Sample Category Title

Daily Pivots: (S1) 1.0004; (P) 1.0016; (R1) 1.0039; More.....

USD/CHF's rebound from 0.9812 is still in progress and intraday bias remains on the upside. The corrective fall from 1.0342 should have finished with three waves down to 0.9812 already. Sustained trading above 55 day EMA (now at 1.0022) will affirm this bullish case. Break of 1.0169 resistance will confirm and target a test on 1.0342 high. On the downside, however, below 0.9948 minor support will turn bias back to the downside for 0.9812 instead.

In the bigger picture, USD/CHF is staying in medium term sideway pattern between 0.9443/1.0342. In any case, decisive break of 1.0342 resistance is needed to confirm underlying strength. Otherwise, we'll stay neutral in the pair first. In case of another fall, we'd expect strong support from 0.9443/9548 support zone.

Daily Pivots: (S1) 111.02; (P) 111.60; (R1) 111.98; More....

USD/JPY is staying in range of 110.99/112.19 and intraday bias remains neutral first. On the upside, break of 112.19 temporary will turn bias back to the upside for 115.49 resistance. Decisive break there should confirm completion of the correction from 118.65. In that case, further rise should be seen to 118.65 and above to resume the rally from 98.97. On the downside, though, below 110.99 minor support will turn bias back to the downside for 110.10 and break will extend the corrective fall from 118.65.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Nonetheless, sustained trading below 55 week EMA (now at 111.16) will extend the consolidation from 125.85 with another fall through 98.97 before completion.

EUR/GBP - 0.8536

 
Recent wave: Major double three (A)-(B)-(C)-(X)-(A)-(B)-(C) is unfolding and 2nd (A) has possibly ended at 0.6936.

Trend: Near term down

Original strategy  :

Sell at 0.8620, Target: 0.8520, Stop: 0.8660

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.8620, Target: 0.8520, Stop: 0.8660

Position : -

Target :  -

Stop : -

 
Although the single currency has recovered after falling to 0.8485 and consolidation above this level would be seen, reckon upside would be limited to 0.8590-00 and renewed selling interest should emerge around 0.8620-25, bring another decline later, below said support at 0.8485 would add credence to our view that top has been formed at 0.8788 and bearishness remains for this fall from there to bring retracement of early upmove, hence further weakness to 0.8470 would be seen, however, oversold condition should prevent sharp fall below 0.8450, risk from there has increased for a rebound to take place later.

In view of this, we are looking to sell euro on recovery as 0.8620-25 should limit upside. Only above 0.8660-65 would defer and suggest low is possibly formed, risk rebound to 0.8680, then 0.8700 but price should falter below said resistance at 0.8735, bring further choppy trading later.

Our preferred count is that, after forming a major top at 0.9805 (wave V), (A)-(B)-(C) correction is unfolding with (A) leg ended at 0.8400 (A: 0.8637, B: 0.9491 and 5-waver C ended at 0.8400. Wave (B) has ended at 0.9413 and impulsive wave (C) has either ended at 0.8067 or may extend one more fall to 0.8000 before prospect of another rally. Current breach of indicated resistance at 0.9043 confirms our view that the (C) leg has ended and bring stronger rebound towards 0.9150/54, then towards 0.9240/50.

WTI oil is holding above broken key barriers at $50.00/10 (psychological barrier / Fibo 38.2% of $55.01/$47.06 descend) that were taken out on last week's strong bullish acceleration from base that was formed at $47.00 zone.

Recovery rally peaked at $50.83 on Friday (the highest of past three weeks) where rally was temporarily capped by daily Kijun-sen line, ahead of next targets at $51.03/14 (50% retracement of $55.01/$47.06 / 100SMA).

The price is expected to consolidate under Kijun-sen barrier, with extended upticks not ruled out, as slow stochastic is strongly overbought on daily chart (no firmer bearish signal yet), with $50.00 zone (reinforced by top of thick hourly cloud, spanned between $50.00 and $49.41) expected to ideally contain and keep immediate near-term bulls intact.

Only return below hourly cloud (also near Fibo 38.2% of $47.07/$50.83 upleg) would weaken near-term structure.

Res: 50.83; 51.03; 51.14; 51.70
Sup: 50.47; 50.00; 49.41; 48.94

USD/CAD has edged higher in the Monday session. Currently, the pair is trading at 1.3350. On the release front, manufacturing data is in focus on both sides of the border. Canada releases Manufacturing PMI, while the US publishes ISM Manufacturing PMI. On Tuesday, Canada releases Trade Balance.

