Fed Scales Back, SNB and BOE in Focus

GBPUSD – technical overview

The corrective rally out from the recent 7 year low at 1.3836 is showing signs of stalling out, with the market looking to carve a fresh lower top ahead of the next major downside extension back towards and eventually below 1.3836. A break below the recent 1.3836 low will then expose a more significant decline to a key measured move objective at 1.3500 further down. At this point, only back above 1.4437 delays.

• R2 1.4437 – 11Mar high – Strong
• R1 1.4305 – 15Mar high – Medium
• S1 1.4139 – 15Mar low  – Medium
• S2 1.4053 – 16Mar low – Strong

GBPUSD – fundamental overview

The Pound was able to find relief in the aftermath of the more dovish FOMC rate decision, but continues to be an underperformer in the currency markets. Brexit risk has bee a major thorn at the side of the UK currency and on Wednesday, local traders were once again reminded of this fact after George Osborne lowered UK GDP forecasts and warned Brexit could lead to a period of disruptive uncertainty. Looking ahead, all eyes will be on today’s Bank of England policy decision. No change is expected on policy but it will be interesting to see what comes of the decision. US data will also be absorbed in the form of initial jobless claims, JOLTS job openings, the current account, Philly Fed and leading indicators. 

USDJPY – technical overview

The market is contemplating the formation of a lower top at 114.88 ahead of the next major downside extension below 110.98 and towards the 107.00 area further down. However, a break below 110.98 would be required to confirm the lower top and strengthen the bearish outlook. Still, while the market holds below 116.00 the immediate pressure remains on the downside.

• R2 113.82 – 16Mar high – Strong
• R1 112.96 – 17Mar high – Medium
• S1 111.50 – Mid-Figure – Medium
• S2 110.98 – 11Feb/2016 low  – Very Strong

USDJPY – fundamental overview

The positive reaction in risk markets post the dovish FOMC rate decision failed to do anything to prop this major pair, with the Yen rallying along with the rest of the currency market on the back of the yield differential shift away from the Buck. The Fed cited global growth, financial market stress, subdued inflation, and tight credit conditions, while scaling back its dot plot from 4 hikes in 2016 to just 2. Ongoing concern over the effectiveness of recent BOJ accommodative measures is also factoring into trade, after recent BOJ measures failed to weaken the Yen. Any signs of a fading in this latest stock market rally will invite more downside pressure in the major pair, with major stops reported below the recent multi-month low from February at 110.98. Looking ahead, we get a batch of US data in the form of initial jobless claims, JOLTS job openings, the current account, Philly Fed and leading indicators. 

EURCHF – technical overview

The latest round of setbacks from fresh multi-month highs at 1.1200 have been well supported, with the broader outlook still highly constructive. Look for any additional weakness in the sessions ahead to continue to be supported, in favour of a higher low and the next major upside extension through 1.1200, towards 1.1500 further up. Only a close below 1.0715 would delay the outlook.

• R2 1.1062 – 17Feb high – Strong
• R1 1.1025 – 10Mar high – Medium
• S1 1.0894 – 10Mar low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

There is no doubt the SNB has been delighted with the market reaction to the latest round of larger than forecast ECB stimulus and dovish Fed decision, with the Euro remaining well bid in the aftermath. This takes a lot of pressure of the central bank when it meets today, with the EURCHF rate holding up well. It’s worth noting that all the fifteen forecasters polled by Bloomberg are looking for SNB policy to remain on hold.

AUDUSD – technical overview

The recent break above medium-term resistance at 0.7385 has forced a shift in the structure and now opens the door for a push towards next key resistance at 0.7849 further up. At this point, a break back below previous resistance at 0.7385 would be required to take the pressure of the topside and open a broader resumption of the longer-term downtrend.

• R2 0.7700 – Figure – Strong
• R1 0.7643 – 17Mar/2016 high – Medium
• S1 0.7533 – 17Mar low – Medium
• S2 0.7500 – Psychological – Strong

AUDUSD – fundamental overview

RBA Debelle attempts to cool the high flying Australian Dollar have fallen on deaf ears thus far, with the market still fueled off this latest wave of broad based US Dollar selling in the aftermath of the dovish FOMC decision. While Aussie employment data was mixed, the fact that full time employment came in strong and the unemployment rate dropped, has also been supporting the commodity currency on dips. Looking ahead, we get a batch of US data in the form of initial jobless claims, JOLTS job openings, the current account, Philly Fed and leading indicators. 

USDCAD – technical overview

The latest break below the 78.6% fib retrace off the October 2015 to January 2016 low to high move, opens the door for a full retracement back to the October base at 1.2832 further down. Overall, the longer-term uptrend is still intact, but the market will need to break back above 1.3447 to take the immediate pressure off the downside and set up the possibility for a higher low.

