Morning Report: Whipsaw Price Action Heading Into Quarter End
Littlefish FX | Mar 25, 2015 05:36AM ET
KEY DATA RELEASES TODAY (GMT) :
0900 EUR German Ifo Business Climate 107.4 v 106.8
1030 USD FOMC Member Evans Speaks
120 USD Core Durable Goods Orders m/m 0.3% v 0.3%
1230 USD Durable Goods Orders m/m 0.3% v 2.8%
OVERNIGHT:
EUR/USD was rangy in Asia after a hugely volatile London and New York session in which we again saw whip saw moves post US CPI, as the USD veered stronger then weaker only to close stronger again as the market continues to chase its tail. Having traded above 1.10 again (first time since the FOMC pop) we have settled into a 1.0900/40 range in Asia. Preference remains to the downside as the reported Real Money Euro selling is still very much ongoing – much less dependent on levels. With the CPI coming in as per the survey should be a USD positive throughout this week as US data expectations are now low post FED and June is still on the radar if NFP and Average Earnings turn out to be robust in a week’s time. Levels to watch now 1.1060 is the key topside resistance, whereas 1.0890, 1.0775 are near term support.
USD/JPY is subdued during Asain trade although the key support at 119.30 largely held thanks to a better than expected US CPI and New Home Sales. The USD after having a wobble finally ended the day higher again. The USD has been a touch softer in Asia and USD/JPY needs to really break back above 120.30/40 to change the balance of things. We are in no man’s land here for now so expect further chop. Today we get US Durable goods which can be a volatile series but any better data that follows on from the reasonably good US CPI will be viewed as USD positive. The market focus really turns to NFP next week and on balance the USD could well regain some ground given the amount of position paring that we have seen.
GBP remains heavy across G10 as UK CPI was slightly weaker yesterday and despite rallying back to 1.4980 post US CPI shenanigans, cable failed to retake 1.5020 key short term resistance and has fallen sharply back to 1.4850 which has been a support level for the last few sessions. With the BOE firmly on hold and perhaps veering to dovishness, and the US where CPI printed an in line number which potentially keeps June hike on the radar, expect cable to remain soft and eventually to break to new lows
PRICE ACTION OVERVIEW:
EUR: While 1.0760/40 supports target 1.1190/1.1210 equality corrective target
GBP: While 1.5030/50 contains upside target 1.4630
JPY: While 119/118.50 contains downside target 124.00
CAD: While 123.50/124 contains downside target 130
AUD: While .7940/6- contains upside target .72
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KEY TRADES:
| FX Pair | Short Term | Position/Date | Entry Level | Target | Stop | Comments |
| EUR/USD | Neutral | Await new signal | ||||
| GBP/USD | Bearish | Await new signal | ||||
| USD/JPY | Neutral | Await new signal | ||||
| USD/CAD | Neutral | Await new signal | ||||
| AUD/USD | Neutral | Await new signal |
ANALYSIS:
EUR/USD Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
- Eroding trendline resistance at 1.10 while this area hold potential for further consolidation and retest 1.0760/40 but while this supports there is potential for a broader corrective phase which has an equality target at 1.1180/1.12. Only below 1.06 suggests trend resumption
- Order Flow indicators; OBV consolidates off lows, Linear Regression and Psychology bullish but retreating form best levels to attempt midpoint tests from above
- Monitoring price action and Order Flow below 1.12 to reset short positions targeting 1.03
GBP/USD: Short Term (1-3 Days): Bearish - Medium Term (1-3 Weeks) Bearish
- While 1.5030/50 caps upside expect a break of 1.47 to confirm trend resumption, above 1.51 suggests a test of 1.52 in broader corrective pattern
- Order Flow indicators; OBV consolidating at lows, Linear Regression and Psychology pierce midpoints from below but continue to stall
- Monitoring price and Order Flow against 1.5030/50 targeting 1.46/45
USD/JPY: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish
- While 119 supports expect retest and eventual break of year to date highs en-route to 124, only below 118 concern bullish bias
- Order Flow indicators; OBV continues consolidation, Linear Regression and Psychology bearish
- Monitoring price action and Order Flow indicators for longs targeting 124
USD/CAD: Short Term (1-3 Days): Bullish - Medium Term (1-3 Weeks) Bullish
- While 1.2350/1.24 supports a close above 1.28 will target key 1.30 only below 1.2350 concerns bullish bias
- Daily Order Flow indicators; OBV retreats from highs, Linear Regression and Psychology bearish
- Monitoring price action and Order Flow indicators to set longs targeting 1.30
AUD/USD: Short Term (1-3 Days): Neutral - Medium Term (1-3 Weeks) Bearish
- Rejected at .79 a break below .7760 suggests false break from bearish channel and early return to trend. A close above yesterdays highs targets .8050 in broader correction.
- Order Flow indicators; OBV consolidating at lows, Linear Regression and Psychology rotating at midpoint
- Monitoring price action and Order Flow indicators to set shorts targeting .72
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