Yen reversed gains at 119.19 per dollar

Good morning from beautiful Hamburg and welcome to our latest Daily FX Report of the week.Yesterday, we knew that the co-pilot of Germanwings Flight 9525, a 28-year-old German national Andreas Lubitz, deliberately activated the autopilot to change the plane's altitude from 38,000 feet to 100 feet, to crash into the French Alps, killing all 150 people on board. Investigators went through his apartment looking for clues as to what the co-pilot's motivation might have been. What could happened to a young man which Facebook profile suggests has an active lifestyle of a keen runner, with an interest in pop music? This kind of event is rare but it has happened before, although the reasons vary widely. A search is underway for the plane's second "black box," the flight data recorder, which could shed more light on the plane's final minutes.

Anyway, we wish you a successful trading day!

Market Review – Fundamental Perspective

The dollar ended a two-day drop against the yen as the gap between yields in the U.S. and Japan widened amid speculations the nations’ monetary policies will diverge. A gauge of the U.S. currency against major pairs gained the most in a week on yesterday, after jobless claims fell by 9.000 to 282.000, the least since the week ended February 13th, which drove Treasury yields higher. The dollar was also supported by Federal Reserve Bank of Atlanta President, Dennis Lockhart, who assure that the U.S. economy can handle moving to a higher rate environment. The yen reversed gains at 119.19 per dollar, after reaching 118.33 yesterday earlier, the strongest level since February 20th. The pound fell 0.2% against dollar to $1.4848. Earlier, it gained as much as 0.8% to $1.4994, before weaking by as much as 0.5% in a volatile session. Sterling strengthened 0.3% to 73.53 pence per euro, snapping four days of declines. According to the U.K. Central Bank policy maker, David Miles, the next move in borrowing costs will, more likely than not, an increase, as there is no signs of persistent underlying deflation pressure. Australian ́s dollar was little changed at 78.21 U.S. cents. The Aussie strengthened during the past week, after the Federal Reserve cut projections for future interest rates. Still, the Aussie remains 16% weaker than it was a year ago. Future contracts signal that the Reserve Bank of Australia will lower its benchmark rate to 1.75% from 2.25% by September, adding more pressure to its currency.

Daily Technical Analysis

USDCAD (Daily)

As we can see in the chart below, The USDCAD has been immersed in a lateral channel for already two months and now the pair is close to the bottom side of this pattern. Considering the USD has climbed around 20% in the last 10 months against the CAD, and the fact that the 1.2800 is a really strong Long-Tern resistance, (it comes from the past), we believe the odds for further declines are higher than an eventual break of the 1.2800 level, identifying 1.2350 and 1.1900 as the closest supports to take into consideration.

Support & Resistance (Daily)