The dollar had a choppy session on Friday, remaining generally on the defensive, with the chance of more of the same in the coming week as concerns over the recent flow of soft US data weighs on the likelihood of a Fed rate hike any time soon. Worries about a Greek default will keep the Euro from posting any serious gains though, and on Friday this and new trading regulations in China led to a steep selloff in the equities markets, with further losses looking possible. This week is going to be busy, starting today with the market looking to digest the surprise, weekend, Chinese RRR cut. Later on we get the German PPI, the Bundesbank Monthly Report and Chicago Fed Activity. The NZ CPI will kick things off, and then later in the session the RBA Governor, Stevens will be speaking at a Goldman Sachs function in Washington.
EUR/USD: 1.0804
EurUsd was choppy once again on Friday but finished where it had spent much of the session, close to 1.0800, after a 1.0732/1.0848 range. The slightly stronger Core US CPI reading on Friday outweighed the softer headline number but there was nothing there to get the Fed excited and for the time being the data does not suggest any hurry for a rate hike.
Today is the last day for Greece to present its economic and fiscal reforms ahead of the Eurogroup meeting of finance ministers on Thursday/Friday. Recent comments by EU officials suggest that any imminent deal to unlock the last tranche of Greece’s bailout funds still seems unlikely and the IMF has all but ruled out allowing any delay beyond May 12 in repaying the €1bn of outstanding debt. There was little optimism coming from the weekend IMF Meeting in Washington that a deal will be agreed by then and analysts suggest that without the disbursement of official funds by early May, Greece will struggle to avoid a default so it looks like being a very intense week ahead on that front and will bring about some volatile price action.
The rest of the week sees a host of secondary data, but with some important numbers due from the US, focusing on the Housing data (Wed/Thur) and culminating in the Durable Goods Orders on Friday. From Europe, the focus will be on Greece and the Eurogroup Meeting, but the coming week also sees the release of the flash PMI’s, the ZEW and the IFO.
Technically, the momentum still looks positive, offering the chance of further gains towards Friday’s high of 1.0848 and beyond, towards the 8 April high at 1.0887 and then on the Fibo resistance at 1.0911 (76.4% of 1.1034/1.0461). Above here looks unlikely in the coming session, but further gains would see the Euro head on towards 1.0954 (7 Apr high) and then to the 1.1034 pivot, above which would put any thoughts of an immediate return to the downtrend on hold.
If the Euro were to fade here, which looks less likely right now, then bids would be seen at Friday’s low of 1.0733 ahead of the 200 HMA at 1.0695. Below this, the rising minor trend support is currently at 1.0670, a break of which is needed to see a more sustained move lower, but currently looks to be on hold. If the situation in Greece falls apart though, this area could be visited very quickly later in the week, so all up the trading conditions appear set to be rather difficult. Be nimble!
Economic data highlights will include:
M: German PPI, Bundesbank Monthly Report, Chicago Fed Activity
T: EU/German/EU ZEW Economic Sentiment Survey
W: G7, US House Price Index, Existing Home Sales
T: EU Provisional Consumer Confidence, German Consumer Confidence , EU Flash Composite/Services/Manufacturing PMI’s , US New Home Sales, Jobless Claims, Kansas Fed Activity.
F: Eurogroup Meeting, German IFO Business Climate/Expectations, US Durable Goods Orders.
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 118.80
US$Jpy had a choppy session on Friday, finishing lower after having traded a 119.22/118.56 range, and having now broken down to close below the base of the daily cloud support, looks to have further downside ahead of it.
Support levels to watch, below Friday’s 118.87 low, are now at the 26 March low (118.32), the Fibo support at 118.20 (61.8% of 115.85/122.02) and at 118.00, but below which there is not too much to provide support until 117.30 (76.4%).
Back above 119.00 and the 100 DMA (119.22), the topside will find sellers at 119.50 and at the daily Tenkan at 119.73 and then at the 200 HMA/daily Kijun at 119.85/90. 120.00 looks to be out of reach in the near term but further out, I still think the dollar will eventually head higher where additional gains would open up a move towards 120.50, 120.85 (both minor) and 121.00. As before, although unlikely to be seen yet, a topside break of 121.00 would open up the 20 March high at 121.20, the consolidation area at around 121.50 and the 10 March high at 122.02. If/when this level can be overcome, the way would open up for a run towards the 15 July 2007 high at 122.42, and in the longer term, the target of 124.13 (17 June 2007 high) would appear on the horizon but will take time.
Economic data highlights will include:
M:
T: Japan Trade Balance
W:
T:
F:.
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.4958
Cable had a choppy Friday session in finally taking out the resistance in the 1.4970/1.5000 area, triggering stops to squeeze up to 1.5052 (50% of 1.5551/1.4565) before once again falling back into the consolidation area and finishing at 1.4960.
With the Election approaching (7 May), and the result being anyone’s guess, it looks as though the price action is going to remain extremely whippy so a very nimble stance is required.
