Jitters Ahead of Easter Break

GBPUSD – technical overview

The recovery rally out from a recent 7 year low has stalled out ahead of key resistance at 1.4668, potentially setting the stage for the next major lower top and bearish resumption. A break back below 1.4053 will strengthen this outlook and expose a retest of 1.3836, which guards against the multi-year base at 1.3500 further down. Back above 1.4668 would be required to take the immediate pressure off the downside.

• R2 1.4398 – 22Mar high – Strong
• R1 1.4300 – Figure – Medium
• S1 1.4139 – 15Mar low  – Medium
• S2 1.4053 – 16Mar low – Strong

GBPUSD – fundamental overview

While most currencies did a good job holding up in the aftermath of the Brussels terror attack, the Pound could not, with the UK currency relatively underperforming. It seems the Pound struggled to find the same degree of support, perhaps on fear Tuesday’s attack would be used as a political tool to sway the UK referendum in favour of the exit camp. Also weighing on the Pound was softer UK inflation data and warnings from Moody's of a ‘credit negative’ UK Budget. Looking ahead, the economic calendar is exceptionally thin, with nothing of note in the UK and only new home sales out in the US.

USDJPY – technical overview

Last week’s break below the previous multi-month low from February was 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 114.15 – 15Mar high – Strong
• R1 112.96 – 17Mar high – Medium
• S1 111.38 – 22Mar low – Medium
• S2 110.67 – 17Mar/2016 low – Strong

USDJPY – fundamental overview

Once again, risk markets proved resilient in the face of terror, with this major pair doing a good job of recovering following an initial wave of setbacks in the aftermath of the Brussels attack. The market has since received an additional prop on the back of solid US manufacturing data, hawkish comments from Fed Harker calling for more than two rate hikes this year, and dovish remarks from BOJ Fuma, who said the BOJ would be prepared to use all three monetary easing methods to achieve the central bank’s inflation target. Wednesday’s calendar is exceptionally thin, with only US new home sales standing out and the market is likely to take its cues from price action in stocks and broader risk sentiment.

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 above 1.0800, 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 1.1024 – 17Feb high – Strong
• R1 1.1000 – Psychological – Medium
• S1 1.0876 – 22Mar low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

The cross rate has come back under mild pressure in recent trade, weighed down by last week’s unchanged SNB policy decision and recent dovish comments from ECB Praet that the central bank could still move lower on rates. But overall, dips continue to be very well supported, even in the face of this latest terror attack in Brussels, with the SNB remaining committed to weakening the Franc as necessary through negative interest rates and intervention. The SNB will need to keep a close eye on stocks in the days ahead, with the market extended and potentially at risk for renewed weakness, which could invite unwanted demand for the Franc.

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 0.7551 – 22Mar low – Medium
• S2 0.7533 – 17Mar low – Strong

AUDUSD – fundamental overview

RBA Stevens’ comment that the Australian Dollar has gotten ahead of itself, may start to weigh more heavily in the sessions ahead, with this latest rally starting to look technically extended, while broader risk markets are increasingly vulnerable at lofty heights. Though Tuesday’s Brussels terror attack hasn’t done much to weigh on the Australian Dollar thus far, the market could start to get a little jittery heading into Easter break and the long holiday weekend. Aussie also could be exposed to solid US manufacturing data and hawkish comments from Fed Harker calling for more than two rate hikes this year. There is very little on the economic calendar for the remainder of the day, with only US new home sales standing out.

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 1.3139 – 22Mar high – Medium
• S1 1.3005 – 21Mar low – Medium
• S2 1.2923 – 18Mar/2016 low– Strong

USDCAD – fundamental overview

The Canadian Dollar has held up rather well of late, and this latest Canada budget does a good job of reducing the need for additional Bank of Canada rate cuts. Still, many wonder whether the changes will actually translate into growth and jobs in the months ahead and this could invite renewed downside pressure. Tuesday’s pullback in the price of OIL has also been weighing a bit on the Canadian Dollar, while a solid round of US manufacturing data and hawkish Fed Harker comments calling for more than two rate hikes this year, further contribute to Loonie setbacks. Looking ahead, the economic calendar is exceptionally thin, with only US new home sales due. Look for OIL and equities to dictate flow.

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 0.6874 – 18Mar/2016 high – Strong
• R1 0.6792 – 21Mar high – Medium
• S1 0.6718 – 17Mar low – Medium
• S2 0.6685 – 15Mar high – Strong

NZDUSD – fundamental overview

While the New Zealand Dollar did a good job containing declines in the aftermath of the Brussels terror attack, the currency was unable to shrug off a solid round of US manufacturing data and hawkish comments from Fed Harker, calling for more than two rate hikes this year. Yield differentials continue to favour the Buck and this in conjunction with an equity market that is looking stretched following an impressive run since early February, could open the door for a more accelerated Kiwi decline. Remember, the RBNZ is capable of additional cuts this year and is not welcoming of a stronger New Zealand Dollar either. Looking ahead, the economic calendar is exceptionally thin, with only US new home sales standing out.

US SPX 500 – technical overview

The current rally is classified as corrective, with any additional upside expected to be well capped below 2050 on a weekly close basis in favour of the next major downside extension below 1800 and towards a measured move at 1550 further down. Ultimately, only a weekly close back above 2050 will delay the bearish outlook.

• R2 2083.00 – 29Dec high – Strong
• R1 2058.00 – 22Mar/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 last week’s 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. Interestingly enough, stocks have proven resilient in the face of this latest Brussels terror, though this will do nothing to calm investor jitters heading into the Easter break and long holiday weekend. Looking ahead, US new home sales is the only notable standout on the Wednesday calendar.

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 an impressive rally in stocks off the February lows 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 in the 1.3400s 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 1.3641 – 22Mar high – Medium
• S1 1.3477 – 18Mar/2016 low – Medium
• S2 1.3425 – 78.6% Fib Retrace – Very Strong

Feature – fundamental overview

The Singapore Dollar has come back under pressure in recent trade, with the emerging market currency extending declines off recent 2016 highs. Doubts over the lasting stimulatory impact of exhausted global central bank policy, this latest Brussels terror attack, solid US manufacturing data and hawkish comments from Fed Harker calling for more than two rate hikes this year, have all contributed to the Singapore Dollar slide. Looking ahead, the economic calendar is exceptionally light on Wednesday, though the market could get jittery as it heads into Easter break and a long holiday weekend. Stocks have also enjoyed a nice run since February and could be at risk of reversing lower, something that would weigh more heavily on the correlated Asian currency.