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Yen Extends Losses Despite Weak US Data
The Japanese yen eased back as the currency fell 0.59% on Tuesday. The reversal came as the USD regained the bullish momentum despite a mixed economic outlook. Housing starts grew 1.16M on the month coming out less than expected while the conference board’s consumer confidence surprisingly fell to 124.1 from 131.4 previously.
USDJPY Bullish at Support, Can the USD Maintain Gains?
The currency pair posted a strong bullish candlestick just after prices touched down to the support level at 109.84. The strong close indicates prices are likely to drift higher in the near term. Watch the resistance level at 111.40 in the near term which could be tested, following the break of the trend line.
Euro Trades Weaker On Mixed Data
The euro was down 0.38% on the day despite economic data from the eurozone staying sparse. The Gfk consumer climate report from Germany showed a decline to 10.4 from 10.7 previously. The fourth quarter GDP report from France was revised to show a 1.0% increase compared to a 0.9% increase as previously reported.
Will the EURUSD Maintain the Bearish Momentum?
The EURUSD currency pair continued to reverse the gains with prices posting a steady decline and resuming the bearish trend. The euro has traded near lows of 1.1251 levels at the time of writing which marks a support area. As long as the support holds, we could expect the EURUSD to post a modest bounce to the upside.
NZD Tumbles As RBNZ Turns Dovis
The New Zealand dollar traded 1.5% lower today after the overnight session showed that the RBNZ was likely to cut interest rates in the near term. The central bank left the official cash rate unchanged at 1.75% at today’s meeting.
Meanwhile, the market sentiment improved on Tuesday after the Treasuries gave back the gains easing fears of a recession. Chicago Fed member Evans, an FOMC voting member, said that the Fed is unlikely to cut rates until the second half of 2020.
Another Central Bank Turns Dovish
The Reserve Bank of New Zealand (RBNZ) is the latest central bank to join the global trend of taking a Uturn. It was only last month when RBNZ Governor Adrian Orr said the risk of cutting rates hasn't increased. His statement on February 13 sent the writing to the lowest level since March 11.New Zealand Dollar rallying more than 1.5% as the central bank's stance was seen as less dovish than markets anticipated. Today the RBNZ kept the official cash rate unchanged at 1.75% but signaled that any new move would likely be downwards given the weaker global economic outlook and reduced momentum in domestic spending. The surprising dovish turn sent the New Zealand Dollar 1.6% lower at the time of writing to the lowest level since March 11.
The steep declines in U.S. Treasury Yields did not cause harm to the US Dollar. In fact, the Dollar Index has rallied 1.2% after testing a 1.5 month low on March 20. Failing to close last week below the 200-days moving average has encouraged more bulls to push the Greenback higher. Although the Federal Reserve has ruled out projections for any interest rate hikes this year, the Dollar still seems to be investors' preferred currency amid signs of deteriorating global economic conditions.
The latest signs of a slowdown have come from China today, as industrial profits at large industrial companies fell 14% y-o-y in the first two months of 2019. Weaker manufacturing activity may introduce further fiscal and monetary policy stimulus measures, but for the sector to convincingly stabilize we need to see positive outcomes from the US – China trade talks. Sterling was under slight pressure early Wednesday as traders await further clarity on the Brexit process with House of Commons due to vote on alternative plans to Theresa May's proposal later today. All options seem to be back on the table, ranging from accepting Theresa May's deal, longer Brexit delay, no-deal Brexit, or even a second Brexit referendum. That's likely to lead to more volatile moves in Sterling which has moved in a tight range since the beginning of the week.
Crude Oil The Bias Remains Bullish
Pivot (invalidation): 59.65
Our preference Long positions above 59.65 with targets at 60.35 & 60.55 in extension.
Alternative scenario Below 59.65 look for further downside with 59.35 & 59.10 as targets.
Comment Technically the RSI is above its neutrality area at 50.
Silver Spot Consolidation In Place
Pivot (invalidation): 15.5200
Our preference Short positions below 15.5200 with targets at 15.3500 & 15.2400 in extension.
Alternative scenario Above 15.5200 look for further upside with 15.5800 & 15.6300 as targets.
Comment The RSI is mixed to bearish.
Gold Spot Consolidation In Place
Pivot (invalidation): 1319.00
Our preference Short positions below 1319.00 with targets at 1312.50 & 1308.50 in extension.
Alternative scenario Above 1319.00 look for further upside with 1324.50 & 1327.50 as targets.
Comment As Long as 1319.00 is resistance, expect a return to 1312.50.
S&P 500 Bullish Bias Above 2800.00
Pivot (invalidation): 2800.00
Our preference Long positions above 2800.00 with targets at 2829.00 & 2844.75 in extension.
Alternative scenario Below 2800.00 look for further downside with 2787.00 & 2767.25 as targets.
Comment The RSI is mixed to bullish.
DAX The Downside Prevails
Pivot (invalidation): 11470.00
Our preference Short positions below 11470.00 with targets at 11349.00 & 11280.00 in extension.
Alternative scenario Above 11470.00 look for further upside with 11520.00 & 11590.00 as targets.
Comment As Long as the resistance at 11470.00 is not surpassed, the risk of the break below 11349.00 remains high.
USD/TRY Expect 5.2400
Pivot (invalidation): 5.4600
Our preference Short positions below 5.4600 with targets at 5.3000 & 5.2400 in extension.
Alternative scenario Above 5.4600 look for further upside with 5.5640 & 5.6350 as targets.
Comment As Long as 5.4600 is resistance, look for choppy price action with a bearish bias.
