New York Forex Report: USD Strong After Lift-Off

New York Forex Report: USD Strong After Lift-Off

In line with expectation, the Fed increased fed fund target range from 0.00 – 0.25% to 0.25 – 0.50% and signal that the following pace of increase will be gradual. Based on the median estimate, there may be four more quarter point increases to 1.375% by the end of next year.  US economic data came in mixed. Housing market data remained robust but IPI and manufacturing PMI continue to point to modest recovery in factories output growth. Separately in the UK, slower increase in wage growth leave rooms for BOE to maintain accommodative policy for a longer period of time. USD remains firm over the European session today as markets digest the new conditions with Equity markets firm also as lift-off is taken as a positive sign for the US economy.

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

Fundamental: EURUSD was weaker over early European trading as German IFO data sets all printed below expectations, underpinning USD strength in the wake of lift-off.

Technical: While 1.09 caps intraday upside corrections expect a grind lower to retest last weeks high and onwards towards the pivotal 1.o8 support. A failure at 1.08 opens a retest of 1.0725 next.

Interbank Flows: Bids 1.08 stops below. Offers 1.0950 Stops above.
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: GBP fell during over the European morning also as, yesterday poor wage growth data weighs on UK rate expectations. Retail Sales data at least was positive today beating expectations of 2.3% to print 3.9% YoY

Technical:  While 1.5050 caps intraday upside expect a drift lower to test bids at 1.4890, a  breach of 1.5050 opens 1.5120 again.

Interbank Flows: Bids 1.49 stops below. Offers 1.51 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: The USD edged up 0.2 percent to 122.30 JPY after the rate hike decision. Afterward, JPY was further weakened to 122.45 to start its Thursday session due to the improved risk appetite. USDJPY rose above 122.30 handle and it may again re-enter its previous trading range 122.30 to 123.75 if USD remains bullish. Markets are waiting for BOJ meeting which will be held tomorrow.

Technical: As expected a retest of 122.50 finds offers on the first test. While 121.60caps intraday downside attempts expect a sustained break of 122.50

Interbank Flows: Bids 121.50 stops below. Offers 122.70 stops above
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental:  The range in focus continues to be  resistance into 134.15 on the topside  and support into the 131.00 region where we based early last week. Post FOMC the cross has been slightly pressured due to negative cross flows from the EUR trade. Market now waits for BOJ on Friday, from which the market is expecting no monetary policy changes.

Technical:  While 132.50 caps intraday downside reactions, expect a grind higher to test upside symmetry objective at 134.86, a failure at 132 opens a test of pivotal 131 next.

Interbank Flows: Bids 132 stops below. Offers 133.50 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Fundamental: AUDUSD remains resilient in the face of US lift-off with an accompanying rebound in risk-sentiment supporting the near term outlook.

Technical: While .7150 supports intraday downside expect a test of .7230/50 ahead of .7320, while this area caps upside attempts pressure remains to the downside

Interbank Flows: Bids .7150 stops below. Offers .7250 stops above
Retail Sentiment: Neutral to bearish
Trading Take-away: Sidelines

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

Fundamental: The Canadian Dollar weakened yet further against the USD as clear policy divergence, accompanied by weaker Oil prices, take USDCAD higher.

Technical: Bulls have the ball while 1.3450 supports intraday downside expect a grind higher to test stops above 1.3840 while 1.3730 caps intraday downside. A close below 1.3389 would ease the near term bullish bias.

Interbank Flows: Bids 1.3450 stops below. Offers 1.3780 stops above
Retail Sentiment: Bearish
Trading Take-away: Sidelines

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