US Dollar Uptrend Not Yet Ready To Relent

GBPUSD – technical overview

The broader downtrend remains firmly intact, with the market taking out recent trend lows at 1.4635, trading down to 1.4565 thus far. This confirms a fresh lower top at 1.5165 and opens the door for the next major downside extension towards a measured move objective at 1.4100 in the weeks ahead. Still, with weekly studies looking stretched, the market has deferred to a period of corrective activity. But ultimately, only back above 1.5165 would take the immediate pressure off the downside.

• R2 1.5054 – 17Apr high – Strong
• R1 1.4984 – 20Apr high – Medium
• S1 1.4812 – 16Apr low  – Strong
• S2 1.4700 – 15Apr low  – Medium

GBPUSD – fundamental overview

Lack of any first tier data out of the UK or US in Tuesday trade will leave this pair trading off broader flows. For the moment, it seems the US Dollar is finally ready to reassert following a period of multi-session correction. Market participants are pushing back into the ‘no better place to be than Dollar’ trade and buying into expectations the Fed will raise rates sooner than later. Throw in upcoming UK election risk and the prospect for a hung parliament, and it looks like we could see more downside risk for the Pound in the sessions ahead.

USDJPY – technical overview

Although the market remains locked within a very well defined uptrend, lack of upside follow through has been discouraging of late, with the pair more content on deferring to a period of consolidation. 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 120.17 – 14Apr high – Strong
• R1 119.74 – 15Apr high – Medium
• S1 118.53 – 20Apr low – Medium
• S2 118.23 – 17Feb low – Strong

USDJPY – fundamental overview

It took some time, but it seems the weekend China RRR cut is finally starting to have an influence on this pair, with the Dollar rallying impressively over the past couple of sessions. The short Yen play remains the trade of choice for many traders in the FX world, with USDJPY dips being well supported each and every time we see any weakness into the 118.00 area. The economic calendar for the week is rather light, so more trade off broader macro themes and developments is to be expected.

EURCHF – technical overview

The recent daily close below 1.0400 has put the pressure back on the downside exposing an immediate retest of support in the 1.0250 area. At this point daily studies are tracking in oversold and a bounce should be around the corner. Though the market will initially need to hold above 1.0250 on a daily close basis to encourage the recovery prospect. However, a daily close below 1.0250 will keep the pressure on the downside and open the door for deeper setbacks towards parity.

• R2 1.0495 – 6Apr high – Strong
• R1 1.0330 – 17Apr high – Medium
• S1 1.0235 – 20Apr low – Strong
• S2 1.0200 – Figure – Medium

EURCHF – fundamental overview

EURCHF has been under consistent pressure since the SNB decided to leave policy unchanged at its last meeting, with setbacks extending well below what had been a much talked about SNB 1.0500 corridor base. The SNB has reiterated it remains ready to act to curb excessive overvaluation in the Franc, and with the market recently dipping below 1.0300, to its lowest levels since January, participants will be on the lookout for any signs of movement from the central bank.

AUDUSD – technical overview

Despite the latest minor bounce, the bearish structure remains firmly intact with the market positioning for the next major downside extension. A daily close below 0.7533 will now be required to confirm the onset of a bearish continuation, with setbacks then projected towards major psychological barriers at 0.7000. For now, corrective rallies should be well capped below 0.7900, while ultimately, only a daily close back above 0.7938 would delay and give reason for pause.

• R2 0.7938 – 24Mar high – Strong
• R1 0.7842 – 17Apr high – Medium
• S1 0.7673 – 16Apr low – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

The Australian Dollar was already under pressure into the Tuesday open on broad based USD demand and comments from RBA Stevens that rate cuts were still on the table and he would not be surprised to see the Australian Dollar lower. The release of the early Tuesday RBA Minutes then went on to back up this dovishness and opened more relative Aussie underperformance with AUDNZD standing out, dropping back towards the recently established record lows just shy of parity. Looking to the economic calendar this week, Aussie CPI due Wednesday will get a lot of attention. Certainly if the the data comes in on the cooler side, it will weigh more heavily on the currency.

