Sample Category Title

Daily Pivots: (S1) 0.8751; (P) 0.8795; (R1) 0.8860; More...

Intraday bias in EUR/GBP remains neutral for the moment. On the upside, break of 0.8842 resistance will argue that corrective fall from 0.8977 has completed, after touching 0.8720 support. Further rise should be seen back to 0.8924 resistance and above. However, sustained break of 0.8720 will bring deeper decline back to 0.8545 instead.

In the bigger picture, outlook is rather mixed for now, except that price actions from 0.9267 (2022 high) are part of the long term range pattern from 0.9499 (2020 high). With 0.8720 support intact, rise from 0.8545 is in favor to continue through 0.8977. However, firm break of 0.8720 will argue that such rebound has completed, and open up deeper fall through this support level.

Daily Pivots: (S1) 1.5994; (P) 1.6095; (R1) 1.6246; More...

EUR/AUD failed to break through 1.6200 resistance and retreated. Intraday bias remains neutral first. Near term outlook stays stays bullish with 1.5826 resistance turned support intact. On the upside, break of 1.6200 will resume the larger rise from 1.4281 to 61.8% projection of 1.4281 to 1.5976 from 1.5254 at 1.6302 next. However, firm break of 1.5826 will confirm short term topping, and bring deeper fall to 55 day EMA (now at 1.5725).

In the bigger picture, the strong support from 55 week EMA (now at 1.5404) is raising the chance of bullish trend reversal. Focus is now on 1.6434 cluster resistance (38.2% retracement of 1.9799 to 1.4281 at 1.6389). Sustained break there should confirm that whole down trend from 1.9799 (2020 high) has completed. Further rally should then be seen to 61.8% retracement at 1.7691. However, rejection by this cluster resistance will make medium term outlook neutral at best.

Daily Pivots: (S1) 0.9914; (P) 0.9946; (R1) 0.9966; More...

A temporary top was formed at 0.9976 in EUR/CHF with current retreat. Intraday bias is turned neutral first. Outlook is unchanged that corrective decline from 1.0095 should have completed at 0.9704. Further rally is in favor as long as 0.9856 minor support holds. Above 0.9976 will target 1.0004 and then 1.0095. However, firm break of 0.9856 will dampen this bullish view and turn bias back to the downside for 0.9704 support instead.

In the bigger picture, prior rejection by 55 week EMA (now at 1.0011) and 38.2% retracement of 1.1149 to 0.9407 at 1.0072 suggests that medium term outlook is staying bearish. That is, down trend from 1.2004 is not completed yet and is in favor to resume through 0.9407 at a later stage. However, decisive break of 1.0095 resistance will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484).

Daily Pivots: (S1) 1.3659; (P) 1.3698; (R1) 1.3752; More....

Intraday bias in USD/CAD stays neutral and outlook is unchanged. Further rally is expected with 1.3650 support intact. On the upside, break of 1.3860 will resume the rally from 1.3261 to retest 1.3976 high. However, firm break of 1.3650 will mix up the near term outlook and bring deeper pullback to 55 day EMA (now at 1.3572) first.

In the bigger picture, the up trend from 1.2005 (2021 low) is still in progress. Break of 1.3976 will confirm resumption and target 61.8% projection of 1.2401 to 1.3976 from 1.3261 at 1.4234. Firm break there will pave the way to long term resistance zone at 1.4667/89 (2016, 2020 highs). On the downside, break of 1.3261 support is needed to confirm medium term topping. Otherwise, outlook will remain bullish even in case of deep pull back.

Daily Pivots: (S1) 0.6638; (P) 0.6682; (R1) 0.6715; More...

Range trading continues in AUD/USD and intraday bias stays neutral. On the upside, another rise through 0.6729 should confirm short term bottoming at 0.6563, just ahead of 0.6546 fibonacci level. Intraday bias will be back on the upside for 55 day EMA (now at 0.6774). Sustained break there will pave the way back to retest 0.7156 high. On the downside, however, sustained break of 0.6546 will carry larger bearish implication and target 0.6169 low.

