Fed Surprises, Doesn’t Bend To Market Pressure

GBPUSD – technical overview

Though the broader downtrend remains intact, the latest surge has resulted in a push back towards key resistance in the form of the 2015 high. From here, look for the market to hold below the yearly high at 1.5552 in favour of a lower top and bearish resumption. A break back below 1.5328 will strengthen the outlook and put the pressure back on the downside. However, a daily close above 1.5552 would compromise the medium-term structure and open the door for a more significant structural shift.

• R2 1.5552 – 26Feb/2015 high – Strong
• R1 1.5498 – 29Apr high – Medium
• S1 1.5328 – 29Apr low  – Strong
• S2 1.5262 – 27Apr high  – Medium

GBPUSD – fundamental overview

The US Dollar wasn’t able to shrug off its horrid GDP print the same way the Pound did in the previous day, with this major pair extending gains within striking distance of the 2015 peak. However, a less dovish than expected FOMC rate decision could shake things up a bit, with the Dollar finding renewed bids on the result. That Fed has downplayed softer data, assigning it to transitory factors and the door has been left open for a rate hike in the coming months. Otherwise, UK election risk is still something to watch, while for today the market will take in a batch of US economic data including US PCE, personal spending, initial jobless claims and Chicago PMIs

USDJPY – technical overview

Although the market remains locked within a 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 120.09 – 23Apr high – Strong
• R1 119.36 – 29Apr high – Medium
• S1 118.53 – 20Apr low – Medium
• S2 118.23 – 17Feb low – Strong

USDJPY – fundamental overview

The Bank of Japan didn’t produce any real surprises on Thursday, delivering an as expected on hold policy decision. A little bit of attention was given to the central bank’s semi-annual outlook report, which downgraded its inflation outlook, while pushing out its 2% inflation timeline objective. However, much of this had been talked about in the lead up, with the resulting price action producing the same lackluster trade we have seen over the past several weeks. Dealers do however cite heavy sell stops in place below 118.00 and if triggered, this could open the door for some welcome volatility in the major pair.

EURCHF – technical overview

The market has finally put in an impressive rebound after a multi-day drop out from the February, 1.0815 recovery high. Last week’s bullish reversal cleared the previous 8 consecutive daily lower highs, with the strong performance potentially signaling some form of a key low in place at 1.0235. Inability to close below 1.0250 had warned of this bounce and from here, there is risk for additional upside back towards 1.0815 in the days ahead. Any setbacks should be well supported ahead of 1.0300, while ultimately, only below 1.0235 negates.

• R2 1.0605 – 23Mar high – Strong
• R1 1.0510 – 29Apr high – Medium
• S1 1.0380 – 28Apr low– Medium
• S2 1.0315 – 23Apr low – Strong

EURCHF – fundamental overview

Last week, the SNB came out with an announcement that it was reducing the group of sight deposit account holders that would be exempted from negative rates. This helped to finally offer some support to the EURCHF rate, which had been under intense pressure for many weeks. SNB Jordan was also out last week reiterating the central bank’s commitment to act to curb excessive overvaluation in the Franc. There are many out there that are still pricing in additional accommodation from the SNB, taking it deeper into unprecedented negative interest rate policy. Though with Jordan also stressing that current policy should not be taken as the ‘new normal’ it will be interesting to see just how much more the SNB is prepared to do. Meanwhile, some renewed optimism for a Greek resolution has also been helping to support.

AUDUSD – technical overview

Despite the latest surge through 0.8000, the bearish structure remains intact with the market positioning for a medium-term lower top and next major downside extension. Look for the market to now stall out above 0.8000, around previous support turned resistance at 0.8033. A break back below 0.7933 will help confirm the outlook and put the pressure back on the downside. Ultimately, only back above 0.8300 would compromise the downtrend.

• R2 0.8136 – 22Jan high – Medium
• R1 0.8075 – 29Apr high – Strong
• S1 0.7900 – Figure – Medium
• S2 0.7872 – 27Apr high – Strong

AUDUSD – fundamental overview

Stronger economic data, higher inflation, lack of any dovish comments from RBA Stevens, broad based Dollar weakness and a repricing of RBNZ expectations, have all been developments supporting Aussie in recent trade. Still, with the currency running so far so fast and with the Fed producing a less dovish than expected monetary policy decision on Wednesday, there is risk additional upside will be limited from here, with the monetary policy divergence theme once again resonating with investors. We are already seeing some relative underperformance on Thursday, following some abysmal Aussie import, export figures. This could give the RBA more to think about when it meets next week. Looking ahead, US data takes center stage, with US PCE, personal spending, initial jobless claims and Chicago PMIs due.

