What a difference a day makes. We talked yesterday about the likelihood of Euro CPI missing slightly but EURUSD still rallying. This is exactly what has happened although the added nail in the coffin for the dollar was a serious miss on US Q1 GDP.
Hardly surprising given the extreme weather for Q1 but dollar downside is the outcome regardless. FOMC was more or less a box ticking exercise as expected.Chinese manufacturing PMI will likely be significant for risk tone on Thursday, with the Australian dollar already seeing buyers ahead of the number in expectation of a strong release.
This is never clear cut though and the risk of this crashing around our ears too on a poor number remains a possibility.
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Although we saw EURUSD drop to 1.3800 again forming a short term double top for the USD% index, the less bleak Euro CPI saw EURUSD push the dollar back, along with a bullish pound that has finally broken to fresh highs. We await the outcome of Friday’s NFP now, although with ADP on Wednesday quite encouraging this could be a good number. If it is this could be a volatile whipsaw week without making much real progress and contained within the EURUSD 1.38 – 1.39 range. I am bearish USD to EURUSD 1.3900
USD% Index Resistance (EURUSD support): EURUSD 1.3855, 1.3827, 1.3800
USD% Index Support (EURUSD support): EURUSD 1.3900, 1.3918
After all the fuss over the German CPI number the 0.1% point drop in Euro CPI and on target print for core CPI was a welcome relief. As such the ECB will likely hold fire again on policy change since their back really isn’t against the wall, not yet anyway. As such we should see a push higher to the recent highs at 1.3900 I remain Bullish EUREUR% Index Resistance: EURUSD 1.3919, 1.3928
EUR% Index Support: EURUSD 1.3850, 1.3800
A further bounce higher for the Yen as the dollar has been crushed by the poor US Q1 GDP. We remains trapped between persistent support and a very major trend line resistance shown at USDJPY 101.85. As such if this rally makes it that far we should see JPY longs unwind somewhat unless there is a significant up-tick in geopolitical risk to cause risk aversion. This is most definitely possible although there seems to be a lid on the situation of sorts so far. I am bearish JPY%JPY% Index Resistance (USDJPY Support): USDJPY 101.85, 101.00
JPY% Index Support (USDJPY Resistance): USDJPY 102.59, 103.44, 104.00
At last we are free of the dreaded thick red line and we have pushed through to the upside. We have run straight into another resistance level though and although slightly pushed through, profit taking has brought us safely back to the level ahead of the key risk events later in the week. A strong Dollar after a good NFP being the main concern for cable bulls right now. I remain bullish GBP%GBP% Index Resistance: GBPUSD 1.6878, 1.6900
GBP% Index Support: GBPUSD 1.6850, 1.6769, 1.6666
Very choppy on Wednesday, the Australian dollar has been chasing it’s tail somewhat as it remains stick in a consolidation range. We have yet to test the strong levels at 0.9200, so the lack of real oomph to the upside could see an unwind to support, particularly if Chinese data is less than impressive. Conversely, if the data is great this would definitely give the Aussie the needed oomph. Gold still looks positive so this could help the Aussie out. I am bullish AUD, ideally from 0.9200AUD% Index Resistance: AUDUSD 0.9315, 0.9388, 0.9400
AUD% Index Support: AUDUSD 0.9218, 0.9200
Another day, another whipsaw. definitely not trading conditions for tight stops or high risk which has been the main problem this year. Not much has technically changed except the lowered likelihood of ECB stimulus, so now things are also looking up for the CHF% index. EURCHF continue to look underweight. I am bullish CHFCHF% Index Resistance (USDCHF support): USDCHF 0.8750, 0.8700
CHF% Index Support (USDCHF resistance): USDCHF 0.8859, 0.8900,
By Mark Lewis