Greenback Rose on Rate Hike Hints and Set Commodity Currencies Under Pressure

The U.S. dollar has traded broadly higher on Wednesday and early Thursday as various Fed board members are talking about more than one rate hikes in this year. The strength of the dollar acts heavy pressure at the stocks and the commodities driving the commodity currencies to record severe sell‐off on yesterday’s trading session. The British pound is apt to the polls coming out for EU referendum and as the number of votes to leave the common bloc increases, the sterling losing momentum against the major currencies. Eurozone has a choppy session with no significant news on the domestic macroeconomic front out of the political turmoil following the bomb attacks in Brussels.

U.S. Dollar has Traded Broadly Higher
Another Fed member spoke about tightening yesterday, boosting the domestic currency in collaboration the upbeat data came out. The Commerce Department said on Wednesday Home Sales rose 2.0 percent to a seasonally adjusted annual rate of 512,000 units and January's sales pace was revised up to 502,000 units from the previously reported 494,000 units. The U.S. Durable Goods Orders will be released today, with forecasts suggesting a strong decline.

EUR/USD – Technical Outlook
The EUR/USD pair had another tight session, trading below the 23.6% retracement level – March 2016 lows to June 2014 highs –, as well as below the critical level at 1.1220. As we suggested on Wednesday, the pair fell below the latter level and is continuing to move south with the next target to remain at 1.1100. Beyond there would see further sellers at 1.1000 – 1.1030, where the shortterm rising trend line could provide some support to the price action, temporary at least.

Pound continues to be subdued as Votes for Brexit Rise
Following recent terror attacks in Brussels, the risk in the continental Europe set to extremely high and the number of British citizens will vote for Brexit in June increased, driving sterling to fall heavily in all fronts. The last ICM poll published on Wednesday morning revealed that 42% of respondents want UK to leave the 19‐nation union, while only 41% said that prefer to stay inside the common bloc. The pound is about to set the fourth consecutive negative daily session. The GBP/USD fell near 3% the last 3 days, however, it remains positive for the month +1.16%, following 4 negative months (Feb. ‐2.30%, Jan. ‐3.34%, Dec. ‐2.10% and Nov. ‐2.42%). UK Retail Sales are scheduled for release today and will be closely eyed.

GBP/USD – Technical Outlook
We continue making profits on the GBP/USD pair, following Monday’s report following the aggressive sell‐off below the 1.4350 level, which have helped us lock a profit around 110 pips. This time, the pair plunged below the 1.4100 – 1.4125 zone in early trading, locking around 50 – 60 pips and currently the pair is moving towards the second suggested zone at 1.4030 – 1.4050. Therefore, we remain short on this pair, targeting the aforementioned zone. It should be noted that the pair is close to snap a negative week, ‐2.74% so far, following 3 straight weeks of gains.

Commodity Currencies Under Heavy Pressure!
The AUD/USD pair has broken down and is now testing the critical level at 0.7500. The pair came under pressure and fell after the U.S. Energy Information Administration (EIA) said crude stockpiles rose 9.4 million barrels last week, the expansion in oil inventories saw WTI fall below the $40.00 per barrel level and weighed negatively on the Commodity Bloc of currencies. The pair closed the day down 1.17% and is trading ‐0.46% early Thursday. On the downside, the next level to watch will be now the 0.7415 and then the key support level at 0.7400.

The NZD/USD plunged more than 0.50% and fell below the key support level of 0.6700. The pair slipped for a fourth straight session. It is clear that oil prices are still affecting the commodity currencies. The pair came back in the same range that was trading few days ago. The daily chart looks negative and currently sitting slightly below the 0.6700, which coincides with the 200‐SMA. Going forward, we could be in for further downside pressure towards 0.6650 and lower.

The USD/CAD pair continued to surge yesterday, ending in green for the fifth consecutive session. The pair has posted a daily close above its 50‐SMA and currently sitting above a key level at 1.3120. A sustained move higher would then look to test 1.3300 and the 12‐month rising trend resistance, currently at 1.3330. Above 1.3330 would lead on towards 1.3400 although this seems a stretch too far at this point.

USD/JPY – Technical Outlook
The USD/JPY pair is continuing to push higher currently trading above 112.50. However, the pair is continuing to struggle on the downside near the psychological level of 111.00, following several failed attempts to break below it. There is no data due during the European Session from Japan, but note that late tonight will see the Japanese CPI figures for February and March, which could cause some waves in the yen pairs. Technically, if the buyers manage to sustain its gains above the key support level at 112.00, as well as above the 112.50 barrier, then we could easily see a run towards the key resistance level of 113.00, above which could see a run towards 113.40 and then to the psychological level at 114.00.

U.S. Indices Closed in Red: S&P 500 Erased Year‐To‐Date Gains
U.S. indices closed Wednesday’s trading session in the red with Dow Jones Industrial Average losing ground, 0.45% down closing at 17,503. The blue‐chip index is about to snap a five weekly winning streak, as the weekly performance currently stands at 0.56%. The Nasdaq was 1.10% lower, also experiencing a negative week after five winning sessions. The S&P 500 managed to erase the modest year‐to‐date gains and turn the performance negative after yesterday’s 0.64% losses to 2,037. The 4% slump in oil prices to $40 per barrel cost 2.19% losses at the energy stock shares.

What to watch today
Early in the morning, the German Gfk Consumer Confidence survey for April will be released – no changes are expected. In Eurozone, the Economic Bulletin and later, the Targeted LTRO will be released. In UK, the Retail Sales for February are coming out. Compared to the last month, the Retail Sales are predicted to slump by 1.0% from an increase of 2.3% prior.

Moving in U.S., the weekly Jobless Claims will be out as usual. The Durable Goods Orders for February, are expected to have decreased by 2.3% versus an increase of 4.7% the flash figure. Overnight, Japanese Inflation Report will hog the limelight.