Yen Will It End?

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 1.4000 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 1.4279 – 5Apr high – Strong
• R1 1.4171 – 6Apr high – Medium
• S1 1.4053 – 16Mar low – Medium
• S2 1.4005 – 6Apr low – Strong

GBPUSD – fundamental overview

Although by most accounts, the ‘remain’ camp still holds the lead in the referendum polls, the gap is narrowing to the point of a near toss up and this continues to be a major thorn at the side of the Pound. The UK currency came under intense pressure on Wednesday, before finally finding relief on the back of an intense wave of broad based selling in the Buck ahead of the Fed Minutes. While there was something to be taken out of the Minutes from both the hawks and doves, for the most part, the tone underscored the Yellen’s cautious sympathy in the previous week, which helped the Pound remain propped off Wednesday’s low. Looking ahead, lack of first-ted data in the UK will leave the market focused on Brexit risk, broader sentiment flow and US initial jobless claims.

USDJPY – technical overview

This latest break below the previous multi-month low from March is a significant development, as it potentially warns of a fresh downside extension and measured move into the 106.00s following a period of multi-day bearish consolidation. Wednesday daily close below 110.00 strengthens this prospect, with any rallies now seen well capped ahead of 112.00. But ultimately, only back above 115.00 would force a shift in the structure and take the pressure off the downside.

• R2 110.64 – 6Apr high – Strong
• R1 109.91 – 7Apr high – Medium
• S1 108.50 – Mid-Figure – Medium
• S2 107.95 – 29Oct 2014 low – Strong

USDJPY – fundamental overview

Plenty of official speak over the past couple of sessions, indicating the administration is keeping a close eye on this unwanted appreciation in the Yen. But it seems the market (as is usually the case) is more than prepared to test the BOJ’s resolve until there is an actual response. PM Abe’s dismissal of the need to intervene has only further contributed to this Yen surge, while any downside pressure on risk assets is likely to intensify the appreciation in the Japanese currency. While Kuroda has reiterated the central bank’s willingness to do more, this is nothing new and isn’t likely to have any impact on the market. Looking ahead, broader sentiment flow, official comments out of Japan and some US initial jobless claims will be the key focus on Thursday.

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 1.0955 – 31Mar high – Medium
• S1 1.0875 – 23Mar low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

Economic data out of Switzerland has been better of late, and there could be signs of an alleviation of intense deflationary pressures. And yet, with the Franc still deemed to be well overvalued, the SNB remains committed to its current policy strategy of intervention and negative rates. The SNB’s job has been a lot easier of late, with the EURCHF rate stable despite more ECB stimulus and accommodations elsewhere, and this should give the central bank the flexibility it needs to keep from making any additional easing moves. But the global backdrop is still shaky and any signs of an intensification of downside pressure on equities, could invite unwanted CHF appreciation, something the SNB needs to continue to closely monitor.

AUDUSD – technical overview

An impressive run for this pair over the past several days, with gains extending to fresh 2016 highs. However, the run is starting to look a little stretched and there is risk for a pullback and potential bearish resumption. Still, a break back below 0.7477 would be required to strengthen this outlook and take the immediate pressure off the topside.

• R2 0.7678 – 4Apr high – Strong
• R1 0.7650 – Mid-Figure – Medium
• S1 0.7510 – 5Apr low – Medium
• S2 0.7477 – 24Mar low – Strong

AUDUSD – fundamental overview

Not much of anything in the way of headlines out of Australia in Thursday trade, with the local economic calendar light and the market instead more focused on broader macro themes. This has helped keep the currency supported off recent lows, with the market rallying in the latter half of Wednesday and holding onto the gains in the aftermath of a Fed Minutes that mostly reflected the cautious sentiment from the Fed Chair in the previous week. Looking ahead, the Australian Dollar will continue to take its cues from risk markets, while also focusing on commodities prices. On the data front, US initial jobless claims is the only notable release.

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 1.3296 to strengthen this outlook and accelerate gains, setting up a possible double bottom and bullish resumption. But while the market holds below 1.3296, a deeper drop to test the October 2015 base at 1.2832 should not be ruled out.