In the bigger picture, rise from 0.6169 (2022 low) has completed at 0.7156, after rejection by 55 month EMA (now at 0.7158). Deeper decline would then be see back to 61.8% retracement of 0.6169 to 0.7156 at 0.6546, even as a corrective fall. Sustained break there will raise the chance of long term down trend resumption through 0.6169 low.

Daily Pivots: (S1) 131.45; (P) 132.04; (R1) 133.04; More...

Intraday bias in USD/JPY remains neutral for the moment. Further decline is expected as long as 135.10 resistance holds. The current favored case is that rebound from 127.20 has completed at 137.90 already. Sustained trading below 61.8% retracement of 127.20 to 137.90 at 131.28 will pave the way to retest 127.20 low next. However, break of 135.10 will turn bias back to the upside for 137.90 instead.

In the bigger picture, rebound from 127.20 should have completed at 137.90 as a corrective move, with strong break of 55 day EMA. The down trend from 151.93 (2022 high) is not over yet. Break of 127.20 will resume this down trend and target 61.8% projection of 151.93 to 127.20 from 137.90 at 122.61. This will now be the favored case as long as 137.90 resistance holds.

Daily Pivots: (S1) 0.9184; (P) 0.9250; (R1) 0.9291; More...

Intraday bias in USD/CHF remains neutral and outlook is unchanged. Corrective pattern from 0.9058 low should still be in progress with rise from 0.9070 as the third leg. Above 0.9339 will target 0.9439 resistance and possibly above. But overall, outlook will stay bearish as long as 0.9474 fibonacci level holds, and another decline through 0.9058 is expected at a later stage.

In the bigger picture, fall from 1.1046 (2022 high) should still be in progress with 38.2% retracement of 1.0146 to 0.9058 at 0.9474 intact. Rejection by 55 week EMA was a medium term bearish sign. Break of 0.9058 will resume such decline towards 0.8756 support (2021 low). But overall, such fall is still as a leg in the long term range pattern from 1.0342 (2016 high). So, downside should be contained by 0.8756 to bring reversal.

Daily Pivots: (S1) 1.0720; (P) 1.0754; (R1) 1.0804; More...

Intraday bias in EUR/USD remains on the upside and outlook is unchanged. Corrective fall from 1.1032 should have completed at 1.0515 already. That came after defending both 1.0482 support and 38.2% retracement of 0.9534 to 1.1032 at 1.0258. Further rise should be seen for retesting 1.1032 high next. On the downside, below 1.0703 minor support will turn intraday bias neutral again first.

In the bigger picture, as long as 1.0482 support holds, rise from 0.9534 (2022 low) should continue to 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273. However, sustained break of 1.0482 will bring deeper fall to 61.8% retracement of 0.9534 to 1.1032 at 1.0106, with risk of breaking through 0.9534 eventually.

EUR/USD breaks higher

The US dollar struggles as the market prepares for a 25-basis-point rate hike by the Fed. A pop above last week’s liquidation point at 1.0760 sends a strong bullish signal, prompting sellers to cover their bets. As the RSI rose into overbought territory, the bulls may see a pullback as an opportunity to stake in at a discount with 1.0700 at the base of the momentum as the first support. A close above the February spike of 1.0800 would reinforce the upward bias and open the door to an extension to the supply zone around 1.0900.

USD/CAD bounces back

The Canadian dollar slipped as February’s monthly CPI fell short of expectations. After lifting offers around the December high of 1.3700, the US dollar has been drifting lower in search of bids. Overall sentiment remains upbeat from the daily chart’s perspective. The demand zone above 1.3600 over the 30-day SMA has caught buyers’ eyes once again. A successful rebound would keep the greenback in the lead. 1.3810 right under the recent peak (1.3860) is a key hurdle and its breach would extend gains towards 1.4000.

FTSE 100 attempts to rebound

Equities recover as investors reposition ahead of the Fed decision. A surge above last Friday’s high of 7500 has alleviated the pressure on the FTSE 100 but the buy side is not out of the woods yet. 7630 from a previous faded bounce is a key resistance where trapped buyers and new sellers could drive the bids lower. However, a bullish breakout would suggest that the path of least resistance is up and a meaningful recovery above 7740 near the 20-SMA could then take shape. 7420 is a fresh support in case of further hesitation.

