Plenty Of Demand For US Dollar On Dips

GBPUSD – technical overview

The recovery rally to fresh 2015 highs at 1.5815 has stalled out, with the market considering the possibility of bearish trend resumption. Tuesday’s close below 1.5445 strengthens the outlook and suggests a medium-term lower top is in place at 1.5815 ahead of the next major downside extension, eventually below the yearly low at 1.4565. Next key support comes in at 1.5089. In the interim, rallies should be well called ahead of 1.5650.

• R2 1.5507 – 25May high – Strong
• R1 1.5437 – 27May high – Medium
• S1 1.5301 – 27May low  – Medium
• S2 1.5250 – Mid-Figure  – Medium

GBPUSD – fundamental overview

It isn’t too often the Queen Mum has an influence on direction in FX markets. But her latest speech has been impacting, after she set the wheels in motion for a referendum on UK membership in the EU. While the Pound had benefitted a good deal from the Cameron victory, the one area for concern with regard to Sterling stability was on the question of whether the UK would remain in the EU. Still, there has been some profit taking from shorter-term accounts on US Dollar longs that has helped to support GBPUSD a bit. Much of the volatility for Thursday will now be predicated on this latest UK GDP print and data out of the US, in the form of initial jobless claims and pending home sales.

USDJPY – technical overview

The market has finally broken out of a multi-month range, with the price surging through key resistance at 122.00, to open the door for the next major upside extension towards the 125.00-130.00 area further up. The broader trend remains highly constructive and any setbacks should now be very well supported on dips. At this point, only a close below 118.23 would delay.

• R2 125.00 – Psychological – Medium
• R1 124.30 – 28May/2015 high – Strong
• S1 123.49 – 28May low – Medium
• S2 122.77 – 27May low – Strong

USDJPY – fundamental overview

Comments from BOJ Kuroda that the FX market should move in a stable manner, reflective of economic fundamentals, may be weighing on the latest surge in USDJPY a bit in Thursday trade. Still, after a run like the one we’ve seen following the break of 122.00, such profit taking from short-term accounts would already be expected. Setbacks in this market should be limited, with plenty of demand from leveraged and macro names seen into dips.

EURCHF – technical overview

The market has finally leveled out after a multi-day drop out from the February high at 1.0815. From here, there is risk for recovery back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported ahead of 1.0300. Look for a push back above 1.0525 to confirm and accelerate gains. Ultimately, only below 1.0235 negates.

• R2 1.0600 – Figure – Medium
• R1 1.0525 – 30Apr high – Strong
• S1 1.0305 – 7May low– Medium
• S2 1.0305 – 21Apr low – Strong

EURCHF – fundamental overview

This market has come under some pressure in recent trade on the back of Euro outflows as market participants fear the worst in Greece. Greece has said it will not be able to make its next IMF loan repayment if a deal is not reached by the June 5th payment date, and this has fueled declines. Adding more fuel to the fire are comments from IMF Lagarde who says there have been no substantial results in talks. Still, an ongoing SNB commitment to act to curb excessive overvaluation in the Franc, should help support dips. Dealers cite solid demand, with no meaningful stops until below 1.0200.

AUDUSD – technical overview

A recent recovery rally has stalled out ahead of 0.8200 and overall, the broader downtrend remains intact. Look for a lower top to be in place at 0.8163, in favour of the next major downside extension back towards and eventually below the current multi-year base from early April at 0.7533. Intraday rallies are now expected to be well capped ahead of 0.8000, while ultimately, only a break back above 0.8163 would delay the bearish structure.

• R2 0.7839 – 25May high – Strong
• R1 0.7768 – 27May high – Medium
• S1 0.7650 – Mid-Figure – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

While the RBA may not cut rates at its upcoming meeting, there is every reason to expect the central bank will leave the door open for additional policy accommodation, as the Australian economy continues to face headwinds. Thursday’s much weaker Aussie Q1 CAPEX showing is supportive of this fact, and has weighed on the commodity currency, which is now closing in on a retest of the 2015 and multi-month low against the US Dollar at 0.7533. Looking ahead, US initial jobless claims and pending home sales will be watched closely and could open some more volatility in this pair.

USDCAD – technical overview

The market looks like it may finally have based out at 1.1920, putting in a meaningful medium-term higher low, ahead of the next major upside extension and bullish trend resumption. Tuesday’s daily close back above previous support at 1.2350 strengthens the outlook, with any setbacks now expected to be well supported above 1.2000.

