Euro Enters Second Quarter in New Postcode

GBPUSD – technical overview

The broader downtrend remains firmly intact, with the market consolidating of recent 5-year lows at 1.4635. This opens the door for the next major downside extension towards a measured move objective at 1.4000 in the weeks ahead. A fresh medium-term lower top is now sought out ideally ahead of 1.5300 in favour of a bearish resumption. Ultimately, only back above 1.5550 would negate.

• R2 1.5010 – 19Mar high – Strong
• R1 1.4922 – 27Mar high – Medium
• S1 1.4753 – 30Mar low  – Medium
• S2 1.4635 – 18Mar/2015 low  – Strong

GBPUSD – fundamental overview

A solid final revision of UK Q4 GDP and some broad based profit taking on long USD positioning have helped to inspire a mild recovery in the Pound. The UK currency had been weighed down and relatively weak in recent trade on a softer inflation outlook and pushed back BOE rate hike expectations. Upcoming UK election uncertainty hasn’t done anything to help, though the market is now trying to find its footing. For today, the market will digest the latest round of UK manufacturing PMIs, while also looking ahead to US data in the form of ADP and ISM manufacturing.

USDJPY – technical overview

Although the market has recently broken to fresh multi-year highs through 122.00, lack of upside follow through has been discouraging, with the pair more content on deferring to a period of correction. Still, overall, the broader trend remains highly constructive and any setbacks should continue to be very well supported in favour of the next major upside extension through 122.03 and towards key psychological barriers at 125.00 further up. At this point, only a close below 118.00 would delay, while a break below 115.55 would be required to negate the constructive outlook.

• R2 121.20 – 20Mar high – Strong
• R1 120.36 – 31Mar high – Medium
• S1 119.11 – 30Mar low – Medium
• S2 118.23 – 17Feb low – Strong

USDJPY – fundamental overview

It has been a choppy bout of consolidation for the Yen in recent trade, with the currency initially finding bids on Wednesday following a softer Tankan report and some broad based equity market liquidation. However, as has been the pattern, any Yen demand continues to be swallowed up as participants trade the monetary policy divergence theme. Perhaps comments from PM Abe aide Yamamoto are also supporting USDJPY dips after the official called for more Bank of Japan easing.

EURCHF – technical overview

Has been in the process of correcting since recovering to 1.0815 in mid-February. Still, the newly adopted constructive outlook remains intact while above 1.0415, with a higher low sought ahead of the next upside extension through 1.0815 and into the 1.1000-1.1200 area. Only a daily close back below 1.0415 would give reason for pause.

• R2 1.0605 – 23Mar high – Strong
• R1 1.0550 – 25Mar high – Medium
• S1 1.0415 – 9Feb low – Strong
• S2 1.0355 – 30Jan low – Medium

EURCHF – fundamental overview

The global equity market continues to show potential signs of topping out and this won’t be a welcome development for the SNB. EURCHF has already come under pressure post the latest SNB decision to leave policy unchanged. Many had been looking for the central bank to move further into negative interest rate policy with another 25bp cut to -1.00%. EURCHF has broken down below the much talked about 1.0500-1.1000 SNB corridor and this has fueled speculation we could see some SNB action ahead. However, until such action presents, there is risk for downside acceleration back towards parity.

AUDUSD – technical overview

The downtrend remains firmly intact following the recent break to fresh multi-year lows at 0.7560. This opens the door for the next major downside extension below 0.7560, with setbacks projected towards psychological barriers at 0.7000. As such, any rallies should continue to be well capped, while ultimately, only a daily close back above 0.7938 would delay the bearish outlook and give reason for pause.

• R2 0.7835 – 27Mar high – Strong
• R1 0.7747 – 30Mar high – Medium
• S1 0.7590 – 18Mar low – Medium
• S2 0.7560 – 11Mar/2015 low – Strong

AUDUSD – fundamental overview

Better than expected Aussie, China manufacturing PMIs, and solid Aussie building approvals have helped to support the Australian Dollar in Wednesday trade. The Australian Dollar has been under intense pressure this week, dropping back towards the recent multi-year low on a collapse in iron ore prices and weakness in global equities. Most of the focus for this currency will now shift to US economic data in the form of Friday’s US employment report, and next week’s highly anticipated RBA rate decision. The market is on the fence right now, though there has been a leaning towards another rate cut.

USDCAD – technical overview

Although the market has recently broken to a fresh multi-year high above 1.2800, inability to establish a daily close above the figure has kept the market locked within a familiar multi-day consolidation. But ultimately, the broader uptrend remains firmly intact, with the next big push seen towards the 2009 peak at 1.3065. In the interim, there is risk for a period of additional correction and choppy consolidation before bullish resumption. Setbacks should however be very well supported above 1.2350, with only a break below to delay the constructive outlook.