Markets

Concerns about financial stability continued to ease yesterday. Risk-on after the CS rescue entered its second day, lifting equities in Europe about 1.5% higher. Main indices in the US rose by 0.7-1.3%. Core bond yields surged. Markets realized their central bank positioning was (and still is) too dovish given subsiding (at least for now) tail risk and still-high inflation. German yields soared 11.1 (30-y) to 25.6 bps (2y). European swap yields advanced by about half that. US rates skyrocketed 6.7 bps to 19 bps in a similar curve inversion deepener. The slight relative yield advantage combined with the bright mood gave the euro an edge over the dollar. EUR/USD took out the 1.0735 resistance level and closed at 1.0768. The narrative was different for sterling. With UK gilt yields adding a mere 5.4 bps at the front-end, GBP took a whammy against both the euro and the dollar despite being a risk-sensitive currency. EUR/GBP bounced off 0.8735 support (50% retracement March-Sep 2022 rally) to finish the day at 0.8814.

Asian stock markets eke out nice gains following the performance on WS. Japan outperforms, catching up with the rest after being closed yesterday. Bunds trade sideways, US Treasuries rise marginally. Cash yields in the country drops a few bps. It’s equally quiet on FX markets with the dollar, the euro and the Japanese yen all trading subdued. Markets are clearly in countdown mode. The ECB watchers conference kicks off with a ton of speakers scheduled. BuBa’s Nagel in an interview with the Financial Times already gave a glimpse of what to expect (see headline below). Focus later obviously then shifts to the Fed policy meeting tonight. US money markets add an 80% probability to the Fed hiking by 25 bps to 4.75-5%. Not only would this in current market thinking be the final hike, there are about three rate cuts priced in for the second half of this year. Investors assume financial stability is going to dominate monetary policy from tomorrow on. This in our view is grossly underestimating the Fed’s resolve to kill (sticky) inflation. It is pity indeed that the situation around First Republic Bank hasn’t been resolved ahead of the meeting. But we believe there are tools other than the policy rate that are more equipped to address any (liquidity) strains in the market should tensions build again. It is the approach the ECB followed last week Thursday and which we believe the Fed will adopt too. How much more tightening is being projected in the dot plot is the key question. But given current market positioning, yields especially at the short end of the curve have further upside scope. This may also call off the recent EUR/USD recovery. 1.068 serves as a first support, followed by the 1.06 big figure. Sterling investors are counting down to the Bank of England meeting tomorrow. UK February CPI numbers this morning delivered a nasty surprise, coming in at 10.4% headline and 6.2% core. Both are an unexpected acceleration from January. Rate hike coming up. EUR/GBP eases back below 0.88 in a first reaction.

News and views

German Bundesbank president Nagel in an interview with the Financial Times said that the central bank’s fight against inflation is not over. “If we were to tame this stubborn inflation, we will have to be even more stubborn”. There’s still some way to go (in hiking rates) and Nagel believes that they are approaching restrictive area. Once the policy rates hit peak levels, the central bank should resist calls to cut them as otherwise inflation could flare up again. The German central banker is also in favour of speeding up the balance sheet winddown when the council reviews the current €15bn/month in July. He remains bullish on the economy thanks to an extraordinarily robust labour market. In the wake of the recent Credit Suisse rescue, he argued that it’s way too early to say that the EMU is heading for a credit crunch which would choke demand.

The IMF and Ukrainian authorities have reached a staff-level agreement on a set of macroeconomic and financial policies that would be supported by a new 48-month Extended Fund Facility Arrangement. The $15.6bn EFF aims to support the Ukrainian authorities anchor policies that sustain fiscal, external, price and financial stability, and support the ongoing gradual economic recovery, while promoting long-term growth in the context of post-war reconstruction and Ukraine’s path to EU accession. The IMF has to approve changes to its lending rules to involve exogenous shocks that are beyond the control of country authorities and the reach of their economic policies, and which generate larger than usual tail risks. It’s their first loan to a country in war.