USDCAD – technical overview

While the broader uptrend is still firmly intact, the market has entered a period of healthy correction following a recent break below support at 1.2350. But now that the market has finally traded into the measured move downside objective area in the 1.1900s, look out for the formation of the next meaningful higher low and resumption of the broader uptrend. Ultimately, only a weekly close below 1.1900 would compromise the constructive outlook.

• R2 1.2117 – 28Apr high – Strong
• R1 1.2073 – 29Apr high – Medium
• S1 1.1945 – 28Apr low – Medium
• S2 1.1900 – Measured Move – Strong

USDCAD – fundamental overview

A bout of heavy profit taking on long US Dollar positions could finally have reached the point of exhaustion after the Canadian Dollar ended lower on the day despite a very discouraging US GDP print. The Canadian Dollar had been well bid in recent trade on softer US data, a rebound in OIL prices and some less dovish Poloz speak. But with the Fed catching many off guard and leaving the door open for rate hikes in the months ahead, this could be the catalyst that opens the door for a resumption of USD demand. Looking ahead, the economic calendar is stacked for this pair on Thursday, with US PCE, personal spending, initial jobless claims, Chicago PMIs and Canada GDP all due.

NZDUSD – technical overview

Though we have seen some strength in recent trade, the market remains locked within a broader, well defined downtrend. As such, look for a more pronounced 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 0.7744 – 29Apr high – Strong
• R1 0.7650 – Mid-Figure– Medium
• S1 0.7537 – 23Apr low – Strong
• S2 0.7500 – Psychological – Medium

NZDUSD – fundamental overview

Plenty of reason for the market to sell Kiwi this week, with the currency already underperforming despite broad based US Dollar selling. Heading into the RBNZ decision, the market had been repricing expectations, with a more dovish central bank expected in light of recent softer inflation and comments from the Assistant Governor. All of this was confirmed in the policy decision, with the RBNZ opening the door to the possibility for a rate cut, while at the same time expressing its discomfort with the elevated New Zealand Dollar. Meanwhile, another Fonterra payout hasn’t helped matters. An in contrast, much to the market’s disappointment, the Federal Reserve delivered a more hawkish statement, further highlighting the policy divergence theme with the RBNZ. Looking ahead, we get US PCE, personal spending, initial jobless claims and Chicago PMIs.

US SPX 500 – technical overview

The most recent rally is stalling after only slightly exceeding critical resistance in the form of the previous 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 broader uptrend remains firmly intact, with a break below 2040 ultimately required to confirm a topping structure and accelerate declines. Initially, the market will need to close below Tuesday’s low to encourage the reversal prospect.

• R2 2150.00 – Psychological – Medium
• R1 2126.00 – 27Apr/Record – Strong
• S1 2094.00 – 28Apr low – Medium
• S2 2071.00 – 17Apr low – Strong

US SPX 500 – fundamental overview

There is a growing sense that with equities so elevated, any additional upside should be limited with a potential capitulation in the works. At this point, the market has yet to really relent, but failure to rally post softer US GDP and a less dovish FOMC decision could be the final straw that breaks this artificially supported market’s back.

GOLD (SPOT) – technical overview

The market has been in a consolidation mode since recovering out ahead 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 1224 will be required to strengthen the constructive prospect. Meanwhile, a daily close back below 1175 delays the recovery and puts pressure back on the downside.

• R2 1246.00 – 10Feb high – Medium
• R1 1224.00 – 6Apr high – Strong
• S1 1175.00 – 24Apr low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

The gold market continues to show signs of demand 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 to $1224, 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 correcting just off fresh record highs. Technical studies are looking a little stretched overall, and there is risk for additional weakness in the sessions ahead to allow for these studies to unwind. But ultimately, the broader uptrend remains firmly intact with any setbacks expected to be very well supported in favour of bullish continuation. A break back below 2.5390 would now be required to take the immediate pressure off the downside.

• R2 2.8000 – Psychological – Medium
• R1 2.7430 – 24Apr/Record – Strong
• S1 2.6445 – 29Apr low – Medium
• S2 2.5390 – 23Mar low – Strong

Feature – fundamental overview

The CBRT continues to be in a very tough spot, with a mix of rising inflation, a declining currency and struggling economy, making it impossible to make any moves on rates. Adding more fuel to the fire, Turkish PM Erdogan continues with his criticism of higher rates and the negative impact on the local economy. The Lira didn’t get much help from the Fed on Wednesday, after the central bank delivered a less dovish statement. For today, markets will be looking at Turkey trade figures along with the CBRT inflation report and Minutes, though none of this is expected to factor into trade. US data later on will play a bigger role.