While the dailies do still point higher, the shorter term charts appear to suggest that we might see a bit of a dip today, where buyers would arrive at 14915 and 1.4900 (both minor supports) and then at 1.4865 (daily Kijun and Fibo support (38.2% of 1.4565/1.5052)) and then towards the 100 HMA at 1.4820 and the 200 HMA at 1.4780 but seems unlikely to be seen for a while.
Back above 1.5000 and Friday’s 1.5052 high would head on towards 1.5100 (daily cloud base) and beyond, towards the 9 March high at 1.5136 and then next Fibo resistance at 1.5170 (61.8% of 1.5551/1.4565). This will be a very strong area of resistance, if seen, also being the top of the long term descending channel and the larger degree of Fibo resistance (23.6% of 1.7191/1.4565).Buying dips seems to be the way to go, but keep stops tight below 1.49, or below the Kijun (1.4865).
Economic data highlights will include:
M:
T:
W BOE Minutes:
T: UK Retail Sales
F:.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9514
US$Chf again headed lower in reaching 0.9493 on Friday, before bouncing to close at 0.9520. The Chf was the overall strongest currency last week, benefiting from the risk aversion caused by the ongoing situation in Greece.
Further losses again look possible, with a break of Friday’s low heading towards the support levels at 200 DMA at 0.9465 and the 3 Apr low at 0.9454. Below there would signal a deeper decline towards the 20 Feb low at 0.9374 and then to the 17 Feb low at 0.9292.
On the topside, which appears less likely at present, would see a run towards 0.9580 and to 0.9600. Above here would open up 0.9633 (61.8% of 0.9862/0.9493) and the 100 HMA at 0.9660.
Economic data highlights will include:
M:
T:
W:
T: Swiss Trade Balance
F:.
Meta Trader – AxiTrader USD/CHF: 4 Hour
AUD/USD: 0.7815
China has surprised the market with a weekend cut to the RRR of 1% and an extra 0.5%-2.0% of RRR cuts for several qualified financial institutions. The size of the cut is much larger than economists had been expecting and will raise concerns about the growth outlook although the Aud$ likes the idea and has gapped higher at the Monday open, trading up to a high of 0.7844 in early NZ trade, a new trend high. It had traded to a high of 0.7842 (76.4% of 0.7937/0.7532) on Friday, as the shorts got squeezed, before settling back below 0.7800 at 0.7770.
After digesting the implications of the Chinese action this week is going to be busy again with plenty of economic headlines due, starting with a speech from RBA Governor Stevens in NY tonight, and to be followed tomorrow by the RBA Minutes and then the CPI data (exp 0.1%qq, 1.2%yy, Core 0.4%) on Wednesday. Later in the week sees the NAB Business Conditions/Confidence and the HSBC Flash China Mfg PMI (prev 49.6).
Most analysts appear to think that this short squeeze is a temporary affair before renewed weakness sets in, which the fundamentals suggest is likely to be the case. The OIS market is now pricing in a May 5 RBA rate cut at around 61% while Iron Ore is still very weak and finished at $49.59 p.t. with some ‘experts’ suggesting a decline to $35 pt. is on the way.
Technically the 4 hour charts now appear to be rolling over to point a little lower although the dailies are still positive, so all up we can expect some choppy trade with a mildly bullish bias, and buying dips seems to be the plan over the next session or two.
Any such dips will find buyers at Friday’s low at 0.7758 and then at the low, seen after the sharp spike higher following last week’s jobs numbers, at 0.7731. Under here would return to 0.7700 and possibly to the 200 HMA at 0.7677 although I don’t think we are going to see that today.
On the topside above 0.7800, Friday’s high of 0.7842 will be the initial hurdle, above which would suggest a run towards 0.7884 (26 March high), 0.7904 (25 March high) and to the trend high at 0.7937.
Look for 0.7750/0.7870 to cover it today, with a mild bias to buying the dips.
Economic data highlights will include:
M: RBA Stevens Speech
T: RBA Minutes
W: Australian CPI, WBC Leading index, China Leading Index
T: NAB Business Conditions/Confidence, HSBC China Manufacturing PMI (Flash)
F:.
Meta Trader – AxiTrader AUD/USD: 4 Hour
NZD/USD: 0.7700
As with the Aud, the Kiwi is opening higher on Monday following the China rate cut. Currently at 0.7700.
After starting the session near to the 0.7645 low, the Kiwi reached a high of 0.7740 on Friday, where the descending trend resistance contained further gains, before finishing roughly in the middle of the range.
Today will be a busy one, with the Q1 CPI due to be released shortly. The consensus is for -0.2% q/q and +0.2% y/y, which would be a 15-year low ,with fall the being led led by a drop of about 10% in fuel prices and a seasonal drop in international airfares.
