FX Strategy 20 Mar 18  

NOK and GBP are the top G10 currencies today, up 0.23% and 0.21%, respectively (versus USD). JPY and NZD are the top G10 loser down 0.41% and 0.33%, respectively. Overnight the RBA meeting minutes were more of the same, causing no problems to the FX markets. The key focus still remains the FOMC meeting; we are bearish USD heading into the meeting because there is a greater scope of disappointment given market is now expecting an upward shift in the Fed’s dot plot. Elsewhere, the outlook for GBP has improved since the announcement of a (favorable) Brexit deal. There is scope for hawkish dissenters to express their opinions at the BoE’s meeting on Thursday, especially if the UK CPI comes in firm today. In the Equities space, the Nikkei 225 has closed lower by 0.47% at 21,380, weighed down by a weak performance by the US equities. That said, the European equities have opened firmer with FTSE at +0.4%, DAX at +0.3% and CAC +0.2%. In the rates market, the US and Bund yields have improved a little with US 10-year at 2.87% and the Bund 10-year yield at 0.58%. In the energy space, the Brent front month is trading slightly firm at $66.51. In terms of data, apart from UK CPI, the German and Euro area Zew economic sentiment will be the only data of any note from Europe. From the US, there is no tier one release today.


10-year Yields Daily chart (12-month)



USD-Index Daily chart (2-month)



Brent Front month Daily chart (2-Month)



Trade weighted basket Hourly chart (1-Week)




Major Currency Pairs


EURUSD Chart (Two-week)



Strategy: Support at 1.2332 for 1.2384
Short-term view: EUR/USD has support at 1.2332, MACD is constructive and a bullish engulfying candle was completed on Monday. Hence, expect a bounce to 1.2384. Below 1.2332 to open 1.2289.


GBPUSD Chart (Two-week)



Strategy: Support at 1.4022 for 1.4099
Short-term view: GBP/USD has support at 1.4020, momentum is improving and a flag type pattern is completed. Hence, we may see a rise to 1.4099. Below 1.4020 to open 1.3980


USDJPY Chart (Two-week)



Strategy: Support at 106.09 for 106.74
Short-term view: USD/JPY support comes in at 106.09, short-term momentum is looking to improve and a head and shoulders bottom is completed. Hence, we may see a rise to 106.74, possibly 107.02. Below 106.09 to open 105.67


AUDUSD Chart (Two-week)



Strategy: Resistance at 0.7740 for .7653
Short-term view: AUD/USD has resistance at .7740 and daily momentum is overly bearish. Hence, we expect a dip to .7653. Above .7740 to open .7774


BTCUSD Hourly Chart (Two-week)



(Chart by Reuters)


Strategy: Resistance at $8593 for $8078
Short-term view: BTC/USD MACD is in an uptrend and a head and shoulders pattern is forming. That said, over the short-run a further dip is likely before the pattern is completed. Hence, we expect a dip to 8078. Above 8593 to open towards 9000, potentially 9459.


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