The Straw that Broke the Market’s Back

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 daily close 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 1.4228 – 23Mar high – Strong
• R1 1.4191 – 22Mar low – Medium
• S1 1.4053 – 16Mar low  – Medium
• S2 1.3836 – 29Feb/2016 low – Strong

GBPUSD – fundamental overview

The Pound remains under pressure into the latter half of the week, with hawkish Fed comments, ongoing Brexit risk and renewed downside pressure in risk assets, all weighing on the UK currency. Economic data in the UK has also been a concern of late and there will be a lot of attention placed on today’s UK retail sales print. More volatility is expected into North America with US initial jobless claims and durable goods standing out.

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 112.14 – 23Mar low – Medium
• S2 111.38 – 22Mar low – Strong

USDJPY – fundamental overview

The major pair is finding solid two way flow, with dips well supported on hawkish Fed speak and favourable US Dollar yield differentials, while a concurrent pullback in risk assets is capping the topside on the pair’s traditional correlation with risk. Trade is starting to thin out for the Easter break, but more volatility is to be expected with stocks rolling over again and key US data ahead in the form of initial jobless claims and durable goods.

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 1.0875 – 23Mar low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

With tensions running high this week in the aftermath of the Tuesday Brussels terror attack, it isn’t too surprising to see the risk correlated cross rate tracking lower. Throw in a round of hawkish Fed speak and concurrent sell-off in equities on the back of the negative risk implication of higher US rates, and there is scope for additional weakness going forward. But overall, dips continue to be very well supported, with the SNB remaining committed to weakening the Franc as necessary through negative interest rates and intervention.

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 potential push towards next key resistance at 0.7849 further up. At this point, only a break back below the previous resistance at 0.7385 would take the pressure of the topside and open a broader resumption of the longer-term downtrend.

• R2 0.7600 – Figure – Medium
• R1 0.7537 – 23Mar high – Medium
• S1 0.7450 – Mid-Figure – Medium
• S2 0.7385 – Previous Resistance – Strong

AUDUSD – fundamental overview

The Australian Dollar has come under pressure in the face of broader US Dollar demand on hawkish Fed speak, but is also finding relative weakness on domestic factors. ANZ’s warning that bad debts will rise on soured loans to the resource sector and fear that the mining industry fallout will spread to the banking industry, have invited an added layer of offers in the Australian Dollar. Meanwhile, this latest pullback in metals prices hasn’t done anything to help, and there is risk for a more intensified drop if US equities extend declines on Thursday. Looking ahead, we get US initial jobless claims and durable goods.

USDCAD – technical overview

Signs of a potential bottom after the market stalled ahead of the critical October base at 1.2832. The market will need to establish back above 1.3406 to strengthen this outlook and accelerate gains, setting up the next medium-term higher low and bullish resumption. But while the market holds below 1.3406, there is still risk for a drop towards 1.2832.

• R2 1.3406 – 16Mar high – Strong
• R1 1.3300 – Figure – Medium
• S1 1.3139 – 22Mar high – Medium
• S2 1.3029 – 22Mar low– Strong

USDCAD – fundamental overview

An impressive run in the Canadian Dollar off near 13 year lows in January looks like it could be coming to an end, with the Loonie back under pressure this week. The combination of hawkish Fed speak and a sizable retreat in the price of OIL have been the primary drivers behind the renewed selling and more volatility is to be expected today, with US initial jobless claims and durable goods due.

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 0.6792 – 21Mar high – Strong
• R1 0.6771 – 23Mar high – Medium
• S1 0.6650 – Mid-Figure – Medium
• S2 0.6575 – 16Mar low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar hasn’t been able to avoid this latest wave of US Dollar buying on the back of hawkish Fed comments and renewed downside pressure in commodities and stocks. However, the release of better than expected trade data early Thursday is perhaps helping to slow declines after the data showed a surplus of NZ$339 million versus the consensus of a NZ$50 million surplus. Looking ahead, more volatility is expected with US initial jobless claims and durable goods due.

US SPX 500 – technical overview

This latest multi-day 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 not liking these latest messages from Fed officials post last week’s dovish FOMC rate decision. Fed officials now appear to be backtracking and the comments have been leaning more to the hawkish side. Fed Bullard’s latest lines that the market is too dovish and a rate hike in April should not be ruled out, seem to be the backbreaking straw that once again has the market worried about the removal of artificial stimulus in the form of easy money. Profit taking into the Easter break is also kicking in and attention will now shift to today’s US initial jobless claims and durable goods.

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 1214.80 – 23Mar low – Medium
• S2 1191.50 – Previous Resistance – Very Strong

GOLD (SPOT) – fundamental overview

GOLD has pulled back a good deal over the past few sessions, with the yellow metal reacting to a resurgence in demand for the US Dollar on a wave of hawkish Fed speak. And yet, dealers continue to cite plenty of demand into dips, with even US Dollar strength unlikely to deter investors looking for an alternative in a shaky risk environment. Exhausted central bank policy is a major concern for the global economy at the moment, making the case for a rotation back into the hard asset increasingly attractive.

Feature – technical overview

USDSGD is finally looking to turn back up after a period of intense correction. 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 1.3850 – 16Mar high – Strong
• R1 1.3750 – Mid-Figure – Medium
• S1 1.3654 – 24Mar low – Medium
• S2 1.3578 – 23Mar low – Very Strong

Feature – fundamental overview

Renewed downside pressure in the emerging markets on the combination of this week’s terror in Brussels and a fresh wave of hawkish Fed comments. US equities are lower and this is having a negative impact on the correlated Singapore Dollar. We have also been seeing some relative weakness on this latest disappointing Singapore industrial production print coming in at -4.7% y/y versus the -3.7% y/y print expected. Looking ahead, trade is expected to thin out into the Easter weekend, though more volatility is expected with US initial jobless claims and durable goods due.