The US dollar was on the retreat yesterday and during today’s Asian session, as a number of soft data were released. Investors seem to expect that the soft data may dovishly affect the Fed’s interest rate decision, later this week. The USD weakness was also underscored by a drop of the 10 year treasury yield, which took off some of greenback’s shine. Analysts point out that market focus is now expected to be on how dovish the Fed will be sounding. We expect the USD to be data driven until the FOMC interest rate decision as well as by any statements of Fed officials. EUR/USD rose on Friday, testing the 1.1340 (S1) resistance line. We could see the pair maintaining a bullish outlook should the USD continue to weaken. Should the pair find fresh buying orders along its path, we could see it breaking the 1.1340 (R1) resistance line and aim for the 1.1390 (R2) resistance hurdle. Should on the other hand the pair come under the selling interest of the market, we could see it aiming if not breaking the 1.1300 (S1) support line.
Pound gets some support yet remains in check.
The pound got some support on Friday as markets seem to be relieved that a no deal Brexit could be avoided. It remains uncertain is UK’s PM Theresa May, can get her Brexit deal approved by the UK Parliament, hence any gains remained in check. May has only three days to win an approval before the EU summit and substantial pressure is being exercised on hard Brexiteers and the DUP. The main argument seems to include the possibility of a long delay of the Brexit date, and possibly taking part in the EU’s parliamentary elections. We expect volatility for the pound to continue in the coming week as Brexit anxiety escalates. Cable rose on Friday breaking the 1.3265 (S1) resistance line (now turned to support) and during today’s Asian session stabilised above it. We could see the pair prove volatile to any further Brexit developments and should positive headlines reel in, we could see the pair rising and aiming if not breaking the 1.3350 (R1) resistance line. Should the bears take over, we expect cable to break the 1.3265 (S1) support line and aim for the 1.3265 (S2) support barrier. Please be advised that volatility could be sudden, to either direction and high, always depending on Brexit developments.
Other economic highlights today and early tomorrow
In today’s European session we get Eurozone’s trade balance for January and just before Tuesday’s Asian session we get New Zealand’s Westpac Consumer Sentiment for Q1. In tomorrow’s Asian session, we get Australia’s House Price Index for Q4 and the minutes of RBA’s last meeting will be released. As for speakers, RBA’s assistant governor Kent will be speaking.
As for the week ahead:
On Tuesday we get the UK employment data for January, Germany’s ZEW economic Sentiment for March and the US Factory orders for January. On Wednesday UK’s inflation data for February are due out while at the same time the UK Parliament will be having another vote on Brexit, the FOMC is to release its interest rate decision and New Zealand’s GDP for Q4 is due out. On Thursday we get from Australia the employment data for February, from Switzerland the SNB interest rate decision, from Norway the Norgesbank interest rate decision, from the UK the retail sales growth rates for February and BoE’s interest rate decision, from the US the Philly Fed Mfg Index for March and from the Eurozone the Consumer Sentiment for March. Also be advised that on Thursday the EU summit will be starting and could affect the pound substantially. On Friday, we get Japan’s CPI rates for February, Germany’s preliminary Mfg PMI and Eurozone’s preliminary Composite PMI, both for March, while from Canada we get the inflation data for February and the retail sales growth rate for January.
GBP/USD
Support: 1.3265 (S1), 1.3175 (S2), 1.3070 (S3)
Resistance: 1.3350 (R1), 1.3450 (R2), 1.3560 (R3)
EUR/USD H4
Support: 1.1300 (S1), 1.1260 (S2), 1.1215 (S3)
Resistance: 1.1340 (R1), 1.1390 (R2), 1.1470 (R3)