USDCAD – technical overview

An extended period of multi-week consolidation has been broken to the downside, with the market taking out key support at 1.2350. While the broader uptrend is still firmly intact, the break below 1.2350 now opens the door to the possibility of a deeper correction into the 1.1900 area before the market looks to carve the next meaningful higher low and resume its uptrend. At this point, a daily close back above 1.2350 would be required to once again solidify bullish structure.

• R2 1.2352 – Previous Support – Strong
• R1 1.2328 – 16Apr high – Medium
• S1 1.2180 – 20Apr low – Medium
• S2 1.2088 – 17Apr low – Strong

USDCAD – fundamental overview

Bank of Canada Governor Poloz backed up last week’s less dovish central bank decision, reaffirming the likelihood the central bank was done cutting rates after saying January’s policy ease looked to be enough to deal with Q1’s front-loaded oil shock. Poloz also sounded rather upbeat on the outlook for growth in the economy. Still, with the Loonie already rallying quite a bit in recent trade and with the broader fundamentals supporting an ongoing monetary policy divergence with the Fed, fresh USDCAD demand from medium-term players has resurfaced.

NZDUSD – technical overview

Though we have seen some strength over the past several sessions, the market remains locked within a broader, well defined downtrend. As such, look for a bearish reversal 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 compromise and give reason for pause.

• R2 0.7800 – Figure – Medium
• R1 0.7741 – 17Apr high – Strong
• S1 0.7579 – 16Apr low – Strong
• S2 0.7487 – 15Apr low – Medium

NZDUSD – fundamental overview

Though we have seen the New Zealand Dollar pull back from recent highs on a resurgence in broad US Dollar demand and softer New Zealand inflation readings, the higher yielding currency is still finding support on dips as risk assets remain elevated at record highs. China’s weekend RRR cut has been the latest source of incentive into risk assets and this is helping to drive Kiwi back towards record highs against it Australian Dollar cousin. Still, any additional upside is seen limited with sizable medium-term players stepping in to sell the market on the monetary divergence theme and risk the higher yielding currency will be exposed in the event of a capitulation in global equity markets.

US SPX 500 – technical overview

The most recent rally is stalling 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. Still, while the market holds above 2040, the uptrend remains firmly intact, with risk for a push to fresh highs beyond 2120 and towards a measured move objective at 2200 further up. At this point, a break below 2040 will be required to confirm a topping structure and accelerate declines.

• 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

There is a growing sense that with equities so elevated and the Fed still on course to move towards a sooner than later rate hike in 2015, any additional upside should be limited with a potential capitulation in the works. At this point, the market has yet to relent, but if the Fed continues to move towards a liftoff in the months ahead, this could be the final straw that breaks this artificially supported market’s back.

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 daily close above 1223 will be required to strengthen the constructive prospect. Meanwhile, back below 1178 delays the recovery and puts pressure back on the downside.

• R2 1246.00 – 10Feb high – Medium
• R1 1224.00 – 6Apr high – Strong
• S1 1178.00 – 31Mar low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

The gold market continues to show signs of broader recovery since stalling out several days back 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. Gold has since pulled back a bit since rallying above $1220, but there is healthy demand reported into dips, with no real sell-stops seen until below $1175.

Feature – technical overview

USDTRY is in the process off consolidating just off recently established fresh record highs. Technical studies are looking a little stretched overall, and there is risk for additional consolidation and correction in the sessions ahead to allow for these studies to unwind. But ultimately, the broader uptrend remains firmly intact and a medium-term higher low is sought out ahead in favour of the next major upside extension beyond 2.7310.

• R2 2.7310 – 15Apr/Record high – Strong
• R1 2.7005 – 17Apr high – Medium
• S1 2.6415 – 10Apr high – Medium
• S2 2.6120 – 10Apr low – Strong

Feature – fundamental overview

Turkey’s latest CBRT survey of expectations has produced some raised inflation forecasts which could make things a little more challenging for a central banking contending with rising inflation, a declining currency and struggling economy. Forecasts show no change on rates in the coming months, and market participants will be anxious to hear from Governor Basci next week, with the central banker expected to introduce alternative macroprudential measures as a means to keep the central bank from needing to push higher on rates.