Will It All Come Crashing Down?

GBPUSD – technical overview

The market continues to extend its correction out from the recent 7 year low at 1.3836, with the latest push back above 1.4440 exposing the next key resistance point in the form of a previous lower top at 1.4668. A break above 1.4668 would signal a bullish structural shift, while inability to take out the level will keep the medium-term pressure on the downside.

• R2 1.4578 – 10Feb high – Strong
• R1 1.4503 – 17Mar high – Medium
• S1 1.4400 – Figure  – Medium
• S2 1.4274 – 16Mar high – Strong

GBPUSD – fundamental overview

Brexit risk has now officially taken a back seat to the more central theme of US Dollar weakness in the aftermath of this week’s decidedly more dovish FOMC meeting. More GBPUSD buy-stops were cleared on Thursday on the break above 1.4440, with the more neutral, less dovish Bank of England decision helping to drive some relative outperformance into Friday. Looking ahead, lack of UK data will leave the market focused on broader macro themes and US Michigan confidence data. On the official circuit, Fed Dudley, Rosengren and Bullard are slated to speak.

USDJPY – technical overview

Thursday’s break below the previous multi-month low from February is a significant development, as it potentially warns of a fresh downside extension ahead following a period of multi-day consolidation. At this point, a daily close below 111.00 would be required to strengthen this prospect, while inability to establish below 111.00 could invite another bounce off the range low back towards the 115.00 area.

• R2 112.96 – 17Mar high – Strong
• R1 112.00 – Figure – Medium
• S1 110.67 – 17Mar/2016 low– Medium
• S2 110.00 – Psychological  – Strong

USDJPY – fundamental overview

The Yen has been getting more attention in recent trade, extending gains on the back of this latest Dollar rout, with USDJPY breaking to a fresh multi-month low below 111.00. Interestingly, Yen strength has come despite continued strength in US equities, which could be somewhat worrying to Japanese officials, if this risk rally runs out of steam and invites additional Yen demand on the safety flow. The BOJ Minutes have come out and haven’t done much to move the market, though the conversation on either potentially adding to QQE or pushing further into negative rates, has invited plenty of concern over the diminished impact of such measures. Still, the BOJ is prepared to ease more if needed. Back in January, former vice finance minister Sakakibara talked of a kind of flow in USDJPY at 110.00 and it will be interesting to see what happens if the level is tested. Looking ahead, we get US Michigan confidence and Fed speak from Dudley, Rosengren and Bullard.

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

As was widely expected, the SNB was out on Thursday leaving policy unchanged. The decision was most certainly a lot easier for the central bank, with the Euro holding up well despite this latest round of ECB stimulus. In a post SNB decision appearance, Jordan conceded that current policy was very expansive, but at the same time, would not rule out additional measures. The SNB also lowered growth and inflation forecasts. Another thing that has been making the SNB’s life easier is this latest run up in risk assets. But with US equities looking a little stretched again, there could be risk for renewed downside pressure on EURCHF if equities in fact turn lower again.

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 the 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 0.7681 – 18Mar/2016 high – Medium
• S1 0.7594 – 14Mar high – Medium
• S2 0.7533 – 17Mar low – Strong

AUDUSD – fundamental overview

Real money accounts and exporter bids have been helping to drive this latest Australian Dollar surge, with the currency benefitting from the combination of a more dovish FOMC, rally in global equities and rebound in commodities. But we are now getting up to levels where the RBA may start to think about coming out and jawboning the currency lower again. Stocks have also run quite fast to the upside since February, and there is risk the rally fizzles out again, which would invite renewed downside pressure. Looking ahead, we get Michigan confidence and a batch of Fed speak from Dudley, Rosengren and Bullard.

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 1.3168 – 11Mar low – Strong
• R1 1.3133 – 17Mar high – Medium
• S1 1.2946 – 17Mar/2016 low – Medium
• S2 1.2832 – 15Oct low– Very Strong

USDCAD – fundamental overview

The rally in the price of crude OIL back above the $40 mark and this ongoing run on the US Dollar post a dovish FOMC, have catapulted the Canadian Dollar to fresh 2016 highs, with the currency now up well over 10% since posting a near 13 year low back in January. The Canadian government has also stepped in with a commitment to implement fiscal measures, which has taken pressure of the Bank of Canada to ease. But overall, with the Loonie having enjoyed a strong rally these past several weeks, there is a possibility the currency once again succumbs to longer-term downside pressure against the Buck. Solid USDCAD bids are reported ahead of 1.2800. Looking ahead, we could get some more volatility here on Friday with Canada CPI and US Michigan confidence due. We also get a round of Fed speak from Dudley, Rosengren and Bullard.

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. However, a break back below 0.6546 will be required to strengthen the outlook and expose fresh declines towards next key support at 0.6347 further down. Ultimately, only a weekly close back above 0.6900 compromises the bearish outlook.

• R2 0.6897 – 15Oct high – Very Strong
• R1 0.6874 – 18Mar/2016 high – Medium
• S1 0.6800 – Figure – Medium
• S2 0.6718 – 17Mar low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has completely forgotten about last week’s surprise RBNZ rate cut, with the currency sharply reversing course, breaking to fresh 2016 highs and trading up to critical medium-term resistance in the 0.6900 area. A dovish FOMC meeting this week has opened an intensified run on the US Dollar, while higher equities and better bid commodities have also been fueling the Kiwi gains. However, we are getting back to a place where the RBNZ might start to get concerned with the elevated Kiwi rate and talk it down once again. Meanwhile, stocks are starting to look exhausted after a nice run, with any downturn to invite renewed Kiwi offers. Medium-term players are reported on the offer around 0.6900. Looking ahead, we get Michigan confidence and a batch of Fed speak from Dudley, Rosengren and Bullard.

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 2083.00 – 29Dec high – Strong
• R1 2052.00 – 18Mar/2016 high – Medium
• S1 2004.00 –15Mar low – Medium
• S2 1968.00 – 10Mar low – Strong

US SPX 500 – fundamental overview

Investors are still buying into Fed and global central bank accommodative 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 could get some more volatility here on Friday with US Michigan confidence due, along with a a round of Fed speak from Dudley, Rosengren and Bullard.

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 1270.90 – 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 intense correction off the multi-year peak at 1.4442 from January. But overall, the structure remains constructive, with dips seen well supported into the 78.6% fib retrace off the 2015-2016 low to high move at 1.3425. Look for the market to find the next meaningful base around 1.3425 ahead of the next major upside extension. Ultimately, only a weekly close below 1.3400 would compromise the outlook.

• R2 1.3671 – 17Mar high – Strong
• R1 1.3600 – Figure – Medium
• S1 1.3477 – 18Mar/2016 low – Medium
• S2 1.3425 – 78.6% Fib Retrace – 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, this week’s rebound in February NODX, coming in well above forecast, has also helped to extend the Singapore Dollar bid. But technicians cite major support ahead of 1.3400 which ultimately could inspire renewed Singapore Dollar selling. Global equities have also enjoyed a nice run in recent weeks and if investors start to lose confidence in the effectiveness of exhausted monetary policy, we could once again see a run on emerging market FX. China deterioration is another theme that could hurt the Singapore Dollar. Looking ahead, the market will take in US Michigan confidence and a round of Fed speak late in the day.