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USDJPY - The pair continued to retain its downside pressure with more declines expected. On the downside, support comes in at the 110.50 level where a break if seen will aim at the 110.00 level. A cut through here will turn focus to the 109.50 level and possibly lower towards the 109.00 level. On the upside, resistance resides at the 112.50 level. Further out, we envisage a possible move towards the 113.00 level. Further out, resistance resides at the 113.50 level with a turn above here aiming at the 114.00 level. On the whole, USDJPY looks to weaken further short term.

USD/CAD has inched upwards in the Friday session. Currently, the pair is trading at 1.3360. On the release front, Canada will release CPI, one of the most important economic indicators. CPI was unexpectedly high in January, at 0.9%. The markets are braced for a weak February report, with an estimate of 0.2%. Traders should be prepared for possible volatility from USD/CAD around the release time of this key event.

It could be a politically charged day in Congress, with the focus on health care legislation. President Trump, who campaigned on a promise to repeal the Affordable Care Act (“Obamacare”), wants the House of Representatives to vote on Friday on a bill which repeals and replaces part of Obamacare. A vote on Thursday was shelved, as there was not enough support to pass the bill. The proposed health bill has become a litmus test for the Trump administration, as a failure to pass the bill would indicate that Trump may not be able to push through Congress his pledges to lower taxes and increase fiscal stimulus. The dollar has sustained broad losses in the past week, in part over market frustration over the lack of any details regarding economic policy from Trump. If the President cannot make good on his promise to reform Obamacare, the dollar could continue to lose ground.

The Canadian dollar is sensitive to movement in oil prices, so lower crude prices could weigh on the currency. West Texas crude has dropped 1.0% in March, and dipped to $47.05 earlier this week, its lowest level since the end of November. Crude headed lower after Crude Oil Inventories posted a strong surplus of 5.0 million barrels, crushing the estimate of 1.9 million. The weekly indicator has recorded only two declines in 2017, as US oil drillers continue to enter the market and ratchet up US oil production. This, together with increased US shale production, has more than offset OPEC’s production cuts. On Monday, OPEC announced it was considering extending the production cut agreement by another 6 months, until the end of 2017.

The NZD/USD currency, popular 'Kiwi' is currently very close to POC zone where it might reject from. The POC (D L5, ABCD bottom, ATR pivot) is supporting longs and the price might spike up to 0.7030 where we see the confluence of EMA89 and ATR pivot. If 0.7030 breaks to the upside target is 0.7060 that corresponds to W H3 camarilla and D H5 target. At this point traders might focus on buying the dips as POC is bull-supportive and W L3 bullish support is just below.

Quick Summary:

W H3 - Weekly H3 Camarilla (Weekly resistance)

D H5 - Daily H5 Camarilla (strongest Daily resistance)

W L3 - Weekly L3 Camarilla (Weekly support)

After a day filled with news headlines surrounding the highly-anticipated vote in the House of Representatives to repeal and replace Obamacare, Republican lawmakers decided to postpone the vote. It is now set to take place today, during the US afternoon. According to various media reports, the delay was owed to the fact that the Republicans may not have had enough support to pass the bill, and thus decided to buy themselves some extra time in an attempt to secure the necessary votes.

But that was not all. In a shock-and-awe move, at least for us, President Trump raised the stakes by declaring that should the bill get voted down today, he is prepared to leave Obamacare in place and move on to tax reform. The US dollar had been trading sideways for most of Thursday, while the debate was raging. However, it started to gain some ground during the Asian morning Friday, following Trump's announcement that the issue of healthcare will be dealt with today, one way or another. This may be due to the fact that Trump showed his willingness to proceed with his tax plans without waiting for the healthcare approval, sending the message that tax reform is among his top priorities at the moment.

With regards to today's vote, in case the House votes for the bill, we expect the dollar and US equities to come under buying interest, on speculation that the new administration will soon proceed with taxes as well. USD/JPY rebounded on Trump's' announcement after it hit support once again at 110.70 (S1). During the early European morning Friday, the rate is trading slightly below the key obstacle of 111.60 (R1), which acted as the lower bound of a sideways range that contained the price action since early January. A House approval is possible to bring the pair back above that hurdle and signal its return within the aforementioned range.

On the other hand, if the House votes against healthcare reform, it could prove negative for the aforementioned assets. Market participants may begin to doubt whether Trump will be able to deliver the tax numbers he has pledged, considering that repealing the healthcare act is one of the conditions for making that feasible. In case of a negative vote, USD/JPY is possible to come under selling interest again and perhaps aim for another test near the 110.70 (S1) support zone. A decisive dip below that support is possible to aim for the psychological round figure of 110.00 (S2).