Technically, while the dailies still point higher, the 4 hour charts appear to be rolling over for a further look at the downside, where the initial support levels to watch will be at 0.7645 (Friday’s low) and at 0.7610 (23.6% of 0.7175/0.7740). Below this would head back into the consolidation zone where further choppy trade would seem likely ahead of 0.7530 (38.2%).
On the topside, 0.7700 will see sellers ahead of Friday’s 0.7740 peak, but above which would suggest a run towards 0.7800 (23.6% of 0.8842/0.7175) and to the 200 DMA at 0.7872.
Economic data highlights will include:
M: NZ CPI
T:
W:
T:
F:.
Meta Trader – AxiTrader NZD/USD: 4 Hour
EURJPY: 128.35
EURJPY: The cross initially headed down to a low of 126.08, where it gave the Fibo support at 126.30 (76.4% of 119.10/149.78) a thorough workout, before bouncing to regain all its losses and more, finishing the week at 128.30. Now approaching the daily Tenkan/Kijun(128.55/90) and the descending trend resistance at 129.45, a break would suggest further gains towards 130.00 and potentially to the daily cloud base/weekly Tenkan at around 131.00.. If the cross runs out of steam here, then support will arrive at 127.80 (minor), below which would head towards 127.35 (100 HMA) . Below this would head back towards 126.75 and to last week’s 126.08 low but which currently looks rather unlikely.Meta Trader – AxiTrader EURJPY: Daily
NZDJPY: 91.30
NZDJPY: The cross had a volatile week in falling sharply to the support at the 100DMA, pulling up at 89.02 before rallying strongly to reach 91.81, breaking above the trend resistance in doing so. It has closed the week right on that level and thus a fairly neutral stance is required but the dailies are beginning to suggest a run to higher ground, and if the quadruple top at 91.81/87/90 (going back to 15 Jan – red line) can be taken out then it looks as if we can head on towards the 29 Dec high at 94.04. If the cross is contained at current levels, then look for another reversal lower towards the 200 DMA at 90.30 below which we could see yet another run towards 89.00 (daily Kijun). The longer term charts now suggest that it may be the upside that comes up trumps.
Meta Trader – AxiTrader NZDJPY: Daily
EURGBP: 0.7220
While the dailies are inconclusive, the weekly charts appear to be turning higher so a mildly positive bias is preferred and with the 4 hour charts also looking mildly positive a run back towards 0.7250 and possibly higher, towards 0.7300, would not surprise in the short term. With the Greek situation looking very uncertain and with the UK Election due in a couple of weeks time though there is likely to be some exaggerated volatility in both directions. The downside will find strong support at last weeks lows at 0.7163, below which the Fibo support at 0.7155 will provide backup (61.8% of 0.7013/7384), a break of which would head to 0.7100 (76.4%) and then to the trend low at 0.7013. This does not look likely at present, and for now buying dips towards 0.7160/70 seems to be the plan, although a very nimble stance will be required as the Greek farce resolves itself and the UK Election results become clear.Meta Trader – AxiTrader EURGBP: Daily
GBPAUD: 1.9215
GBPAUD: The cross had another volatile ride last week, in trading a range of 1.9038/1.9462 before finishing pretty much in the middle. The short term movements are very difficult to pick and further choppy trade either side of the 100 DMA (1.9186) may be the outcome this week. Rising trend support is containing the downside, currently at 1.9090, but a break of which could take the cross back to 1.8826, the low of 4 weeks ago. Below this, the base of the channel and the 200 DMA are at 1.8650. The topside will see sellers once more at 1.9460, above which would test the top of the channel, currently at 1.9560. Overall trading the wide range of 1.9000/1.9560 seems to be the plan, with a stop and reversal in the case of a break of either side..
Meta Trader – AxiTrader GBPAUD: Daily
DXY: 97.44
The DXY turned sharply lower last week, falling to a low of 97.00 before finishing at 97.44, as the wide, choppy consolidation continues. I suspect we are in for more of the same in the next couple of days, with the potential for further downside action and a slightly bearish dollar bias. Below 97.00 would see a run towards the recent lows of 96.32 ( 6 April) and then to 96.17 (26 March). Below here would head back to 95.30 (23.6% of 78.90/100.39) which acted as strong resistance on the way up.
The topside will encounter resistance at 98.00 and then at minor descending trend resistance at 98.40. Above there would head back to 99.30 although this seems unlikely to occur, at least early in the week. If/when we do overcome this resistance, the next upside hurdle will be 100.00 and then the trend high of 100.39. Beyond this, the major target remains at 101.77 (61.8% of 121.02/70.69), a break of which would head towards the March 2003 high at 102.15. In the longer term the Jan 2003 high at 103.20 would come into view but right now looks as though it will take a while.
The monthly indicators are still strongly bullish and I don’t think that the current price action signals any major turnaround in this trend coming yet, so buying dips (i.e. selling Euros into rallies) still seems to be the longer term plan, although right now it seems that there may be better levels to do so..
Meta Trader – AxiTrader DXY: Daily
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.