Euro (March)
Session close: Gained nearly a penny
Fundamentals: Today’s U.S Core CPI was better than expected by one tenth for both YoY at 1.8% and MoM at 0.3%. But guess what, the Dollar lost more than 0.5% on the session and 1% from its swing high. Along with CPI was a very poor read on Retail Sales; headline came in at -0.3% and Core at 0.0%, both missing by 0.5%. This immediately sparked the stagflation argument. First, we want to put stagflation to rest for now as this is the first sharp drop in spending while CPI has been essentially trending lower for the last 18 months. However, yes this raises the fear gauge on stagflation and this coupled with extremely strong technicals in the Euro and extremely weak technicals in the Dollar has encouraged a directional move today. Earlier this morning Eurozone GDP was in line with expectations while Industrial Production was much stronger. Tomorrow is Eurozone Trade Balance data at 4:00 am CT. ECB members Praet and Lautenschlaeger speak at 4:45 am CT and 6:00. U.S PPI is due at 7:30 am CT along with weekly Jobless Claims, NY Empire State Manufacturing and Philly Fed. Industrial Production is due at 8:15 am CT.
Technicals: Today’s outside bullish reversal and move out above major three-star resistance at 1.2434-1.2436 has added fuel to our Bullish Bias. The longer it stays above here the more bullish the tape becomes. The 9-day moving average crossed below the 21-day only yesterday and today’s reversal signals a rejection. The next major level to watch from here is 1.2508-1.2514 and this now aligns with a trend line from the highs.
Bias: Bullish
Resistance: 1.2434-1.2436***, 1.2508-1.2514**, 1.2608***, 1.2695***, 1.30***
Support: 1.23805**, 1.2209-1.2222***, 1.2112-1.21405***, 1.2003***
Yen (March)
Session close: Gained about half a penny
Fundamentals: The Yen is moving higher not only on weakness in Asian equity markets but on a deep-seated sentiment shift. There is clear speculation that the Bank of Japan will catch up with other central banks and tighten or taper policy later this year. The hesitance in reappointing BoJ chief Kuroda has been an understated catalyst. It is also likely that a reduced carry trade has added support. On the other side of the coin, extreme Dollar weakness as mentioned above has helped the Yen trade to the highest level since November 2016. Japanese GDP missed expectations last and halted the rally before it was reinvigorated in U.S hours following CPI and Retail Sales. Core Machinery Orders is at 5:50 pm CT and Industrial Production is at 10:30 pm CT.
Technicals: Price action is in a melt-up for the Yen and the bullseye is major three-star resistance, our only level above. The session low was .9285 and this now aligns with .9279 to bring support, a close below here will not only neutralize this rally but potentially begin to signal a failure; longs must manage risk to this point.
Bias: Bullish
Resistance: .9480-.9491***
Support: .9279-.9285**, .92015**, .9154-.91665**, .9113**, .9062-.9075***
Aussie (March)
Session close: Gained about half a penny
Fundamentals: Today was a massive whipsaw in the Aussie Dollar upon the release of U.S CPI data. In the end, the Aussie put in a strong session and has seen tremendous strength today along with the commodity sector and Dollar denominated assets. However, the day is just getting started in Australia and Employment Change data is due 6:30 pm CT. Analysts expect an addition of 15,300 jobs.
Technicals: Today’s session finished with an extreme outside bullish reversal. The session low held major three-star support and closed out above major three-star resistance. Nine times out of ten this is an all systems go buy signal. However, today is that one time and traders must keep an eye on Employment Change. We are Bullish in Bias and will remain so outright as long as tonight’s data does not flop.
Bias: Bullish
Resistance:.7991**, .8046-.8051***, .8135-.8151****
Pivot – .7901-.7915***
Support – .7868**, .7733-.7757***, .7640**
Canadian (March)
Session close: Gained about half a penny
Fundamentals: Like the other three currencies mentioned, the Canadian put in an extremely strong session on U.S Dollar weakness. This has been a very quiet week on the data front out of Canada, but tomorrow is ADP Employment at 7:30 am CT which is a private read on the heels of last week’s hideous government read. Also, tomorrow Bank of Canada Governor Council Member Schembri speaks at 12:30 pm CT. Crude Oil also reversed sharply from its session low and the EIA inventory report was not bearish. With the price of Oil back above $60 for now this should be supportive to the Canadian.
Technicals: Price action did not settle above resistance at .7996-.8006 but it made its way into this level ahead of the electronic close. Watch for this area to hold through the end of the week to confirm a bottom. Today’s outside bullish reversal is very positive and we have been adamant that we are long term bullish the Canadian with a target of .8524 before the end of the year. Today’s session low was .7908 and we will adjust major three-star support to align with here; a move back below this level will signal a failure.
Bias: Bullish
Resistance – .7996-.8006**, .8070**, .81195-.8163***, .8290***, .8524****
Support – .7931-.7949***, .78805**, .7752-.7787***
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