Hard to ignore the inflation data

GBPUSD – technical overview

The market is in a correction phase in the aftermath of the run to fresh multi-month highs in 2021. At this stage, additional setbacks should be limited to the 1.3000 area ahead of the next major upside extension towards a retest and break of critical resistance in the form of the 2018 high. Back above 1.3835 takes pressure off the downside.

• R2 1.3354 – 4 March high – Strong
• R1 1.3299 – 23 March high – Medium
• S1 1.3051 – 29 March low – Strong
• S2 1.3000 – Psychological – Medium

GBPUSD – fundamental overview

The Pound has been lagging of late, with the currency suffering from a scaling back of rate hike expectations. BOE Broadbent has said he sees an unprecedented external hit to national income from the commodities spike. This follows dovish comments from BOE Bailey earlier this week. Key standouts on today’s calendar come in the form of German retail sales, UK GDP, German unemployment, Eurozone unemployment, US initial jobless claims, and US core PCE.

USDJPY – technical overview

The market has rocketed higher to fresh multi-month highs and is now staring at a retest of the critical peak from 2015 up ahead of 126.00. Technical studies are however quite extended, with scope for a sizable correction in the weeks ahead.

• R2 125.86 – 2015 high – Strong
• R1 125.11 – Figure – Medium
• S1 121.18 – 25 March low – Medium
• S2 120.95 – 24 March low – Medium

USDJPY – fundamental overview

Finally, some demand for the Yen this week, this after the Japanese ministry of finance stepped in. The MOF said it was closely watching for the negative impact of the weaker with a sense of urgency. At the same time, the BOJ’s continued defense of the JGB yield cap should limit potential Yen upside. Key standouts on today’s calendar come in the form of German retail sales, UK GDP, German unemployment, Eurozone unemployment, US initial jobless claims, and US core PCE.

AUDUSD – technical overview

At this stage, the market has found a bottom and is trying to work back to the topside. Ultimately, it will take a break back above 0.7600 to shift the focus back on the topside. A weekly close below 0.7000 will force a bearish shift.

• R2 0.7541 – 28 March/2022 high – Strong
• R1 0.7500 – Psychological – Medium
• S1 0.7166 – 15 March low – Medium
• S2 0.7100 – Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar is trading just off fresh yearly highs as it benefits from positive market sentiment and overall bid commodities. At the same time, we had been seeing some demand on the back of fears around the war and the resulting push higher in commodities. With worry around the war now fading, there has been some selling pressure into resistance. Key standouts on today’s calendar come in the form of German retail sales, UK GDP, German unemployment, Eurozone unemployment, US initial jobless claims, and US core PCE.

USDCAD – technical overview

Signs of a major bottom in the works after a severe decline from the 2020 high. A recent weekly close back above 1.2500 encourages the constructive outlook and opens the door for a push back towards next critical resistance in the 1.3000 area. Any setbacks should be well supported into the 1.2200s.

• R2 1.2625 – 22 March high – Strong
• R1 1.2593 – 28 March high  – Medium
• S1 1.2466 – 25 March low – Medium
• S2 1.2430 – 30 March/2022 low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been well bid overall on elevated commodities prices, an uptick in global sentiment and solid Canada data. But we have seen some selling of oil in recent sessions which has stalled the run higher in the Loonie. Meanwhile, BofA is calling for three consecutive BoC rate hikes in April, June, and July. Key standouts on today’s calendar come in the form of German retail sales, UK GDP, German unemployment, Eurozone unemployment, US initial jobless claims, and US core PCE.

NZDUSD – technical overview

Setbacks have intensified in recent weeks with the market trading down to fresh multi-month lows. A recent breakdown below the 0.6700 area opens the door for a drop towards 0.6500 in the sessions ahead.

• R2 0.7000 – Psychological – Strong
• R1 0.6999 – 30 March/2022 high – Medium
• S1 0.6728 – 15 March low – Medium
• S2 0.6700 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar has been tracking with commodities and risk sentiment. Overall, both of performed well of late, which has helped to drive the currency to yearly highs. We've also seen added demand on local data, with construction data and business confidence exceeding expectation. Key standouts on today’s calendar come in the form of German retail sales, UK GDP, German unemployment, Eurozone unemployment, US initial jobless claims, and US core PCE.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. Back above 4,700 will be required at a minimum to take the immediate pressure off the downside.

• R2 4700 – Round number – Strong
• R1 4641 – 29 March high – Medium
• S1 4374 – 18 March low – Medium
• S2 4330 – 17 March low – Medium

US SPX 500 – fundamental overview

With so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout, rising inflation, and geopolitical tension should weigh more heavily on investor sentiment in Q1 2022.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900.

• R2 2076 – Record high, August 2020 – Strong
• R1 2071 – 8 March/2022 high – Medium
• S1 1900 – Round number – Medium
• S2 1878 – 16 November high – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, coronavirus fallout, inflation risk, and geopolitical tension. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.