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'The core reading is still low and the trimmed mean is creeping back into the target band but it's still on the lower end. Inflation is still pretty soft by historical standards. For us, the RBNZ will probably just remain on the sidelines from here.' - Tom Kennedy, JP Morgan

Inflation growth in New Zealand hit its five-year high in the three-month period to March, surprising markets. Statistics New Zealand reported on Thursday that inflation rose at an annualised 2.2% rate in the Q1 of 2017, the highest level in five years. Thus, the inflation rate hit the mid-point of the Reserve Bank of New Zealand's inflationary target range of 1-3% for the first time in more than a year. On a quarterly basis, the Consumer Price Index climbed 1% in the March quarter, while market analysts anticipated a slighter increase of 0.8%. Therefore, annual inflation growth surpassed analysts' expectations for a 2.0% rise. Following the release, the New Zealand Dollar rose from 0.7000 to 0.7042 against its US counterpart. The Q1 inflation acceleration was in large part driven by higher oil and food prices and a tax hike on alcohol and tobacco. The housing market also provided a significant boost to inflation in the reported quarter. Nevertheless, New Zealand's Central bank is unlikely to change its monetary policy despite stronger-than-expect inflation data. The Bank's interest rates are also expected to remain unchanged at record lows of 1.75%. Excluding volatile items, such as petrol, alcohol and cigarettes, annual inflation climbed just 1.5% but remained within the Bank's target range.

'Twenty-five Nobel Prize-winning economists have united to warn far-right candidate Marine Le Pen against using their ideas to campaign against the euro and the European Union in her bid for the French presidency.' – John Follain, Bloomberg

Pair's Outlook

On Thursday morning the common European currency against the Greenback remained below the second weekly resistance, which stopped the pair's Tuesday's jump. The resistance level is located at the 1.0729 mark. It is possible that the currency exchange rate will retreat to the 1.0687 level, where the 20-day SMA together with the monthly PP are located at. On the other hand a break of the weekly R2 would free up the range up to the weekly R3, which is located at the 1.0780 level. However, most likely the pair will remain at the current levels, as the markets are expecting the French presidential elections.

Traders' Sentiment

Traders remain bearish, as 53% of open positions are short. However, 54% of trader set up orders are to buy the Euro.

'The USD side also looks supportive for further gains in cable, which reflects softer US data surprises, a longer timeline for fiscal reform and a shift in Fed pricing.' – TD Securities (based on FXStreet)

Pair's Outlook

As was anticipated, the GBP/USD currency pair underwent a correction on Wednesday, passing through only the immediate support, namely the weekly R3. According to technical studies, the Cable should continue to weaken today, with the upper Bollinger band and the weekly R3 now acting as a relatively strong resistance area. In case bears do take over the market, the Sterling would risk slipping under 1.27, despite the weekly R2 providing support around that area. Ultimately, a plunge towards 1.2620 is possible, as geopolitical factors keep weighing on the given pair. On the other hand, another leg up is unlikely to cause the 1.2850 mark to get pierced today.

Traders' Sentiment

Today both the market sentiment and all pending orders reached a perfect equilibrium.

'We still think the dollar is going to strengthen over time based on the outlook for US monetary policy... but for now, with markets not heavily focused on monetary policy, it could explain this consolidation (for the greenback).' – Wells Fargo (based on Business Recorder)

Pair's Outlook

The US Dollar managed to appreciate against the Yen on Wednesday, with the monthly S1 limiting upside volatility. Ultimately, trade closed in front of the 200-day SMA, but this level remains an unreliable resistance. Nevertheless, the Buck is still unlikely to post significant gains, as supply, represented by the monthly S1, is still intact. However, the RSI indicator suggests the Greenback is to keep recovering, thus, preserving the descending channel pattern. Overall, the majority of signals are bullish, despite other bearish signs. A lot of uncertainty is currently surrounding the USD/JPY, especially since political events and factors continue to pressure the US currency.

Traders' Sentiment

Nearly three quarters (74%) of all open positions are long today, whereas 57% of all pending orders are to acquire the Buck.

'It appears that large fund selling in the Far East overnight is also putting pressure on the price of gold, and this move has kept the Wall Street gold traders guarding their long positions.' – Walter Pehowich, Dillon Gage Metals (based on Reuters)

Pair's Outlook

As forecasted before the yellow metal has retreated to the support of the 61.80% Fibonacci retracement level, above which it remained on Thursday morning. The retracement level is located at the 1,278.73 level. It is supported by the monthly R1 at 1,275.52 and the weekly PP at 1,274.84. It is most likely that after finding support during the late hours of Wednesday trading the bullion's price will resume the surge, which was stopped short before reaching the 1,300 mark. The reason for that is the fact that there are no resistance levels up to the 1,300 level.

Traders' Sentiment

SWFX traders are bearish on the metal, as 56% of open positions are short. However, 64% of trader set up orders are to buy the metal.

Cable bounced back above 1.2800 after correction from fresh multi-month high at 1.2904 was contained by thickening hourly cloud at 1.2770 that sidelines immediate threats of deeper pullback.

Bullish technical studies and positive sentiment on early election decision keep the pair supported.

However, the downside would remain vulnerable as daily studies are overbought, but no firmer bearish signal seen so far.

Hourly cloud (spanned between 1.2773 and 1.2708) marks significant support and break below it would signal further easing which would expose key support at 1.2620 (200SMA).

Tuesday's high at 1.2859 marks the first pivot ahead of key 1.2904 barrier, break of which would unlock psychological 1.3000 barrier.

