US dollar weakness continued overnight, as Yellen’s dovishness sent ripples through the market. Wednesday morning saw Federal Reserve Chair Janet Yellen raise concern over the global growth outlook and uncertainty in commodity prices acting as headwinds to the US economy. Fed President Evans echoed Yellen’s concern, citing risks for the US economy are to the downside, supporting a shallow path for policy tightening. The US dollar continued to weaken as the market digested this new-found dovishness ahead of the much anticipated NFP this Friday. The Australian dollar pushed to monthly highs off the back of this USD weakness touching 0.770 before consolidating around the 0.7660 level.
The Fed has been strongly supporting their data-dependent approach towards policy-tightening this year. Despite this stance, the Fed continues to look to global market conditions and market-based measures of inflation expectations, turning its back on traditional indicators such as unemployment and PCE deflators. With central banks fighting for weaker domestic currencies to stimulate growth and inflation, there appears to be no urgency for the Fed to continue its policy tightening path.
Recent US dollar softening has proved unable to support Oil as it continues to slide ahead of production freeze negotiations next month. Despite a temporary bounce from better than expected IEA inventories data, Oil is struggling to find support at these levels. With inventories continuing to build and major oil producer Saudi Arabia losing market share, pressure is mounting for an outcome from the Doha negotiations on April 17th. Analysts believe failure to reach a widespread consensus on production levels could see Oil fall to $35/bbl with scope for as low as $30/bbl. WTI and Brent are trading at $38/bbl and $39.80/bbl respectively at time of writing.
Currency Updates:
EUR/USD Intraday: bullish bias above 1.1300.
Pivot: 1.1300
Our preference: long positions above 1.1300 with targets @ 1.1365 & 1.1400 in extension.
Alternative scenario: below 1.1300 look for further downside with 1.1280 & 1.1255 as targets.
Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Supports and resistances:
1.1450 ***
1.1400 **
1.1365 ***
1.1321 Last
1.1300 ***
1.1280 ***
1.1255 **
USD/JPY Intraday: under pressure.
Pivot: 112.85
Our preference: short positions below 112.85 with targets @ 112.05 & 111.60 in extension.
Alternative scenario: above 112.85 look for further upside with 113.20 & 113.45 as targets.
Comment: the RSI lacks upward momentum.
Supports and resistances:
113.45
113.20
112.85
112.45 Last
112.05
111.60
111.20
GBP/USD Intraday: caution
Pivot: 1.4355
Our preference: long positions above 1.4355 with targets @ 1.4455 & 1.4515 in extension.
Alternative scenario: below 1.4355 look for further downside with 1.4305 & 1.4260 as targets.
Comment: intraday technical indicators are mixed and call for caution.
Supports and resistances:
1.4570 **
1.4515 ***
1.4455 ***
1.4358 Last
1.4355 ***
1.4305 ***
1.4260 ***
AUD/USD Intraday: further advance.
Pivot: 0.7610
Our preference: long positions above 0.7610 with targets @ 0.7700 & 0.7745 in extension.
Alternative scenario: below 0.7610 look for further downside with 0.7565 & 0.7515 as targets.
Comment: the RSI is mixed to bullish.
Supports and resistances:
0.7790
0.7745
0.7700
0.7665 Last
0.7610
0.7565
0.7515
SPI 200 (ASX) (M6) Intraday: rebound.
Pivot: 5030
Our preference: long positions above 5030 with targets @ 5100 & 5145 in extension.
Alternative scenario: below 5030 look for further downside with 4990 & 4960 as targets.
Comment: the RSI is supported by a rising trend line.
Supports and resistances:
5185
5145
5100
5076 Last
5030
4990
4960
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