New York FX: Risk Appetite Fades, Oil Unloads
Littlefish FX | Feb 24, 2016 11:44AM ET
New York Forex Report: The continued slide in Oil prices over the European morning is weighing heavily on risk sentiment with equity markets dragged lower in tandem. The Saudi decision not to cut Oil production is undoing much of the recent gains in Oil as over-supply fears once again cloud the outlook for Oil. The US dollar continues firm, boosted by Fed member comments yesterday supporting a March rate hike. Key data for the US session will be a raft of US PMIs and also Crude Oil inventories, after news of last week’s record build weighed on prices.
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Despite a sharp turn lower in equity markets over the early European session, EUR is weaker too suggesting a decline in hedging volume and pressure from a resurgent US Dollar.
Technical: While prior pivotal support at 1.1050/30 acts as intra day resistance bears target prior range support at 1.08. Only a close over 1.1150 eases immediate downside pressure.
Interbank Flows: Bids 1.0950 stops below. Offers 1.1150 stops above
Retail Sentiment: Neutral
Trading Take-away: Neutral
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Brexit fears continue to weigh as Sterling stares into the abyss, weighed upon also by comments from BOE Governor Mark Carney who said that there is considerable room for further stimulus if needed.
Technical: While 1.4040/60 acts as resistance expect a continued grind lower for a test of the next major monthly downside objective at 1.37. Only a close over 1.4450 eases immediate downside pressure.
Interbank Flows: Bids 1.39 stops below. Offers 1.4040 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short
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USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: A fresh deterioration in global risk sentiment has seen a return to JPY safe-haven buying.
Technical: The failure at 112 opens retest of 111 bids. Only a close over 113.40 eases immediate downside pressure.
Interbank Flows: Bids 111.50 offers below. Offers 113.50 stops above
Retail Sentiment: Bullish
Trading Take-away: Short
EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Heavy selling continues in EUR/JPY as expectations for further ECB easing continue to stand in contrast to the safe-haven demand supporting JPY.
Technical: While 123.70 offers intraday resistance expect a continued grind lower to print fresh lows and test bids at the psychological 120 en route to a weekly downside objective at 118/117
Interbank Flows: Bids 122 stops below. Offers 124 stops above.
Retail Sentiment: Bullish
Trading Take-away: Short
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Fundamental: Heavy risk aversion in markets coupled with a stronger US Dollar has AUD/USD under pressure heading into the New York open.
Technical: Expected retest of offers above .7240 attracts near term profit taking. While .7150 supports intraday expect a test of range resistance at .7300. Only a failure at.7050 pivotal support threatens bullish bias
Interbank Flows: Bids .7150 stops below. Offers .7300 stops above.
Retail Sentiment: Neutral
Trading Take-away: Neutral
USD/CAD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Fundamental: A renewed downturn in Oil combined with a stronger US Dollar have seen USD/CAD continue to push higher into the New York open. Traders will be keeping an eye on US crude oil inventories following last week’s record build. A similar number could drive USD/CAD higher still.
Technical: While USD/CAD trades sub 1.3850 downside pressure remains the driver with bears fully focused on a retest of 1.3630 bids ahead of 1.3530. A close over 1.3850 suggests a retest of 1.40 offers in broader range trade.
Interbank Flows: Bids 1.3630 stops below. Offers 1.3850 stops above
Retail Sentiment: Bullish
Trading Take-away: Neutral
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