As for the rest of today's highlights

During the European day, we get the preliminary manufacturing and services PMIs for March from several European nations and the Eurozone as a whole. Most of these indices are expected to have ticked down, but to still remain elevated, which is likely to be another set of pleasant news for ECB policymakers, who at their latest meeting shifted to a more optimistic tone.

From the US, we get durable goods orders for February. Expectations are for both the headline and the core rates to have risen. The forecasts are supported by the nation's ISM manufacturing PMI for the month, where the New Orders sub-index rose notably, indicating a rising pace of increase in new orders. Rising orders could prove somewhat positive for the dollar, but much of the currency's forthcoming wave will depend on the healthcare vote. We also get the nation's preliminary Markit manufacturing and services PMIs for March.

From Canada, we get CPI figures for February. The core rate is expected to have stayed unchanged, while no forecast is available for the core figure. Our own view is that the core rate may have ticked up, given that the nation's Markit manufacturing PMI survey for February showed that there was a solid increase in the prices of finished products. Although a slight acceleration in core inflation could support CAD at the release, we do not expect it to lead to a material shift in the dovish tone of BoC officials. At the latest meeting, they did not appear particularly worried about inflation, but they did maintain a cautious tone with regards to exports, which continue to face competitiveness challenges as they noted. This was a hint that the strength of the Canadian dollar is muting the outlook for exports and as such, we expect BoC officials to maintain a relatively dovish tone in the foreseeable future, despite any modest progress in economic data.

USD/CAD traded higher yesterday and during Asian morning Friday, it emerged above the 1.3350 (S1) resistance (now turned into support barrier). Now the rate is headed towards the 1.3390 (R1) resistance, where investors may stand and await for the CPI data. A potential acceleration in the core CPI could encourage the bears to take advantage of that resistance and push the pair back below 1.3350 (S1). Something like that could open the way for the 1.3300 (S2) territory.

As for the speakers, we have two on the agenda: New York Fed President William Dudley and St. Louis Fed President James Bullard.

USD/JPY

Support: 110.70 (S1), 110.00 (S2), 108.80 (S3)

Resistance: 111.60 (R1), 111.90 (R2), 112.40 (R3)

USD/CAD

Support: 1.3350 (S1), 1.3300 (S2), 1.3270 (S3)

Resistance: 1.3390 (R1), 1.3425 (R2), 1.3460 (R3)

On the hourly chart of USDCAD, we see price undergoing a bigger three wave recovery A-B-C. Current intraday strength is part of final wave C, that may extend its gains towards the Fibonacci ratio of 61.8. Resistance may also be seen around the 1.3464/1.3496 region, where previous swing highs may act as turning points lower.

USDCAD, 1H

EUR/USD has pushed above the 1.08 line on Friday, courtesy of strong PMI numbers out of Germany and the Eurozone. In Germany, Flash Manufacturing PMI jumped to 58.3, above the forecast of 56.6 points. Eurozone Flash Manufacturing PMI improved to 56.2, above the estimate of 55.3. Both indicators hit their highest levels since 2011. There was further good news, as Services PMIs in Germany and Europe also pointed to stronger expansion. In the US, today's highlight is Core Durable Goods Orders, which is expected to rebound with a gain of 0.5%, after a decline of 0.2% in the previous reading.

It promises to be busy Friday on Capitol Hill, with the focus on health care legislation. President Trump, who campaigned on a promise to repeal the Affordable Care Act (“Obamacare”), wants the House of Representatives to vote on Friday on a bill which repeals and replaces part of Obamacare. A vote on Thursday was shelved, as there was not enough support to pass the bill. The proposed health bill has become a litmus test for the Trump administration, as a failure to pass the bill would indicate that Trump may not be able to push through Congress his pledges to lower taxes and increase fiscal stimulus. The dollar has sustained broad losses in the past week, in part over market frustration over the lack of any details regarding economic policy from Trump. If the President cannot make good on his assault on Obamacare, the dollar could continue to lose ground.

The economic picture has brightened in the eurozone, as the economy has improved in recent months. The German economy, the largest economy in Europe, remains in solid shape and is expected to expand 1.5% in 2017. However, consumer confidence has not followed suit. GfK German Consumer Climate lost ground for a second straight month, as the GfK indicator fell to 9.8 in March, its lowest level since November 2016. Eurozone Consumer Confidence remains weak, as the indicator posted a decline of -5 in March, almost unchanged. These soft numbers are largely a result of higher inflation, as consumers are concerned about their reduced purchasing power.

