Not Too Much Behind US Dollar Slide

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 1.4515 would be required to take the immediate pressure off the downside.

• R2 1.4322 – 4Apr high – Strong
• R1 1.4287 – 11Apr high – Medium
• S1 1.4141 – 8Apr high – Medium
• S2 1.4104 – 11Apr low – Strong

GBPUSD – fundamental overview

The Pound was an outperformer in Monday trade, though there really wasn’t anything UK specific to point at that would have explained the strong bid tone. Dealers did talk of heavy buy related interest in GBPJPY, which may have factored into trade, while broad based US Dollar weakness and demand for commodities also helped to prop the Pound. Looking ahead, the key standout on Tuesday’s calendar comes in the form of UK inflation data. Of course, ongoing Brexit risk and any headlines on that front will also play a part. On the official circuit, we get speeches from Fed’s Harker, Williams and Lacker.

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. Last week’s 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 109.91 – 7Apr high – Strong
• R1 109.10 – 8Apr high – Medium
• S1 107.63 –11Apr/2016 low – Medium
• S2 107.00 – Figure – Strong

USDJPY – fundamental overview

Not much of a reaction to the latest dip in Japanese bank lending as this market continues to take it cues from gestures out from the administration relating to this latest surge in the Yen. At this point, it seems the market will continue to test the administration’s resolve until it actually steps in with a formal response to Yen strength. Any warnings against the strength of the Yen may slow the pace of appreciation, though ultimately, the Yen is still at risk for additional upside in the absence of an official response. Moreover, downside pressure in equities is also something to watch, which as things correlate, could invite additional Yen demand. Looking ahead, the economic calendar is light, and broader flows will dictate trade. On the official circuit, we get speeches from Fed’s Harker, Williams and Lacker.

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 1.0844 – 7Apr low – Medium
• S2 1.0810 – 29Feb/2016 low – Strong

EURCHF – fundamental overview

News of cash climbing to a record high over at the SNB could be helping to support this latest dip in EURCHF, with the market perhaps thinking the SNB has more room to be able to step in  and intervene to weaken the Franc. Overall, the SNB’s job has been easier of late, with the EURCHF rate stable despite warnings of 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 0.7638 – 7Apr high – Medium
• S1 0.7492 – 7Apr low – Medium
• S2 0.7477 – 24Mar low – Strong

AUDUSD – fundamental overview

A very healthy round of NAB business confidence and conditions readings have inspired a fresh round of demand for the Australian Dollar in Tuesday trade. The employment component within the data was particularly impressive, rising to a five year high. This should keep the RBA from thinking about any additional accommodation, with the data showing the Australian economy holding up well in the face of global headwinds. Looking ahead, the economic calendar is light for the remainder of the day and broader sentiment flow is likely to influence direction. On the official circuit, we get speeches from Fed’s Harker, Williams and Lacker.

USDCAD – technical overview

Overall, pressure remains on the downside, with the market trading just off fresh 2016 lows and ahead of the key October 2015 base at 1.2832. Daily studies are starting to approach oversold readings which could warn of a base ahead, though ultimately, it will take a break back above 1.3296 to take the immediate pressure off the downside.

• R2 1.3219 – 5Apr high – Strong
• R1 1.3016 – 11Apr high – Medium
• S1 1.2858 – 31Mar low – Medium
• S2 1.2832 – 15Oct low – Strong

USDCAD – fundamental overview

Another round of gains for the Canadian Dollar on Tuesday, with the Loonie building on momentum from solid employment data in the previous week. Monday’s surge in commodities, with both OIL and GOLD well bid, certainly contributed to the latest wave of Canadian Dollar gains, while broad based selling of the US Dollar also factored. Perhaps dovish comments from Fed Kaplan, ruling out an April hike, added to the downside pressure in USDCAD. Looking ahead, lack of first-tier economic data will leave the market focused on broader macro themes. On the official circuit, we get speeches from Fed’s Harker, Williams and Lacker.

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 0.6759 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 0.6967 – 30Mar/2016 high – Strong
• R1 0.6904 – 4Apr high – Medium
• S1 0.6791 – 11Apr low – Medium
• S2 0.6759 – 5Apr low – Strong

NZDUSD – fundamental overview

Lack of first tier economic data in the early week has the New Zealand Dollar trading on broader macro flow. The US Dollar has come under broad pressure into Tuesday, while commodities have been very well bid, which has helped to support Kiwi back towards key resistance in the 0.6900 area. However, with the RBNZ unlikely to welcome strength above 0.6900 and towards 0.7000, medium-term offers are likely to emerge into any additional strength. Looking ahead, the economic calendar is light, with the only notable standouts coming in the form of some Fed speeches from Fed’s Harker, Williams and Lacker.

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

There is clearly a debate 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. Investors did not like the more upbeat comments from the Fed Chair late Thursday, with Yellen saying the economy could handle further rate hikes. Moreover, the fact that monetary policy is exhausted on a global scale is not something that should be a comfort to stocks trading relatively close to 2015 record highs. Still, we continue to get comments from the other side, with dovish Dudley and Kaplan speak helping to support stocks a bit. Looking ahead, more Fed speak on Tuesday, with Harker, Williams and Lacker due.

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 1260.15 – 22Mar 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 and extended global equities. 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

USDMXN finally looks poised to turn back up after a period of intense correction off the record high from earlier this year. Overall, the structure remains constructive, with the most recent dip well supported ahead of 17.0000. Look for a break and close back above 18.0000 over the coming sessions to strengthen the outlook. Ultimately, only a weekly close below 17.0000 would give reason for pause.

• R2 18.3940 – 18Feb high – Strong
• R1 17.9900 – 16Mar high – Medium
• S1 17.4545 – 5Apr low – Strong
• S2 17.0950 – 31Mar/2016 low – Strong

Feature – fundamental overview

Although the swaps market is still pricing two more Banxico rate hikes between now and year end, there is increasing risk market participants will scale back from this more hawkish pricing. The global outlook is shaky, the local economy is still struggling and Mexican inflation has been rather tame. All of this would be supportive of a more cautious Banxico going forward, which ultimately, should weigh more heavily on the Peso. Into Tuesday, the Peso has found some demand on the back of this latest run in commodities and mild US Dollar selling.