Sample Category Title

EUR/USD - 1.0882

Original strategy  :

Exit long entered at 1.0900

Position : - Long at 1.0900

Target :  -

Stop : -

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Despite intra-day marginal rise to 1.0951, lack of follow through buying and current retreat suggest consolidation below this level would be seen and downside risk remains for retracement to 1.0870, break there would suggest an intra-day top is formed, bring further fall to 1.0850 but reckon support at 1.0821 would hold from here, bring another rise later.

In view of this, would be prudent to stand aside for now. Only above said resistance at 1.0951 would extend recent upmove from 1.0340 low to 1.0975-80 and possibly towards 1.1000 which is likely to hold on first testing due to loss of momentum, risk from there is seen for a retreat later.

USD/JPY - 111.47

Original strategy  :

Buy at 110.70, Target: 111.70, Stop: 110.35

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 110.70, Target: 111.70, Stop: 110.35

Position :  -

Target :  -

Stop : -

The greenback surged after finding renewed buying interest at 109.59 and broke above previous resistance at 110.60, adding credence to our view that recent rise from 108.13 low is still in progress and bullishness remains for this move to bring at least a strong retracement of early downtrend, hence further gain to resistance at 111.75-80 would be seen, break would extend gain to 112.00, however, overbought condition should prevent sharp move beyond another previous resistance at 112.20.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as previous resistance at 110.60 should limit downside, bring another rally. Below 110.30-35 (61.8% Fibonacci retracement of 109.59-111.51) would defer and suggest top is possibly formed, risk weakness to 109.80 but break of support at 109.59 is needed to provide confirmation.

Daily Pivots: (S1) 1.0868; (P) 1.0909 (R1) 1.0967; More....

Intraday bias in EUR/USD is turned neutral with 4 hour MACD turned below signal line. A temporary top is in place at 1.0949 after hitting upper trend line resistance. At this point, another rise could be seen as long as 1.0777 support holds. But still, rise form 1.0339 is seen as a corrective move. Hence we'd pay attention to topping signal even if EUR/USD rises through 1.0949. On the downside, below 1.0777 minor support will turn bias to the downside for 1.0569 support first.

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.

Daily Pivots: (S1) 1.2792; (P) 1.2818; (R1) 1.2863; More...

GBP/USD is still bounded in tight range below 1.2903 temporary top. Intraday bias remains neutral at this point. As long as 1.2614 resistance turned support holds, further rally is expected. Firm break of 100% projection of 1.2108 to 1.2614 from 1.2365 at 1.2871 will target 161.8% retracement at 1.3184. Still, price actions from 1.1946 are seen as a correction. Hence we'd expect strong resistance below 1.3444 to bring larger down trend resumption. On the downside, break of 1.2614 resistance turned support will turn bias back to the downside for 1.2365 support first.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term reversal yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Daily Pivots: (S1) 110.04; (P) 110.62; (R1) 111.65; More....

Intraday bias in USD/JPY remains on the upside for the moment. Sustained break of 111.58 support turned resistance will indicate that fall from 118.65 is merely a corrective move and has completed. Outlook will then be turned bullish for 115.49 resistance and above. On the downside, break of 109.58 minor support is needed to confirm completion of the rebound from 108.12. Otherwise, further rally is still in favor even in case of retreat.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. Current development suggests that it's not completed yet and is extending. In case of deeper decline, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

Daily Pivots: (S1) 0.9911; (P) 0.9940; (R1) 0.9962; More.....

Intraday bias in USD/CHF is neutral for the moment with 4 hour MACD trending up. At this point, with 0.9999 minor resistance intact, deeper fall is still in favor. Below 0.9897 temporary low will turn bias to the downside for 0.9812 and possibly below. Nonetheless, whole decline from 1.0342 is seen as a correction. Hence, we'll look for bottoming signal below 0.9812. Meanwhile, on the upside, above 0.9999 minor resistance will turn bias back to the upside for 1.0107 resistance.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Dollar strengthens broadly today as markets are eagerly awaiting US President Donald Trump's tax reform plan. Dollar index is back above 99 after dipping to as low as 98.69 earlier this week. Meanwhile, stocks are also looking for fresh stimulus as DJIA and S&P 500 are looking at making new records highs. On the other hand, Euro and other European majors are paring some gains as the boost from French election fades. Euro traders are also getting cautious ahead of tomorrow's ECB rate announcement and press conference. The Japanese Yen stays soft, except versus Aussie and Kiwi, as tensions in North Korea escalates. Canadian Dollar, on the other hand, is recovering mildly despite weak retail sales.