Res: 1.2859, 1.2904, 1.2950, 1.3000
Sup: 1.2800, 1.2770, 1.2755, 1.2708

The pair is trading in extended consolidation around 200SMA (currently at 108.85) after recent bear-leg from 111.56 (10 Apr high) found footstep just above 108.00 round-figure support. Near-term action is directionless and entrenched within 108.30/109.20 range, as studies on lower timeframes are neutral. Larger picture, however, shows bearish, with current consolidation seen as a pause of larger downtrend which eyes initial target at 107.84 (Fibo 61.8% of larger 101.17/118.65 rally) and may extend further down on break of the latter. Limited upside is seen for now, with falling 10SMA (currently at 109.33) reinforcing initial 109.20 barrier and extended upticks expected to hold below daily Tenkan-sen (currently at 109.84) and former lows at 110.10.

Res: 109.20, 109.33, 109.84, 110.10
Sup: 108.70, 108.30, 108.11, 107.84

Weekly
    •    Last Candlesticks pattern: Shooting doji
    •    Time of formation: 20 Feb 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Bearish engulfing pattern
    •    Time of formation: 21 Mar 2017
    •    Trend bias: Near term down



Aussie did meet renewed selling interest at 0.7611 (we recommended in our previous update to sell at 0.7570 and a short position was entered) earlier this week and has slipped, retaining our bearishness for the fall from 0.7750 top to bring at least a strong retracement of the rise from 0.7158, hence further decline to 0.7450-55 (50% Fibonacci retracement of 0.7158-0.7750), then towards 0.7380-85 (61.8% Fibonacci retracement) would be seen, however, reckon downside would be limited to 0.7300-10 and bring rebound later.

On the upside, whilst initial recovery to 0.7560-65 cannot be ruled out, reckon the Kijun-Sen (now at 0.7612) would cap upside and bring another decline later. Only a daily close above the Kijun-Sen would abort and signal first leg of decline from 0.7750 has ended, bring a stronger rebound to 0,7640-50 but resistance at 0.7680 should cap upside, price should falter below 0.7700-10, bring another decline later. 



Recommendation: Hold short entered at 0.7570 for 0.7390 with stop above 0.7620.



On the weekly chart, as aussie recovered after finding support at 0.7473 (just held above the Kijun-Sen at 0.7468) and consolidation above this level would be seen, however, if our view that top has been formed at 0.7750 is correct, upside should be limited to 0.7590-00 and bring another decline, below the Kijun-Sen (now at 0.7468) would add credence our view that the rebound from 0.7158 has ended at 0.7750, then further fall towards 0.7380-85 (61.8% Fibonacci retracement of 0.7158-0.7750) would be seen, however, reckon downside would be limited to 0.7290-00, bring recovery later.

On the upside, expect recovery to be limited to 0.7575-80 and the Tenkan-Sen (now at 0.7612) should hold, bring another decline later. Above resistance at 0.7641 would risk test of resistance at 0.7680 but only a sustained breach above this level would signal the retreat from 0.7750 has ended instead, bring another bounce towards this level. Looking ahead, only break of 0.7778 resistance would suggest a possible upside break of early established broad range, bring further rise to 2016 high at 0.7835, above there would confirm and encourage for headway to 0.7900 and later towards psychological level at 0.8000.

The Euro rallied in early European trading, probing above key near-term barrier at 1.0738 (daily Kijun-sen) which capped gains in past two days.

Wednesday's consolidation of Tuesday's strong rally was contained by former strong barrier, now support at 1.0700, keeping near-term bulls intact.

Also, US dollar is weaker on lowered expectations on rate hike in June, which gives additional support to Euro, few days ahead of French election.

Outcome of the first round of election will be the main driver for the single currency, which is expected to come under stronger pressure in case anti-EU candidates win on Sunday.

Until then, the pair is expected to remain bid and extend gains, driven by bullish technicals and weaker dollar.

Daily close above Kijun-sen would be seen as bullish signal for extension towards 1.0776 (Fibo 61.8% of 1.0905/1.0568 descend).

Conversely, repeated close below Kijun-sen line would signal prolonged consolidation with near-term risk expected to shift lower.

Res: 1.0759, 1.0776, 1.0800, 1.0825
Sup: 1.0720, 1.0700, 1.0685, 1.0657

USD/CHF - 0.9960

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9970

Kijun-Sen level                    : 0.9973

Ichimoku cloud top                 : 1.0004

Ichimoku cloud bottom              : 0.9985

Original strategy :

Sold at 1.0000, Target: 0.9900, Stop: 1.0030

Position : - Short at 1.0000

Target :  - 0.9900

Stop : - 1.0030

New strategy  :

Hold short entered at 1.0000, Target: 0.9900, Stop: 1.0010

Position : - Short at 1.0000

Target :  - 0.9900

Stop : - 1.0010

As the greenback has remained under pressure after recent selloff, adding credence to our bearish view that recent decline from 1.0108 top is still in progress and bearishness remains for further weakness to 0.9943-48 (1.236 times projection and previous support) and then 0.9926 (61.8% Fibonacci retracement of 0.9813-1.0108) but reckon 0.9900-05 (1.618 times projection) would hold on first testing, bring rebound later.

In view of this, we are holding on to our short position entered at 1.0000. Above previous support at 1.0008 would defer and risk rebound to 1.0020-30 but still reckon indicated resistance at 1.0067 would remain intact.