• R2 1.3211 – 14Mar high – Strong
• R1 1.3168 – 11Mar low – Medium
• S1 1.3023 – 17Mar/2016 low – Medium
• S2 1.3000 – Psychological– Strong

USDCAD – fundamental overview

The Canadian Dollar is taking top prize amongst the developed currencies, with the currency continuing to benefit from high flying OIL prices and a shift in the US Dollar outlook. The latest dovish FOMC decision has opened a fresh round of Canadian Dollar buying, with the Loonie posting another 2016 high in the aftermath. Solid Canada manufacturing sales also hasn’t hurt the plight of the commodity currency, which will continue to digest this latest Fed decision while looking ahead to today’s batch of data which includes Canada wholesale sales and US initial jobless claims, JOLTS job openings, the current account, Philly Fed and leading indicators. 

NZDUSD – technical overview

The market remains confined to a broader downtrend with rallies continuing to be very well capped ahead of medium-term resistance at 0.6900. A break below 0.6546 will strengthen the outlook and expose fresh declines towards next key support at 0.6347 further down. Ultimately, only back above 0.6900 compromises the bearish outlook.

• R2 0.6834 – 4Jan/2016 high – Strong
• R1 0.6820 – 17Mar high– Medium
• S1 0.6718 – 17Mar low – Medium
• S2 0.6684 – 15Mar high – Strong

NZDUSD – fundamental overview

It’s amazing what can happen in just one week. All of the Kiwi bearishness in the aftermath of last week’s surprise RBNZ rate cut has been forgotten, with Wednesday’s dovish Fed and the early Thursday better than expected New Zealand GDP print, once again inviting renewed demand for the risk correlated commodity currency. Looking ahead, we get a batch of US data in the form of initial jobless claims, JOLTS job openings, the current account, Philly Fed and leading indicators.

US SPX 500 – technical overview

The latest rally is classified as corrective, with any additional upside expected to be well capped below 2050 in favour of the next major downside extension below 1800 and towards a measured move at 1600 further down. Ultimately, only a daily close back above 2050 will delay the bearish outlook.

• R2 2050.00 – Psychological – Strong
• R1 2040.00 – Figure – Medium
• S1 2004.00 –15Mar low – Medium
• S2 1968.00 – 10Mar low – Strong

US SPX 500 – fundamental overview

Investors are still buying into accommodative Fed gestures despite exhausted monetary policy, with this latest dovish FOMC decision fueling a fresh round of bids, extending this impressive recovery out from the early February multi-month low. The primary driver behind this latest push has been the Fed’s scaled back dot plot, with the central bank downgrading its rate hike timeline assessment from 4 to just 2 hikes in 2016. Still, despite the rally, there is a sense that with policy reaching its limits, the incentive to be buying risk assets isn’t what it once was, which could once again weigh over the coming sessions. Looking ahead, we get a batch of US data in the form of initial jobless claims, JOLTS job openings, the current account, Philly Fed and leading indicators. 

GOLD (SPOT) – technical overview

The market continues to show signs of a major structural shift, with the impressive recovery from the multi-year low in late 2015 at 1046, extending above the critical October 2015 peak at 1192. From here, any setbacks should be well supported ahead of 1191, in favour of a higher low and the next major upside extension to medium-term resistance at 1307. Ultimately, only a weekly close back below 1191 would delay the newly adopted constructive outlook.

• R2 1283.50 – 10Mar/2016 high – Strong
• R1 1263.85 – 17Mar high – Medium
• S1 1225.70 – 15Mar low – Medium
• S2 1191.50 – Previous Resistance – Very Strong

GOLD (SPOT) – fundamental overview

GOLD continues to show impressive demand on dips. The yellow metal has become increasingly attractive in the current market environment. Uncertainty has resurrected GOLD on its status as a compelling hedge against exhausted monetary policy. Even this impressive rally in stocks has done little to weigh on the commodity, reflective of the fact that any rallies in risk are less compelling these days.

Feature – technical overview

USDSGD has entered a period of correction since pulling back from the multi-year peak at 1.4442 from January. But overall, the structure remains constructive, with dips seen well supported. Look for any additional setbacks to continue to be well supported above 1.3500 in favour of an eventual resumption of the uptrend and retest of 1.4442. Ultimately, only back below 1.3500 would delay the constructive outlook.

• R2 1.3851 – 16Mar high – Strong
• R1 1.3696 – 11Mar low – Medium
• S1 1.3608 – 22Jul/17Mar low – Medium
• S2 1.3500 – Psychological – Very Strong

Feature – fundamental overview

The Singapore Dollar has enjoyed a nice recovery run over the past several weeks, breaking to fresh 2016 highs. A resurgence in risk appetite has helped fuel the renewed demand for the emerging market currency, with the more dovish FOMC decision and scaled back Fed rate hike timeline fueling the move. On the domestic front, the latest rebound in February NODX, coming in well above forecast, is also helping to keep the Singapore Dollar bid. Looking ahead, the key focus will be on this latest round of risk on flow in the aftermath of the FOMC decision, with the market looking to see if these gains can actually be sustained with monetary policy so extended and little stimulus left in the tank.