Trump administration to deliver tax reform

All eyes are on what US President Donald Trump would deliver regarding his tax reforms today. There are talks that Trump would push to lower public companies' income tax rate to 15%, down from 35%. Besides, there would be cut on top tax rate on "pass through" businesses, from 39.6% to 15%. And there would also be tax rate cut on offshore earnings which are repatriated, down from 35% to 10%. Meanwhile, there won't be a so called "border-adjustment" tax on imports. Treasury Secretary Steven Mnuchin and National Economic Director Gary Cohn are scheduled to have a joint pressure conference around 1:30pm ET today, from the White House Briefing Room.

North Korea tensions escalate

It's reported that the US military has started installing the THAAD system in South Korea, to protect against threats from North Korea, ahead of the election day of the former on May 9. Hundreds of residents protested against such installation around 250km south of Seoul. In Seongju, there were protestors carrying signs reading "No THAAD, No War" and "Hey, US! Are you friends of occupying troops". And they are worried that such installation would indeed increase the risks of the area they live being targeted by North Korea.

In China, the foreign ministry spokesman Geng Shuang said "China strongly urges the United States and South Korea to stop actions that worsen regional tensions and harm China's strategic security interests and cancel the deployment of the THAAD system and withdraw the equipment." Geng warned that "China will resolutely take necessary steps to defend its interests."

In Japan, the Cabinet Secretariat Civil Protection Portal Site warned that "Japan is facing urgent new threats to peace and security and diverse situations, including the proliferation of weapons of mass destruction and ballistic missiles." Visit to the site surged to 5.7m this month as the Japanese are getting more concerned with the geopolical risks. Meanwhile, civilians will be warned in case of a nuclear attack. And they will have 10-minute to hide underground in case.

BoJ watched in upcoming Asian session

BoJ monetary policy announcement will be the main focus in the upcoming Asian session. The central bank is widely expected to keep policies unchanged. Meanwhile, it's expected that BoJ would lower inflation forecast in the quarterly Outlook for Economic Activity and Prices report, to be released after the policy announcement. But the central bank may upgrade growth forecast. In January forecast, BoJ projected core CPI to hit 1.5% yoy in this fiscal year. But core CPI is currently standing at 0.2% yoy in February with weak momentum in price growth. On the other hand, IMF raised Japan's growth forecast to 1.2% in 2017, up from January estimate of 0.8%. BoJ could share similar view.

Euro lose momentum ahead of ECB

ECB meeting will be another focus tomorrow. The first round result of French presidential election, and centrist Emmanuel Macron's high chance of winning the run-off should give ECB much relief. Nonetheless, the central bank is still not ready to hint on any stimulus exit yet. ECB President Mario Draghi has stressed enough that there are much downside risks to the economy, and underlying inflation stayed low. Risks are still tiled much to the downside in spite of the French election results. Meanwhile, various ECB officials have clearly expressed that the course of monetary policies are set for 2017. The central bank will continue with its EUR 60b per month asset purchase till the end of the year. And it's unlikely that policy makers will opt for a rate hike before the asset purchase ends. We'd expect the speculation and debate on exit to start heating up again in June. For now, tomorrow's announcement and press conference will likely be status quo.

Australian CPI back in RBA's target range

Australia CPI rose 0.5% qoq and 2.1% yoy in Q1, up from prior quarter's 0.5% qoq, 1.5% yoy. But missed expectation of 0.6% qoq, 2.2% yoy. That's the first time inflation is back in RBA's target range since 2014. RBA said earlier this month that it expected headline inflation to pick up over the course of 2017. However, it also expected that recovery in underlying inflation to be "a bit more gradual" due to subdued wage growth. Trimmed mean CPI rose to 1.9% yoy, up from 1.6% yoy and beat expectation of 1.8% yoy. Weighted median CPI rose to 1.7% yoy, up from 1.5% yoy, but missed expectation of 1.8% yoy.

Elsewhere...

Canada retail sales dropped -0.6% mom in February versus expectation of 0.2% mom. Ex-auto sales dropped -0.1% mom versus expectation of -0.3% mom. Swiss UBS consumption indicator was unchanged at 1.5 in March. Japan all industry activity index rose 0.7% mom in February.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9911; (P) 0.9940; (R1) 0.9962; More.....

Intraday bias in USD/CHF is neutral for the moment with 4 hour MACD trending up. At this point, with 0.9999 minor resistance intact, deeper fall is still in favor. Below 0.9897 temporary low will turn bias to the downside for 0.9812 and possibly below. Nonetheless, whole decline from 1.0342 is seen as a correction. Hence, we'll look for bottoming signal below 0.9812. Meanwhile, on the upside, above 0.9999 minor resistance will turn bias back to the upside for 1.0107 resistance.