The DAX Index has ticked lower in the Friday session, but remains above the symbolic 12,000 level. Currently, the DAX is at trading at 12,031.75. On the release front, Germany the Eurozone posted impressive PMI numbers. In Germany, Flash Manufacturing PMI jumped to 58.3, above the forecast of 56.6 points. Eurozone Flash Manufacturing PMI improved to 56.2, above the estimate of 55.3. Both indicators hit their highest levels since 2011. There was further good news, as Services PMIs in Germany and Europe also pointed to stronger expansion.

The economic outlook appears brighter in the eurozone, as the economy has improved in recent months. The German economy, the largest in Europe, remains in solid shape and is expected to expand 1.5% in 2017. However, consumer confidence has not followed suit. GfK German Consumer Climate lost ground for a second straight month, as the GfK indicator fell to 9.8 in March, its lowest level since November 2016. Eurozone Consumer Confidence remains weak, as the indicator posted a decline of -5 in March, almost unchanged. These soft numbers are largely a result of higher inflation, as consumers are concerned about their reduced purchasing power.

It promises to be busy Friday on Capitol Hill, with the focus on health care legislation. President Trump, who campaigned on a promise to repeal the Affordable Care Act (“Obamacare”), wants the House of Representatives to vote on Friday on a bill which repeals and replaces part of Obamacare. A vote on Thursday was shelved, as there was not enough support to pass the bill. The proposed health bill has become a litmus test for the Trump administration, as a failure to pass the bill would indicate that Trump may not be able to push through Congress his pledges to lower taxes and increase fiscal stimulus. The dollar has sustained broad losses in the past week, in part over market frustration over the lack of any details regarding economic policy from Trump. If the President cannot make good on his assault on Obamacare, the dollar could continue to lose ground.

'Retailers continue to be squeezed by rising cost pressures on the one hand, and intense competition on the other, which will limit their ability to raise prices.' - Anna Leach, CBI

UK retail sales posted the largest drop in almost seven years in the three-month period to February amid higher fuel prices that put pressure on household budgets. Nevertheless, the Office for National Statistics reported on Thursday that British retail sales advanced 1.4% last month, following the preceding month's fall of 0.5% and surpassing analysts' expectations for a 0.4% rise. Despite a stronger-than-expected rebound, in the three months to February sales dropped 1.4%, compared to a 0.5% decline seen in the three-month period to January. That marked the biggest fall since March 2010. On an annual basis, sales were up 3.7%, whereas analysts anticipated a 2.6% increase after a 1.0% gain registered in January. Earlier this week, the ONS reported consumer prices jumped 2.3%, the highest in more than three years, while inflation used for calculation retail sales growth advanced 2.8%, the highest since March 2012. The ONS also noted that higher inflation, mainly driven by the weak Pound, started hurting consumers' pockets. Consumer spending is closely followed by the Bank of England, as it accounts for nearly two-thirds of UK output. On Thursday, one of the largest apparel retailers in Britain Next said it was 'extremely cautious' about prospects for the year ahead after it reported a 4% annual profit decline.

'The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending March 11, a decrease of 0.1 percentage point from the previous week's unrevised rate.' - US Department of Labour

The number of Americans filing for unemployment benefits rose more than expected last week, hitting the highest level over the past seven weeks, official figures revealed on Thursday. The US Department of Labour reported initial jobless claims rose by 15,000 to a total of 258,000 in the week ended March 17, up from the preceding week's upwardly revised reading of 243,000. In the meantime, market analysts expected unemployment claims to hit 240,000 during the reported week. Nevertheless, even despite the uptick in last week's claims, US labour market remained solid, with employers being slow to dismiss workers, as it becomes rather difficult to fill vacancies with experienced employees. The February figure marked the 80th consecutive week of claims below 300,000, which is widely considered as a healthy jobs market.

Apart from that, Thursday's report also featured yearly alterations for previously reported initial and continuing claims, with the latter benchmark dropping 39,000 to settle at 2M over the week ended March 10, while the unemployment rate among those eligible for jobless benefits managed to decline to 1.4% from the 1.5% reading registered previously.

'Because the daily chart is at the neck line of a head and shoulders bottom, there is a 40% chance of a strong breakout and a measured move up.' – Al Brook, Brooks Price Action (based on investing.com)

Pair's Outlook

On Friday morning the common European currency traded against the US Dollar near the support, provided by the monthly R1, at the 1.0772 level. The currency exchange rate was still undecided on its course during the day, as the rate bounced around the mentioned level of significance. Traders are advised to watch out for a break to the upside, as it is forecasted by various market analysts, which means that bullish bias is set to prevail. However, the direction is most likely going to be set by the fundamentally important US healthcare vote.

Traders' Sentiment

SWFX traders remain bearish, as 63% of open positions are short on Friday. Meanwhile, 53% of trader set up orders are to sell the Euro.