New York Forex Report: Euro Pauses Post CPI Pop

New York Forex Report: Euro Pauses Post CPI Pop

New York Forex Report: In the G10 FX space, the EUR is outperforming modestly on the session following the release of higher than expected Eurozone CPI data while the JPY is the main under-performer on the session as equity markets nudge modestly higher. The CAD remains soft, following heavy losses through the week which leave the USD at its highest level in more than a year amid rising US/Canada trade tensions

USD In the US, the advance trade in goods deficit widened to $64.8bn in March. Exports fell 1.7% MoM, but were still up 7.6% YoY. Imports fell 0.7% MoM but were up 10.0% y/y. Separately, US wholesale inventories unexpectedly edged lower in March, whilst retail inventories rose.

EUR The ECB left all benchmark interest rates on hold following the latest meeting with the main refi rate remaining at 0.0% and the deposit rate at -0.40%. According to the statement, the bank continues to expect that interest rates will be held at present levels or lower for an extended period of time and well past the horizon of net asset purchases. The ECB also made no changes to the quantitative easing programme which, according to current guidance, will continue at a rate of EUR60bn until the end of 2017. The statement reiterated that the bond-purchase programme would be extended beyond the end of 2017 if necessary. In his press conference, ECB President Draghi was generally more optimistic surrounding the outlook for growth and he stated that the risks to the outlook had moved closer to balance while the downside risks have diminished. He also expressed optimism surrounding a range of growth indicators and pointed to the strength of recent PMI reports.

GBP According to the UK’s CBI Distributive Trades Survey, retail sales growth accelerated in the year to April, with volumes rising faster than expected. The report showed a reading of 38, a massive beat on the 6 expected by economists and the 9 reported in the previous month.

JPY The Bank of Japan (BoJ) voted to keep interest rates at – 0.1%, where they have stood since the start of 2016. The decision was widely anticipated by markets, which expect the Japanese central bank to maintain its low-rate pledge for the foreseeable future.

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

Technical: 1-3 Day View – As 1.0850 supports expect a grind higher to test 1.0982 as the next upside objective. Only below 1.0820 concerns near term bullish bias.

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): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – As 1.1050 supports potential to test 111.75 pivot, a close over 112 resets focus on larger upside objectives

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: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Near term support sited at 120.35 as price prepares to test pivotal trend line resistance at 122.35 a close over this level opens 124.40.

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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