In the bigger picture, we're still maintaining that firm break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the cross. However, the corrective nature of the fall from 1.0342 is starting to give the medium term outlook a bullish favor. Hence, in stead of looking for topping signal around 1.0342, we'd now pay closer attention to upside acceleration as USD/CHF approaches this level again.

Economic Indicators Update

Last week the US President Trump stated on twitter that he will "unveil his major tax reform plan on Wednesday April 26".

The recent reported US Q1 corporate earnings have been outperformed, pushing US stocks up. Tuesday evening, the Dow Jones index hit a 6-week high of 21022, and the S & P 500 index hit a 8-week high of 2392.15. The S & P 500 index has rallied around 1.7% over the past two days.

The value of US stock markets has reached the highest level since 2004, some investors worry US stocks are overvalued.

The current trend of the S & P 500 index remains bullish, trading above the 10-day and the 20-day SMAs.

The price is currently nearing the short-term major resistance level at 2400, where there is heavier pressure, we will likely see a consolidation at this area prior to the next move.

The 4-hourly Stochastic Oscillator reading is around 80, suggesting a correction.

The resistance level is at 2390, followed by 2400 and 2410.

The support line is at 2380, followed by 2370 and 2360.

A further 190 S&P 500 listed companies will report earnings this week including some major components such as: Microsoft, Amazon, Intel, and Alphabet. The mega-caps Apple and Facebook will report earnings next week.

Whether the bulls will break the major resistance depends on the performance of the upcoming corporate earnings, Trump's tax reform speech, and whether Trump's tax reform bill could be passed.

Keep a close eye on Trump's announcement, scheduled this afternoon, it will likely cause volatility for USD and US stock markets.

If the resistance level at 2400 is broken, we will likely see the bulls further test the resistance level at 2450.

The CAC is showing little movement in the Wednesday session. Currently, the index is trading at 5,277. It's another quiet day on the release front, as there are no German or Eurozone indicators on the schedule.

Overshadowed by the French election, the ECB holds a policy meeting on Thursday. No surprises are expected from the cautious central bank. The benchmark rate will likely remain at a flat 0.0%,where it has been pegged since March 2016. With the eurozone showing stronger inflation and growth numbers in the first quarter, there had been speculation that the ECB might taper its asset-purchase program or wind up the program earlier than December. However, the ECB appears in no rush to make any monetary moves, particularly with the current French election and the German election in September.

European stock markets jumped on the weekend, reacting with a thumbs-up to the outcome of the French presidential election. The CEC has also jumped on the bandwagon and remains close to 8-year highs. French voters will have a crystal-clear choice between the two final candidates, who want to take France in very different directions. Emmanuel Macron served as a minister under President Francois Hollande. He favors deregulation and is a staunch supporter of the European Union. Marie Le Pen, who heads the National Front, has campaigned on a 'France first' platform, vowing to curb immigration and take France out of the eurozone. Hollande and Francois Fillon, who ran in the first round, have thrown their support behind Macron and asked voters to reject 'extremism'. Macron is a heavy favorite to win the second round and become president, with polls giving him a comfortable lead of above 60%. Since opinion polls were accurate ahead of the first round of voting, the markets appear to relying on the current polls as well, meaning that the markets have priced in a Macron victory. Unless this sentiment drastically changes during the week, the election will be a non-event for the market. At the same time, nothing is a sure thing in politics, as underscored by the Brexit vote and the election of Donald Trump, two events which stunned the markets and triggered strong market movement.

Will the lights stay on in Washington this weekend? President Trump will have to punch in some overtime this week to avoid a shutdown of the federal government on Saturday. Congress must pass a spending bill which will fund the government until October, but the bill requires the backing of 60 senators. This means that the Republicans (who control 52 seats) will need the support of 8 Democrats. This has led to intensive bipartisan negotiations, and it's reasonable to expect that these talks could go down to the wire, as both sides try to stick to their positions and try not to blink first. The last shutdown was in 2013, lasting 17 days. Another shutdown would be embarrassing for Trump, as it would start on his 100th day in office and would cast doubts on his ability to push his budget and tax plan through Congress.

AUDUSD - The pair turned lower on Tuesday and followed through lower on Wednesday. On the downside, support resides at the 0.7450 level where a breach will aim at the 0.7400 level. Below that level will set the stage for a run at the 0.7350 level with a cut through here targeting further downside pressure towards the 0.7300 level. On the upside, resistance lies at the 0.7550 level. A cut through here will turn attention to the 0.7600 level and then the 0.7650 level where a violation will set the stage for a retarget of the 0.7700 level. On the whole, AUDUSD remains biased to the downside.