Canada's economy expanded 0.6% in January, easily beating the forecast of 0.3%. This marked a 7-month high for GDP, and raises hopes that a strong US economy will boost its northern neighbor. Although the Canadian economy has been churning out decent numbers, lower oil prices have had a negative impact on the Canadian economy and also weighed on the Canadian dollar, which remains above the 1.33 level. Later in the week, we'll get a look at Canadian Employment Change, which is expected to post a modest gain of 5.7 thousand.

Donald Trump's presidency has been anything but smooth. The battles with the media continue, an economic policy remains a mystery, and Trump suffered a major setback as he couldn't even muster a vote over his healthcare bill. Despite these hiccups, the US economy hasn't missed a beat in 2017. The CB consumer confidence report soared to 125.6 in March, and strong consumer confidence levels should translate into increased consumer spending. GDP for the fourth quarter was revised to 2.1%, up from 1.9% in the previous GDP report. This points to strong growth for the economy, as the discussions around the monetary policy tables are not whether the Fed will raise rates, but will it press the rate trigger twice or three times in 2017. The Fed will release the minutes of its March meeting on Wednesday, and the markets will be looking for clues as to the timing of a possible rate hike.

Daily Pivots: (S1) 1.0632; (P) 1.0666 (R1) 1.0687; More....

With 1.0739 minor resistance intact, intraday bias in EUR/USD remains on the downside for 1.0494 support. We're holding on to the view that corrective rise from 1.0339 is completed at 1.0905. And, larger down trend is probably resuming. Break of 1.0494 should confirm this bearish case and target 1.0339 low and below. Break of 1.0339 will target parity next. On the upside, above 1.0739 minor resistance will delay the bearish case and turn focus back to 1.0905 resistance instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

USD/CHF - 1.0015

Original strategy :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 0.9950, Target: 1.0050, Stop: 0.9915

Position : -

Target :  -

Stop : -

As the greenback has continued trading with a firm undertone, suggesting recent rise from last week’s low at 0.9813 is still in progress and bullishness remains for this move to extend gain to previous support at 1.0060 (now resistance), however, loss of upward momentum should prevent sharp move beyond resistance at 1.0109, risk from there has increased for a retreat to take place later. 

In view of this, would not chase this rise here and would be prudent to buy dollar on pullback as said support at 0.9948 should limit downside. Below 0.9931 (50% Fibonacci retracement of 0.9831-1.0031) would abort and signal top is formed instead, bring correction to 0.9905-10 (61.8% Fibonacci retracement) but reckon previous resistance at 0.9869 would hold from here. 

Movements in the forex markets are very limited today. Sterling dips mildly after PMI manufacturing missed expectation. Euro stays soft in general even though comments from policy makers should be Euro supportive. Aussie weakened earlier in the day on retail sales disappointment but no follow through selling is seen so far. Yen stays in tight range after uninspiring release of Tankan survey. Dollar on the other hand, trades mixed as markets await ISM indices and employment data later in the week, as well as FOMC minutes. In other markets, Gold continues to struggle in tight range around 1250. WTI crude oil is staying firm above 50 handle but can't extend gains so far.

ECB chief economist Praet: Probability of additional easing reduced considerably

ECB chief economist Peter Praet said in an interview that policy makers are "more confident that the economic expansion will continue to firm and broaden." However, "underlying inflation, which is an indicator of price stability over the medium term, remains subdued." And, could inflation head back to target without the current "expansionary monetary policy"? Praet's answer was "no". Nonetheless, the "probability" for additional stimulus "has reduced considerably". On the other hand, ECB executive board member Benoit Coeure said today that "the financial sector and the economy and states should prepare for an environment of higher rates." And he warned again that "negative rates were very effective but they shouldn't go on for too long as that penalizes the banking sector".

UK manufacturing growth slowed

UK PMI manufacturing dropped to 54.2 in March, down from 54.6, below expectation of 55.0. That's the third straight decline in a row. Markit noted that "UK manufacturers continued to benefit from solid inflows of new business". And, "part of the increase in new orders reflected further growth of foreign demand." However, "high costs and weak wage growth are sapping the strength of consumers, with rates of expansion in output and new orders for these (consumer) products slowing further." Overall, "the outlook for the sector also remained positive, with business optimism rising to a ten-month high."

Also released from Europe, Eurozone PPI rose 0.0% mom, 4.5% yoy in February. Eurozone manufacturing PMI was finalized at 56.2 in March, unrevised. Swiss SVME PMI rose to 58.6 in March, above expectation of 58.0. Swiss retail sales rose 0.6% yoy in February, better than expectation of -0.8% yoy fall.