• R2 1.3296 – 24Mar high – Strong
• R1 1.3219 – 5Apr high – Medium
• S1 1.3003 – 4Apr low – Medium
• S2 1.2968 – 1Apr low – Strong

USDCAD – fundamental overview

An impressive recovery in the price of OIL and a pre-Fed Minutes US Dollar decline, were all that was needed to get the Canadian Dollar bid back up, after the Loonie had come under renewed downside pressure in recent trade. The release of a Fed Minutes that for the most part reaffirmed the Fed Chair’s sentiment in the previous week, did a good job of keeping the Loonie bid up into Thursday. Looking ahead, Canada building permits and US initial jobless claims are the only notable standouts on today’s calendar. The market will probably spend more time focused on sentiment flow and commodities prices.

NZDUSD – technical overview

Despite gains over the past several days, the market still remains confined to a broader downtrend with rallies continuing to be very well capped ahead of the key psychological barrier at 0.7000. However, a break back below 0.6668 will be required to strengthen the outlook and expose fresh declines towards next key support at 0.6546 further down. Ultimately, only a weekly close above 0.7000 compromises the bearish outlook.

• R2 0.6904 – 4Apr high – Strong
• R1 0.6845 – 6Apr high – Medium
• S1 0.6759 – 5Apr low – Medium
• S2 0.6668 – 28Mar low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has come under relative pressure over the past week, since posting a fresh 2016 high against the Buck. Into Thursday, only the Pound has performed worse amongst the developed currencies over the past 5 days. While setbacks have been rather mild, the underperformance is noteworthy nonetheless, with the currency perhaps taking an added hit on comments from RBNZ Deputy Governor Bascand who said monetary policy should remain accommodative and that declines in inflation may lead to low wage settlements. The market is already pricing more cuts from the RBNZ going forward and the central bank is likely to jawbone the currency off current elevated levels. Still, dips have been somewhat supported on Wednesday’s broad based US Dollar slide and a Fed Minutes that mostly echoed the cautious tone from Fed Yellen in the previous week. Looking ahead, sentiment flow, commodities prices and US initial jobless claims will be the key things to watch. 

US SPX 500 – technical overview

This latest multi-day rally is classified as corrective, with any additional upside expected to be well capped below 2100 on a weekly close basis in favour of the next major downside extension below 1800 and towards a measured move at 1500 further down. Ultimately, only a weekly close back above 2100 will delay the bearish outlook.

• R2 2083.00 – 29Dec high – Strong
• R1 2080.00 – 4Apr/2016 high – Medium
• S1 2021.00 –24Mar low – Strong
• S2 2004.00 – 15Mar low – Medium

US SPX 500 – fundamental overview

Stocks are doing their best to remain elevated, with investors trying to squeeze up every ounce of Fed dovishness to fuel the market higher. Certainly, Wednesday’s Fed Minutes offered some fresh ammunition to bulls, with the release mostly echoing Fed Chair Yellen’s cautious tone in the previous week. Still, there is clearly a debated going on within the Fed and the case for slowing down the normalisation process is not as clear cut as the market may be pricing. Moreover, the fact that monetary policy is exhausted on a global scale is not something that should be a comfort to stocks still trading relatively close to 2015 record highs. Looking ahead, US initial jobless claims is the key release for Thursday.

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 1191. 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 1244.10 – 30Mar high – Medium
• S1 1208.35 – 28Mar low – Medium
• S2 1191.50 – Previous Resistance – Very Strong

GOLD (SPOT) – fundamental overview

GOLD has been very well supported in recent dips, with the yellow metal finding solid demand in 2016 on the back of fears over the limitations of exhausted monetary policy. Overall, whether the US Dollar is bid or not is becoming less relevant, with risk sentiment likely to be the primary driver. Any weakness on this front will continue to bolster the yellow metal.

Feature – technical overview

USDSGD is finally poised to turn back up after a period of intense correction. Overall, the structure remains constructive, with the most recent dip 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 a 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 1.3650 – Mid-Figure – Medium
• R1 1.3590 – 5Apr high – Medium
• S1 1.3425 – 78.6% Fib Retrace – Strong
• S2 1.3412 – 31Mar/2016 low – Strong

Feature – fundamental overview

Very little on the domestic front driving the Singapore Dollar at the moment, with most of the price action driven off the US Dollar side of the equation. This is a market that continues to be highly sensitive to the Fed policy outlook and risk appetite. And so, with the Fed Minutes for the most part echoing Yellen’s cautious tone in the previous week, risk markets have been supported and the Buck has come back under some pressure. And yet, there is every sense that with monetary policy exhausted across the globe, any meaningful upside in the Singapore Dollar from current levels could very well be limited.