The pick of the day is USD/JPY, who started the week over the Asian session with a big jump, and the market sentiment is going from consolidation to rally, to consolidation, to rally. It’s probably a Japanese dance move. On the daily dance floor the pair pierced through the current Ichimoku cloud, and the Tenkan moving average seems to be on its way to cross above the flattening Kijun line. The RSI is above the neutrality area and has yet to approach the overbought zone. I have set to take profit at the 23% Fibonacci level at 103.472 through a broke above this level could open doors for more upward moves in the pair with 105.45 as target. Now if the pair suddenly changes direction and breaks below 100.3 that would turn the outlook to bearish with a first alternative target at 97.7. The month of march will end today and the flows could take a role in the equity markets. The Nikkei is still down by around 9% since the start of the year.
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What Happened Over the Weekend
Investors were hoping for a bit of direction from ECB member Weidmann, as many expected his speech on Friday night to reinforce his points earlier in the week that QE or negative rates are actions that he would get behind. Unfortunately it was less ‘direction’ and more ‘misdirection’ as Weidmann asserted that deflation isn’t yet present and much of the downward pressure on prices has been through food and energy temporarily. The more cynical among us believe that his intentions are towards unconventional monetary policy, but that the ECB might have to wait until after the European elections this May before they can take action.
That might prove to be more difficult than they think as, if France is anything to go by, representation in the European parliament gets a little more right wing and a little less about the common good. In this weekend’s run-off elections Francois Hollande has taken big losses to his main opposition, the UMP, and Marine Le Pen’s Front Nacionale has taken more seats than originally thought last week. Hollande will now undertake a dramatic cabinet reshuffle, as early as today, in a bid to move the heat from him to his team.
Some good news from Greece this weekend, as they approved further reforms which will grant them their April aid disbursement. The reforms were big and there were thousands of protesters outside parliament demonstrating against health care cuts and market liberalisation , but eventually the package went through 152 votes for, versus 135 against.
Cyprus, another country at the mercy of the Troika, have said that further escalation in Crimea could really hurt its chances of returning to growth. Tourism is their one main industry now and Russian tourists were their main growth area. now with the depreciation of the Rouble and general uncertainty, they’re not sure that will continue.
Both the US and Russia agree that they want to find a diplomatic solution to Crimea, but neither are entirely sure what that solution is. After Obama and Putin spoke on Friday and agreed that diplomacy should be the way forward John Kerry and Sergei Lavrov were unable to find common ground, particularly on Russia pulling back troops from the Ukraine border. In the meantime Moody’s have put Russian government debt on review, expecting it to be downgraded.. The ratings agency noted that these problems could have effects on inward investment for many years to come and will almost certainly slow down the process of diversifying the Russian economy away from oil.
In Asia, markets have opened higher on the last trading day of the quarter, but the Nikkei is still down by around 9% since the start of the year. In China some $14bn of assets have been seized by China from the family and close associates of a retired party member. This is part of the biggest corruption scandal in more than 60 years, Reuters report.
Looking at today, month end flows will take a dominant role in equity markets, but the only big winner in that arena is the FTSE MIB, the Italian bourse, which has seen gains of 13%. We’ve got some European inflation numbers today which could move the single currency if they post particularly low, though markets won’t feel able to second guess the ECB’s next move, which may or may not come on Thursday. We’ll go into more detail on what’s in store for the rest of the week tomorrow.
Intraday Forex Technical Levels
EUR/USD Intraday: the upside prevails.
Our preference: Long positions above 1.376 with targets @ 1.381 & 1.3845 in extension.
Alternative scenario: Below 1.376 look for further downside with 1.374 & 1.372 as targets.
Comment: The pair stands above its support and remains on the upside.
Supports and resistances:
1.3875
1.3845
1.381
1.38 Last
1.376
1.374
1.372
GBP/USD Intraday: the bias remains bullish.
Our preference: Long positions above 1.659 with targets @ 1.6665 & 1.67 in extension.
Alternative scenario: Below 1.659 look for further downside with 1.655 & 1.6505 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
1.672
1.67
1.6665
1.6652 Last
1.659
1.655
1.6505
USD/JPY Intraday: the upside prevails.
Our preference: Long positions above 102.65 with targets @ 103.35 & 103.75 in extension.
Alternative scenario: Below 102.65 look for further downside with 102.4 & 101.95 as targets.
Comment: the RSI is well directed. The pair remains on the upside and is breaking above its resistance.
Supports and resistances:
104.1
103.75
103.35
103.205 Last
102.65
102.4
101.95
USD/CHF Intraday: under pressure
Our preference: Short positions below 0.8875 with targets @ 0.881 & 0.8785 in extension.
Alternative scenario: Above 0.8875 look for further upside with 0.89 & 0.893 as targets.
Comment: The pair has broken below its support and remains under pressure.
Supports and resistances:
0.893
0.89
0.8875
0.8835 Last
0.881
0.8785
0.876
NZD/USD Intraday: key resistance at 0.8695
Our preference: Short positions below 0.8695 with targets @ 0.862 & 0.8585 in extension.
Alternative scenario: Above 0.8695 look for further upside with 0.872 & 0.875 as targets.
Comment: as long as 0.8695 is resistance, likely decline to 0.862.
Supports and resistances:
0.875
0.872
0.8695
0.8646 Last
0.862
0.8585
0.8565
AUD/USD Intraday: under pressure |
Our preference: Short positions below 0.926 with targets @ 0.921 & 0.918 in extension.
Alternative scenario: Above 0.926 look for further upside with 0.93 & 0.934 as targets.
Comment: The pair remains within a bearish channel.
Supports and resistances:
0.934
0.93
0.926
0.9227 Last
0.921
0.918
0.915
USD/CAD Intraday: bullish bias above 1.1025.
Our preference: Long positions above 1.1025 with targets @ 1.1075 & 1.1105 in extension.
Alternative scenario: Below 1.1025 look for further downside with 1.0995 & 1.0975 as targets.
Comment: The pair is facing a pull back.
Supports and resistances:
1.1145
1.1105
1.1075
1.1041 Last
1.1025
1.0995
1.0975