Japan Business Sentiment Improved in First Quarter, but Outlook Not as Bright

Japan released its quarterly Tankan survey earlier today. The large manufacturer DI improved to 12 in 1Q17, from 10 in the prior quarter. However, this missed expectations of a bigger improvement to 14. The large non-manufacturer DI rose to 20, compared with consensus of 19% and 4Q16's 18, mainly driven by higher confidence in services and construction sectors. Note the pickup in sentiment was modest given the depreciation in Japanese yen (USDJPY rallied) during the period. For SMEs, the manufacturer DI added 4 points to 5 while the non-manufacturer DI doubled to 4, during the period. The DI for all industry and all firms gained 3 points to 10.

Corporate confidence over the coming 3 months, however, deteriorated. The large manufacturer expectations DI was +11 while that for non-manufacturers was 16. The former marked an improvement from the previous reading but signaled deterioration from the current conditions. The expectations DI for all firms, at +4, also dropped -5 points from the current conditions DI. On the capex plan outlook, large companies projected a 0.6% yoy increase for FY17, compared with a -0.9% contracted for the same period last year, suggesting that the sentiment in large companies has improved this year. BOJ's USDJPY assumption for large manufacturers came in at 108.43, up from 104.9 for FY16 in 4Q16 survey. USDJPY currently is trading around 111.

Aussie dives after weak retail sales

Australian dollar tumbles sharply today after weaker than expected retail sales. Sales dropped -0.1% mom in February versus expectation of 0.3% rise. Apparels was the biggest drag in sales, posting -2.5% mom fall. Meanwhile, sales of household goods dropped -0.4%. Executive director of the Australian Retailers Association noted that "discretionary spend" is showing impact in the data. Also from Australia TD securities inflation expectation rose 0.1% mom in March. Building approvals jumped 8.3% mom in February.

RBA rate decision is a main focus tomorrow and the central bank is widely expected to keep interest rate unchanged at 1.50%. There is little prospect of a rate cut this year as housing markets heat up again in recent months. Little new information would be given from this week's meeting as RBA would wait for the set of Q1 data to be released later before adjusting economic outlook. But for the moment, some notable weakness is seen in Aussie broadly.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0632; (P) 1.0666 (R1) 1.0687; More....

With 1.0739 minor resistance intact, intraday bias in EUR/USD remains on the downside for 1.0494 support. We're holding on to the view that corrective rise from 1.0339 is completed at 1.0905. And, larger down trend is probably resuming. Break of 1.0494 should confirm this bearish case and target 1.0339 low and below. Break of 1.0339 will target parity next. On the upside, above 1.0739 minor resistance will delay the bearish case and turn focus back to 1.0905 resistance instead.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.

Economic Indicators Update

GBP/USD - 1.2498

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

As cable found good support at 1.2433 on Friday and staged another strong rebound on active cross-trading in sterling, suggesting the erratic rise from 1.2377 (last week’s low) is still in progress and may extend gain towards 1.2570-75, however, as broad outlook remains consolidative, reckon upside would be limited to 1.2595-00 and price should falter below last week’s high at 1.2616, bring retreat later.

In view of this, would not chase this rise here and would be prudent to stand aside in the meantime. Below 1.2480 would bring weakness to the upper Kumo (now at 1.2469) but said support at 1.2433 should remain intact. Only a drop below 1.2433 support would revive bearishness and suggest the rebound from 1.2377 has ended, bring weakness to 1.2400, break there would confirm and retest of 1.2377 would follow.

EUR/USD - 1.0668

Original strategy  :

Sell at 1.0740, Target: 1.0625, Stop: 1.0775

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.0740, Target: 1.0625, Stop: 1.0775

Position : -

Target :  -

Stop : -

As the single currency has remained under pressure after last week’s selloff, suggesting the decline from 1.0906 top is still in progress and bearishness remains for this fall to extend further weakness to 1.0620-25, then test of previous chart support at 1.0600, however, a sustained breach below the latter level is needed to retain downside bias for subsequent selloff to 1.0570-75 first, otherwise, risk from there is seen for a rebound later.

In view of this, would not chase this fall here and would be prudent to sell dollar on recovery as 1.0735-40 should limit upside. Only a firm break above resistance at 1.0773 would suggest low is formed instead, bring a stronger rebound to 1.0800 but resistance at 1.0827 should remain intact.