Tuesday Forex Technical Report

Forex Report

TueMar 17	12:15am	EUR	High	ECB President Draghi Speaks
	1:30am	USD		TIC Long-Term Purchases	27.2B	39.2B
	6:00am	AUD	High	Monetary Policy Meeting Minutes
	8:34am	JPY	High	Monetary Policy Statement
	Tentative	JPY	High	BOJ Press Conference
	3:30pm	EUR	High	German ZEW Economic Sentiment	58.9	53
		EUR		Final CPI y/y	-0.30%	-0.30%
		EUR		ZEW Economic Sentiment	58.2	52.7
		EUR		Employment Change q/q	0.10%	0.20%
		EUR		Final Core CPI y/y	0.60%	0.60%
	6:00pm	CAD	High	Manufacturing Sales m/m	-1.10%	1.70%
		USD	High	Building Permits	1.07M	1.06M
		USD		Housing Starts	1.05M	1.07M
	7:30pm	USD		Treasury Sec Lew Speaks
	Tentative	NZD	High	GDT Price Index		1.10%

GBP/USD further weakness ahead

“The anticipated GBP weakness exceeded our expectation as it plunged to a low of 1.4699. Strong impulsive downward momentum suggests further weakness for today.”

“A move below 1.4699 could lead to a quick drop to 1.4650.”

“Strong resistance is at 1.4810.”

EUR/USD inching higher, near 1.0530

EUR/USD bounced off 1.0460

The pair has managed to revert a negative start after opening around the 1.0460 region in Asia, recovering some ground along with the offered tone surrounding the USD.

Empty docket in the euro area today will leave the attention to the US releases, with Capacity Utilization, Industrial Production and the Housing Market index gauged by NAHB as the main highlights.

Despite no major announcements are expected, market participants would pay attention to Draghi’s speech tonight in Frankfurt about “The Future of the Finance Industry – Between Growth and Regulation”; followed by a speech by ECB’s Exec Board Member S.Lautenschlager on “Reality Check – How to Foster Growth in the New Regulatory Landscape”, also in Frankfurt.

EUR/USD levels to consider

The pair is advancing 0.19% at 1.0516 and a breakdown of 1.0457 (12-year low Mar.16) would expose 1.0335 (2003 low Jan.2) and then 1.0300 (psychological level). On the flip side, the initial up-barrier lines up at 1.0635 (high Mar.13) ahead of 1.0683 (high Mar.12) followed by 1.0718 (high Mar.11).

Asia Recap: USD has no rivals, key breakouts

[FOREX News] AUD/USD saw a gradual and steady decline since the get-go, with technicals communicating bearish continuation and the NAB Monthly Business Survey for February 2015 exacerbating the pain, as the market learnt that business confidence deteriorated further from 3 to 0 even after the RBA rate cut.

China Consumer Price Index (MoM) came above expectations (0.8%) in February, with the actual at 1.2%, while the yearly stood at 1.4% vs 0.9% expected. While there were some comments that improved inflation data may provide the PBOC some scope to hold off from further easing, the pick up in inflation is thought to be temporary, with its main contributor being the Chinese new year period, according to the Chinese Bureau of Statistics.

NZD/USD traded heavy following news that Fonterra trading had been halted in its dairy industry entities, due to a threat made to contaminate infant milk formula, NZ police reported, despite no signs of any contamination. Even New Zealand's Minister of Primary industry said New Zealand infant formula "just as safe today as it was before". NZD/USD registered its lowest at 0.7275.

USD/JPY kept roaring higher, making fresh trend highs at 122.00, breaking marginally its former peak at 121.82 from early Dec 2014. The rise was driven by USD strength across the board, with leveraged names main suspects riding the pair up, with 122.00 expected to provide enough 2-way money negotiations to potentially close some of the long deals being carried from 120.00+.

EUR/USD: below 1.0750 targets 1.0730/25 –

[FOREX News] “We do look like the market will head to the 2003 lows of 1.0765....Now given that the market is drastically oversold this support should hold.”

“Difficult to buy into such a weak market, therefore only do it for a very short time on a correctionary basis only.”

“Below 1.0750 and we are out of longs, back into shorts looking for further weakness down to 1.0730/25 then 1.0690.”

“Today our daily pivot is at 1.0860 which so far has held the overnight high..Europe may well come in and re-test this resistance...Any long positions to be covered to here.”

USD/JPY break above 121.85 targets 123.00

[FOREX News] “As we highlighted yesterday, the break of the key 120.50 resistance last Friday signals the start of a bullish USD phase targeting last year’s high near 121.85.”

“In line with our expectations, USD continues to gain ground touching a high of 121.60 as of the time of writing.”

“Upward momentum is clearly very strong at this stage and a move above 121.85 will shift the focus to 123.00.”

“Trailing-stop is still at 119.60 for now but 120.30 is already a strong support.”

Barclays: Little to disturb the EUR downtrend

[FOREX News] "The ECB is scheduled to begin purchases of European Government Bonds under its recently expanded asset purchase programme on Monday.”

“The Eurogroup meeting (also Monday) will be mostly devoted to Greece and provide an opportunity for progress on planned reform but a formal agreement remains unlikely at this stage.”

“In terms of data, we look for euro area industrial production (Thursday) to increase 0.3% m/m in January (consensus: 0.2%) consistent with recent business surveys showing a minor improvement in the manufacturing sector"

"However, as we have noted previously, we do not believe a stabilisation of euro area activity will be enough to support a rally in EURUSD in the context of diverging ECB-Fed monetary policy and widening EU-US real interest rate differentials"

Gold recovers from 3-month lows

[FOREX News] Gold holds above 1170 levels

Currently, gold trades 0.30% higher at 1170.60 levels, bouncing-off session lows at 1167.47 levels. Gold prices suffered its fifth weekly drop in the past six, as QE on EZ and a solid monthly US jobs report drove the US dollar to its strongest level in over a decade. Surprisingly strong US jobs data put the risk of a mid-year Fed hike back on the table, dent demand for non-interest-bearing yellow metal, dragging its prices lower.

Moreover, in signs of lack of investors’ confidence in gold, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.59 percent to 756.32 tonnes on Friday.

Gold Technical Levels
The metal has an immediate resistance at 1174 (hourly 20-DMA) and 1180 levels. Meanwhile, support stands at 1167.47 (Today’s low) levels below which doors could open for 1163 (March 6 Low) levels.

Japan Q4 recovery slower than expected

[FOREX News] “Japan Q4 final GDP q/q: 0.4% v 0.5%e; Annualized GDP: 1.5% v 2.2%e; nominal GDP: 1.0% v 1.1%e; confirms emergence from technical recession”

“Japan Feb bank lending (incl trusts): 2.5% v 2.5% prior; bank lending (ex- trusts): 2.6% v 2.6%e”

“Japan Jan current account: ¥61.4b v ¥270be; adj current account: ¥1.06t v ¥1.18te; trade balance: -¥864b v -¥936be”

“Japan Cabinet Office released the final Q4 GDP data that confirmed the economy emerged out of recession, but did so at a slower than expected pace.”

“Private consumption component was up 0.5% - ahead of 0.3% prelim and consensus - but corporate sentiment remained cautious, as investment contracted by 0.1% again vs expected 0.2% pickup.”

“Japan Chief Cabinet Sec Suga spoke after the release, noting economy is still on recovery track. Likewise, BOJ Dep Gov Nakaso remarked the trend toward achieving the 2% inflation target is more important than the pace, although he still expects to reach that goal some time in FY15 unless oil prices continue to pull CPI lower.”