It was another wild ride today with all markets seeing excessive volatility. Equities were knocked lower – but later recovered – while the metals and oil prices jumped, after Saudi Arabia and assorted allies carried out air strikes in Yemen, fuelling worries of a further escalation of tensions in the ME. Early European dollar sales have been sharply reversed ahead of what could be another volatile session as focus turns to the US GDP and also towards speeches from the Fed’s Janet Yellen and Stanley Fischer. Also watch out for Mark Carney who may cause some ripples in Cable. Expect another busy session. Good w/e all.
EUR/USD: 1.0881
After tripping stops, taking the Euro up to a new correction high of 1.1057 it has since headed sharply lower, reaching 1.0855 amidst talk of some sovereign selling above 1.10 despite Mario Draghi sounding a bit more upbeat about the outlook for the EU economy today. The dollar also received assistance from the US initial jobless claims which dropped -9k to 282k, hitting the lowest level in five weeks, below expectation of 295k, and the market will now turn its focus towards today’s important Q4 US GDP (exp 0.1%mm, 2.4%yy, Core 1.1%, -0.4%yy) as well as speeches from the Fed’s Yellen and Fischer, which will follow up some hawkish comments made earlier today by Bullard/Lockhart.
The reaction from the highs has been sharp, and with the 1 and 4 hour charts pointing lower, it now looks to be the downside that could again feel the heat. Having now broken below the 38.2% Fibo support of the rally from 1.0461/1.1057 (1.0883), it looks as though the Euro could be headed towards the 50% pivot at 1.0831 and then possibly towards the rising trend support seen at 1.0800, backed up by the 200 HMA (1.0487) and the 61.8% Fibo support at 1.0780. Below here minor support will arrive at 1.0750 and then at 1.0715 (76.4%) although it will need a very strong GDP to reach this today.
The dailies still point higher though, so another test of the upside should not be ruled out. 1.0900 will see the initial sellers, ahead of the 100 HMA at 1.0920 above which will run into minor levels at 1.0950 and 1.0975. I would be doubtful of seeing 1.100 again today but if wrong another test of the session high at 1.1057 should not be ruled out, above which there is not too much to stop the Euro heading towards 1.1114 (5 March high) and then to 1.1159 (76.4% of 1.1378/1.0461)
Looking to sell rallies, trading from the short side appears to be the plan, but with direction to be guided by the US data/Yellen.
Economic data highlights will include:
US GDP, Fed Fischer/Yellen Speeches.
Meta Trader – AxiTrader EUR/USD: 4 Hour
USD/JPY: 119.22
The dollar did a lot more than I bargained for, in falling sharply, on safe haven demand for the Yen, to a low of 118.32 (76.4% of 115.85/122.02) in Europe because of fears of a Middle East war in the Yemen before bouncing to reach minor resistance at 119.40 (38.2% of 121.17/118.32). Having cleaned out the long dollar positions, the way now seems open for further gains, and above 119.40 would open up further minor Fibo levels at 119.75 and 120.49, with 120.00 likely to see sellers in between.
Back to the downside, 119.00 and 118.80 will provide minor support ahead of the 118.32 lows. I don’t think we are going back down here, but if wrong then look for a run to 118.00 and lower.
The Middle East situation will need t be closely monitored, and some pre-weekend demand for the Yen may be in order. There is also a fair bit of Japanese data due today but it will be the US GDP/Yellen speech that will attract most of the attention.
Economic data highlights will include:
CPI, Unemployment, Retail Trade.
Meta Trader – AxiTrader USD/JPY: 4 Hour
GBP/USD: 1.4841
Sterling had another choppy session in trading a range of 1.4805/1.4994, but has finished just 30 points lower over the course of the day and there is little to add.
The resistance ahead of 1.5000 held and this looks increasingly formidable, but before then there are going to be interested sellers at minor levels at 1.4870, 1.4900 (100 HMA) and at 1.4950.
The downside, which is mildly favoured, will find buyers once again at 1.4805 (61.8% of 1.4687/1.4994), below which would head towards 1.4758 (76.4%) and then to the recent lows at 1.4713 and at 1.4633.
Watch out for Mark Carney who will be speaking.
Economic data highlights will include:
BOE Carney Speech.
Meta Trader – AxiTrader GBP/USD: 4 Hour
USD/CHF: 0.9630
The dollar has bounced well off the session low of 0.9490 to currently sit at 0.9625 and if the session high of 0.9655 can be overcome, would appear to now be headed back towards 0.9700/30.
The dailies still point lower though, so don’t get too carried away on the topside yet. Support will arrive at the 100 DMA at 0.9585, below which 0.9530 will provide minor support ahead of 0.9490.
Buying dips or a break of 0.9655 appears to be the plan.
Meta Trader – AxiTrader USD/CHF: 4 Hour
…
AUD/USD: 0.7820
The Aud squeezed up to a 0.7880 peak in early Europe on the back of the selloff in the dollar but has since returned to levels seen yesterday and currently sits at 0.7815. With the 1 and 4 hour charts showing a negative bias, a more substantial test of 0.7800 would not surprise, below which would run towards the magnetic 100 Month MA at 0.7775 (50% of 0.7559/0.7937) and then to the 23 Mar low at 0.7762. A break of this would then see a deeper correction to the 200 HMA at 0.7750 and the next Fibo support at 0.7735 (61.8%).
Back to the topside, 0.7845 (100 HMA) will be the initial resistance ahead of the session high of 0.7880. I don’t really see it above here today but further resistances would arrive at 0.7900. If wrong, further advances would suggest a run to the previous session high at 0.7935 above which would open up the chance for a bigger squeeze, with the potential to revisit the Fibo resistance at 0.8010 (61.8% of 0.8294/0.7559) and the pivot level at 0.8025.
Selling rallies and trading it from the short side still appears to be the plan today, although the dailies are still positive, so overall the conditions look set to remain quite choppy.
Meta Trader – AxiTrader AUD/USD: 4 Hour
NZD/USD: 0.7580
A nasty squeeze to 0.7664 was seen in early Europe although that has since reversed and the Kiwi currently sits just above the session lows of 0.7555.
With the 1 and 4 hour charts pointing lower, the downside may come under pressure although any real direction is likely to be on hold until the US data late in the day.
Supports to watch, are firstly right here at 0.7576 (23.6% of 0.7175/0.7696) and then at 0.7545 (minor) and 0.7500 (38.2%/200 HMA). A break of this would allow a deeper move towards 0.7440, but seems unlikely today.
On the topside, 0.7600 will now act as resistance ahead of which would see sellers at 0.7630, 0.7650 and 0.7670, although I don’t think we are heading back up here again today.
As with the Aud, the dailies do still appear to be positive, so all up, look for more choppy trade in the sessions ahead.
Meta Trader – AxiTrader NZD/USD: 4 Hour
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