• R2 1.2500 – Psychological – Strong
• R1 1.2492 – 27May high – Medium
• S1 1.2395 – 27May low – Medium
• S2 1.2305 – 26May low – Strong

USDCAD – fundamental overview

No surprises from the Bank of Canada on Wednesday, after leaving rates unchanged at 0.75%. The tone of the accompanying monetary policy statement echoed familiar central bank sentiment and had little influence on price action. Performance in the pair was driven more off  US Dollar demand on a sooner than later Fed rate hike expectation and some renewed downside pressure in OIL prices. Dealers have been talking about short-term profit taking from smaller accounts, but also cite plenty of USDCAD demand on dips. Looking ahead, the Canada current account, industrial product and raw material prices are due, along with US initial jobless claims and pending home sales.

NZDUSD – technical overview

Despite a minor consolidation, the market remains locked within a broader, well defined downtrend and looks to be in the process of carving out the next medium-term lower top. As such, look for deeper setbacks in the sessions ahead, for a retest of the key 0.7176, 2015 low, 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 0.7322 – 26May high– Strong
• R1 0.7271 – 28May high– Medium
• S1 0.7212 – 27May low – Medium
• S2 0.7176 – 3Feb/2015 low – Strong

NZDUSD – fundamental overview

Fonterra’s reduction of its Farmgate milk price forecast has given bears another excuse to knock the higher yielding New Zealand Dollar into Thursday trade, though setbacks have been buoyed by some broad based profit taking on US Dollar longs from short-term spec accounts. Overall however, the RBNZ has been shifting towards accommodation, and with the possibility for a rate cut now on the cards, the monetary policy divergence with the Fed is becoming all the more pronounced. US equities are also looking shaky at lofty heights, and any setbacks here could weigh more heavily on the correlated Kiwi. poking ahead, US initial jobless claims and pending home sales are due.

US SPX 500 – technical overview

The latest break to fresh record highs has stalled out, with the lack of bullish momentum suggesting the market could be exhausted at current levels and poised for a significant corrective decline. Tuesday’s close below 2116 strengthens the outlook and could open the door for deeper setbacks towards critical support at 2040 over the coming sessions. Ultimately, only back above 2137 negates.

• R2 2150.00 – Psychological – Medium
• R1 2137.00 – 19May/Record – Strong
• S1 2084.00 – 12May low – Medium
• S2 2062.00 – 7May low – Strong

US SPX 500 – fundamental overview

The equity market has failed to establish any meaningful bullish momentum after breaking to fresh record highs in the previous week and could be at risk for stalling out yet again. A wave of solid US economic data, along with a number of hawkish comments from various Fed officials are all supportive of a rate liftoff sooner than later, and this reality is making it less attractive to be long equities at lofty levels. Today’s US initial jobless claims and pending home sales will be watched closely.

GOLD (SPOT) – technical overview

The market has been very well supported on dips since recovering from the 2014 base. The price action 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. Look for a break back above recent highs at 1232 to strengthen this outlook. Ultimately, only a daily close below 1170 will negate.

• R2 1246.00 – 10Feb high – Medium
• R1 1232.00 – 18May high – Strong
• S1 1170.00 – 1May low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

Despite recent setbacks, the GOLD market continues to show signs of demand on dips. Many investors already feel that with currencies across the board looking less attractive in a low yield environment, and with global equities looking vulnerable at record highs, there is no better place for capital allocation than GOLD. Dealers cite plenty of interest ahead of $1170 with buy-stops reported above $1235.

Feature – technical overview

USDSGD has turned back up, following an intense round of declines off multi-year highs from March. The recent break back above a double bottom neckline at 1.3400 now opens the door for additional upside in the sessions ahead towards a measured move objective in the 1.3650 area. At this point, it looks like the market has carved out a medium-term higher low at 1.3190, en route towards a retest of the 1.3937 March peak.

• R2 1.3650 – Measured Move – Strong
• R1 1.3540 – 27May high – Medium
• S1 1.3403 – 26May low – Medium
• S2 1.3358 – 25May low – Strong

Feature – fundamental overview

Emerging market FX has come under pressure across the board as the US Dollar gains momentum in light of the sooner than later Fed rate hike prospect. A round of solid US economic data and hawkish Fed comments have been driving the price action, while we have also seen some reason for relative SGD weakness following the release of much softer than expected Singapore industrial production earlier this week. More data ahead out of the US, with initial jobless claims and pending home sales due.