69 under pressure a failure here open trend line support at 116.57. 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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