Bill Baruch, President of BlueLineFutures.com previews today’ forex movers.
Euro (ECM)
Session close: Settled at 1.1392, up 17 ticks
Fundamentals: The euro worked higher Monday after a breath of fresh air from German Ifo Business Climate. Sentiment data in the Eurozone has been broadly trying to turn a corner in recent months.
till, German 10-year Bund yields stayed below zero and at the lowest level since October 2016 for much of the session. They dropped sharply Friday after the worst German Manufacturing PMI since September 2012. Relatively speaking, U.S. Flash PMIs on Friday weren’t much better compared to expectations and this kept the euro from having an even worse finish to the week.
Chicago Fed President Evans, a 2019 voter, said the yield curve inversion is “pretty narrow” and the fundamentals are still good. Former Fed Chair Janet Yellen spoke at the same event and added that the yield curve may signal the need to cut rates but does not signal a recession. Philadelphia Fed President Harker, a 2020 voter, took a bit more hawkish route than other members saying he still sees one hike this year, but the Fed is still in a “wait-and-see mode”. This afternoon, according to the CME’s FedWatch Tool there is now only a 29% chance rates stay unchanged through 2019 and a 71% probability the Fed hikes. Tonight, Boston Fed President Rosengren, a 2019 voter, speaks 7:30 pm CT.
Tomorrow, we look to German Ifo Consumer Climate, French GDP and early comments from Evans and Harker again. On the heels of the sentiment data and with yields in focus, a German 2-year Schatz Auction at 5:40 am CT will be in focus. From the U.S, Building Permits and Housing Starts are due at 7:30 am CT, Case Shiller Housing is out at 8:00 am CT and the closely watched March Consumer Confidence is due at 9:00 am CT. Regional data from Richmond and Dallas will be released at 9:00 am CT and San Francisco Fed President Daly speaks at 2:00 pm CT.
Technicals: Price ping-ponged around in the latter half of last week. A move above the 1.1442-1.1450 level brought a tailwind but what is now major three-star resistance at 1.1522-1.1549 stopped the run in its tracks. To the downside, price action has been buoyed by support at our pivot level at 1.1371-1.1378 and this will be crucial moving forward, below here the bears have an edge.
urthermore, a move below support at 1.1332-1.1337 will completely negate recent strength and encourage lower action. A close back above 1.1414 is simply constructive but the bulls certainly have their work cut out from them. We do see value down here in a longer-term sense.
Bias: Neutral/Bullish
Resistance: 1.1414*, 1.1433-1.1444**, 1.1465-1.1473**, 1.1522-1.1549***
Pivot: 1.1371-1.1378
Support: 1.1332-1.1337**, 1.12455-1.12695**, 1.11845-1.1213***
Yen (JYM)
Session close: Settled at .91455, down 0.5 tick
Fundamentals: The Japanese yen has shown great life in the last few sessions. A more dovish Federal Reserve followed by weakness in equity markets over the latter half of last week is a perfect recipe for higher prices. Monday, the yen finished higher amidst dollar weakness and the U.S 10-year Treasury note yield reaching the lowest level since December 2017. However, by the end of the session, equity markets stabilized, and the 10-year yield recovered a bit. Ultimately, the yen finished off the highs. Considering such, traders should not chase price action higher and instead wait for a constructive pullback, something that has seemed to be an oxymoron for the Yen in recent months. Still, with economic data dissipating and headwinds due to trade, Brexit and contracting earnings, the Yen should prove to trade higher over the longer-run. The Bank of Japan Summary of Opinions is due at 6:50 pm CT along with Corporate Services Price Index data. BoJ CPI is due at noon CT.
Technicals: After a string of favorable sessions, the yen tested our major three-star resistance at .9145-.9185 today, finishing the session right there. While a clear close out above here is necessary for a breakout back into the thick of January’s price action, a constructive pullback is just as necessary. To do such, price action must hold major three-star support at .9108-.9109.
Bias: Neutral/Bullish
Resistance: .9145-.9185***, .9222-.9249**, .9305-.9326***
Support: .9108-.9109***, .9064**, .9007-.90135**, .8919-8931***, .88355-.8845***
Aussie (ADM)
Session close: Settled at .7118 up 25 ticks
Fundamentals: The Aussie turned a corner late last night as traders looked to upbeat comments out of Beijing ahead of a fresh round of U.S.-China trade talks later this week. Better sentiment data out of Germany worked to buoy the tape. There is no data out of Australia tonight but that from Europe and the U.S tomorrow will play a key role.
Technicals: Today was green but price action did not get out above major three-star resistance at .7117-.7130. We continue to hold a Bearish Bias after last week’s technical failure to breakout and hold higher price action, however, a close above major three-star resistance will negate such. We are targeting a wave back down to .7007-.7014 at minimum.
Bias: Neutral/Bearish
Resistance: .7117-.7130***, .7152*, .7182-.7202**
Support: .7052-.7063*, .7006-.7014***
Canadian (CDM)
Session close: Settled at .7472, up 1.5 ticks
Fundamentals: The Canadian dollar pared lower action through the day but turned green late in the session as risk-sentiment began to pick-up. Overall, we see downside potential as trade and growth headwinds remain relevant. Crude oil holding near $60 has been a bright spot for the currency. There is no data out of Canada tomorrow.
Technicals: We find the tape immediate-term weak below our pivot at .74945. Price action neared major three-star support at .7427-.7443 before consolidating higher but we believe there is unfinished business to the downside. We will remain slightly bearish while below that .7495 pivot.
Bias: Neutral/Bearish
Resistance: .7516**, 7543-.7559**, .7600***, .7630**, .76595**
Pivot: .74945
Support: .7427-.7443***, .7330-.7347***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com
