The euro participated in the party early but could not stick, writes Bill Baruch, President of BlueLineFutures.com.
Euro (ECM)
Session close: Settled at 1.1285, down 3.5 ticks
Fundamentals: The euro participated in the party early but could not stick. Manufacturing data from both China and the U.K came in stronger than expected but revisions to the Eurozone reads were another disappointment. This and a softer CPI kept a lid on price action ahead of U.S hours where a poor Retail Sales number was largely ignored for better ISM Manufacturing. Overall, the dollar strengthened, and the euro had no substance to compete. Some days, the broader risk-sentiment focuses on what it wants and China data that avoided recessionary-like conditions was front and center. However, in the back seat was a poor read on February U.S Retail Sales, larger Business Inventories than expected and a worse U.S Manufacturing PMI than the ISM. As for the euro, it’s been a one-way ticket lower since the March 20 Fed meeting. Today, Spanish Unemployment and ECB Official Praet are due at 2:00 am CT and February U.S Durable Goods due at 7:30 am CT.
Technicals: The euro has finished lower for seven out of the eight sessions following the March 20 Fed meeting. Strong support comes in at the previous lows at 1.12455-1.12695 and it’s tough to sell into previous lows unless you are highly confident it will break this time down here. However, understand there were lower lows in the front-month March contract that bring major three-star support at 1.11845-1.1213.
Bias: Neutral
Resistance: 1.1332-1.1337**, 1.1371-1.1378**, 1.1433-1.1444**, 1.1465-1.1473**, 1.1522-1.1549***
Support: 1.12455-1.12695**, 1.11845-1.1213***
Japanese yen (JYM)
Session close: Settled at .9031, down 47.5 ticks
Fundamentals: The yen finished lower for the fifth time in six sessions and the S&P 500 settled at the highest level since Oct. 9. China data simply avoided the fourth contraction in a row, it’s like your kids bringing home D’s on their tests for months and now you’re excited about a C. Treasury prices took a swift kick to the gut as the data buoyed risk-sentiment. However, we understand this as the Treasury complex was overbought. What we don’t understand as much is a worse revision in German and three out of four major data points missing in the U.S but completely being ignored. But never forget, the market is always right.
Technicals: Since failing at major three-star resistance head-on, the yen has shed a point and a half and finds itself back at a crucial level; the continuous 200-day moving average which comes in at .9108. This has been our first support level from those highs, so we understand the slow grind back into here. Now, it’s crucial to see how it reacts at this level; we like to believe the yen is trying to invigorate an uptrend above such.
Bias: Neutral/Bullish
Resistance: .9145-.9185***, .9222-.9249**, .9305-.9326***
Support: .9108-.9109***, .9064**, .9007-.90135**, .8919-8931***, .88355-.8845***
Australian dollar (ADM)
Session close: Settled at .7124, up 15 ticks
Fundamentals: The RBA holds a policy meeting tonight with a decision due at 10:30 pm CT. Some would suggest that a dovish narrative is already priced in, however, what is not priced in is a failure to hold onto the China gains. Instead of focusing on equity market sentiment, the Aussie is a commodity currency and traders cannot ignore what copper did today finishing 6¢ from its high and leaving a massive daily tail just below $3. This sort of landscape would lead you to believe things are not as well as equity markets are saying and hence, the RBA could be more dovish than anticipated. Building Approvals are up first at 7:30 pm CT.
Technicals: Between the weekend’s China data and an upbeat narrative around U.S and China talks, one would have thought the Aussie surely has closed out above major three-star resistance and this is simply not the case. Yes, on March 26th, the Aussie managed a close above at .7154 but quickly failed the following day. Last night’s spike struggled to hold above the mark set at .7117-.7130 and we maintain a belief that rallies are being sold and the Aussie will soon find a path lower.
Bias: Neutral/Bearish
Resistance: .7117-.7130***, .7152*, .7182-.7202**
Support: .7052-.7063*, .7006-.7014***
Canadian (CDM)
Session close: Settled at .75285, up 25.5 ticks
Fundamentals: Bank of Canada Governor Poloz said today that the slowdown is temporary. Listen, we are on board to believe this, but we must see more than a couple non-recessionary data points. A beat on Canadian GDP on Friday was a start but it was not an amazing read. For Canada, we are eyeing Ivey PMI on Thursday. There is no major Canadian data ahead of that and the tape will be reliant on how the U.S Dollar digests data tomorrow and Wednesday along with any headlines on the U.S and China trade front. However, Crude Oil has been a bright spot for the Canadian and it finished at the highest level since November today.
Technicals: This has been a nice two-day run for the Canadian coming off a double bottom. Price action is out above a trend line from the February high. This trend line now brings support at .74945-.7500 and the tape will be favorable above here.
Bias: Neutral
Resistance: .7559-.7564**, .7600-.7630***, .76595**
Support: .74945-.7500**, .7427-.7443***, .7330-.7347***
Bill Baruch provides technical levels on all markets throughout the week at BlueLineFutures.com