• R2 1.2835 – 18Mar/2015 high – Strong
• R1 1.2784 – 31Mar high – Medium
• S1 1.2595 – 30Mar low – Medium
• S2 1.2533 – 26Mar high – Strong

USDCAD – fundamental overview

The Canadian Dollar has been under medium-term pressure on the back of some broad based US Dollar demand and lower commodities prices. However, the currency has recovered a bit in recent trade, with a better than expected Tuesday Canada GDP print driving the short-term outperformance. Overall, the Fed divergence theme and softer oil market should continue to weigh on the Loonie, though there is risk building for some more short-term Loonie strength with participants booking profit on US Dollar longs ahead of Friday’s US employment report. For today, Canada manufacturing PMIs, US ADP and ISM manufacturing are in focus.

NZDUSD – technical overview

The market has recently stalled out above 0.7600 and remains locked within a well defined downtrend. Look for deeper setbacks in the sessions ahead back towards the key low of 0.7176, below which opens the next major downside extension towards psychological barriers at 0.6500. Ultimately, only back above 0.7890 would give reason for pause.

• R2 0.7697 – 24Mar high – Strong
• R1 0.7566 – 30Mar high – Medium
• S1 0.7440 – 1Apr low – Strong
• S2 0.7275 – 18Mar low – Medium

NZDUSD – fundamental overview

The New Zealand Dollar is standing out as an underperformer in Wednesday trade. Private client and macro account sell interest remains strong, and these participants are taking advantage of any USD declines to build into existing Kiwi shorts. Broad based US Dollar demand and downside pressure in commodities have been driving the latest bout of Kiwi weakness, and today’s relative weakness could be a result of some tension ahead of the upcoming ‘Global Dairy Trade Price Index’ release which put in a disastrous -8.8% print at the previous showing. Another strain on the New Zealand Dollar at the moment is the renewed weakness in global equities, with the higher yielding currency exposed to these setbacks.

US SPX 500 – technical overview

The most recent rally has stalled out ahead of critical resistance in the form of the record high from February at 2120. This suggests we could be in the process of carving out a more meaningful top. Look for a break and close below critical support at 2040 over the coming sessions to confirm the structural shift and open the door for deeper setbacks towards 2000. However, inability to establish a close below 2040 will keep the pressure on the topside.

• R2 2150.00 – Psychological – Medium
• R1 2120.00 – 25Feb/Record – Strong
• S1 2040.00 – 18Mar low – Strong
• S2 2000.00 – Psychological – Medium

US SPX 500 – fundamental overview

As the Fed inches closer and closer to a rate hike, euphoria has morphed into trepidation. There is a nervous tension and real sense that we are finally at the end of the rope and it all could come crashing down. Though the market has since stabilized, there is risk for a major downside acceleration if the 2040 level is taken out this week. The all-important monthly US employment report is due on Friday, and with the result likely to influence the Fed policy timeline, the next big move in stocks could be driven off this event.

GOLD (SPOT) – technical overview

The market has been in recovery mode over the past several days after stalling shy of the 2014 base. The bounce suggests the market could now be poised for additional upside in the sessions ahead in an attempt to carve out a more meaningful longer-term base. Still, a break above 1223 will be required to the constructive prospect. Until then, immediate pressure remains on the downside and scope exists for a lower top below 1223 and retest of the 1131, 2014 base.

• R2 1223.00 – 2Mar high – Strong
• R1 1206.00 – 27Mar high – Medium
• S1 1178.00 – 31Mar low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

Despite some selling over the past couple of sessions, the gold market is still showing signs of broader recovery since stalling out the other week ahead of the 2014 base. Many investors already feel that with currencies across the board in a downward spiral, and global equities at risk for major capitulation, there is no better place to be invested than in the yellow metal. Looking ahead, much of the focus will be on the Friday monthly employment report out of the US. Today’s ADP and ISM manufacturing will also get a bit of attention.

Feature – technical overview

USDTRY has been locked within a very well defined uptrend, with the market recently breaking to fresh record highs. The latest pullback off the high is viewed as corrective, with the next higher low sought out ahead of bullish continuation. Key support comes in at 2.4335, which represents the previous higher low, and ultimately, only a break below this level would compromise the constructive outlook.

• R2 2.6800 – Psychological – Medium
• R1 2.6485 – 13Mar/Record – Strong
• S1 2.5405 – 23Mar low – Medium
• S2 2.5150 – 11Feb high – Strong

Feature – fundamental overview

Though the Lira has found a brief period of relief in recent trade on the back of Tuesday’s better than expected Turkish GDP print, market participants know not to get too carried away, with the Turkish economy still quite vulnerable. Today’s much softer manufacturing PMI print, at near 6 year lows, is a testament to this fact and the overall softer data should keep the CBRT from tightening policy despite rising inflation. The next key release out of Turkey comes Friday in the form of CPI.