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Greg’s Weekly Analysis W/C 2nd April 2018

Fundamentals: The coming week is set to be fairly busier mainly due to the US NFP Jobs number hitting markets as per the end of the trading week of the new month. The RBA will hold their monetary policy on Tuesday but it is widely expected to hold rates and not make any changes, that said hawkish or dovish comments will most likely directly translate into market volatility, consensus shows that the RBA has more chance of being dovish to due the recent GDP figures and they could highlight the risk for no change in policy. Probability for a rate hike as of now stands at 23% by year end much lower than the 60% at the start of the year, that said the USD has every chance to rebound further dragging down the aussie.

Technicals: The pair sold off below the 0.7700 price level but not before retracing and retesting the same level as resistance. Besides forming a lower high on the daily timeframe, price action also confirms further bearish pressure through candlestick patterns. If price aligns based on intra days as well we’ll be able to sell the pair with a promising target at 0.75000.

Fundamentals: The next ECB meeting takes place in April and inflation has become the central banks mains focus, and while the euro strengthened based on tightening expectations from the ECB, if inflation is below where the ECB would deem it enough to change policy, the euro will act bearish since the ECB can only be dovish. Flash inflation reading for march are scheduled on Wednesday and the annualized rate is expected to improve 0.3% which would post a 1.4% still plenty below the expected 2%, however if figures improve and not decline, it could be seen as positive by investors and market participants who would buy the euro on optimism and if the ECB remains dovish then sell it again, creating a buy the rumor sell the fact scenario.

Technicals: Despite forming a new daily high just last week the euro quickly took a turn to the downside and failed to pullback and continue its’ presumable bullish strength. Price is just above the 1.23000 level and did not manage to form a new low, and with no clear confirmation, the odds are in no mans land meaning that price could turn in any direction, this is why waiting for next weeks price action development will be key to deciding whether the euro is worth the risk or whether it’s better to leave it be, for now.

Fundamentals: As always the pound is susceptible to Brexit related risks it managed to strengthen before selling off based on USD rebound. Manufacturing, construction and services PMI are due out from Tuesday onwards and while they have their importance and are expected to post above 50 expansionary figures, the might fail to drive price action if USD keeps up with its rebound.

Technicals: The pound formed its new high and pulled back to the 1.400 price level. This price level and area could play a significant role next week, if buyers decide to support price, we could see a higher low formation on the daily timeframe, this would be a strong buying signal given that candle pattern will most likely confirm the bullish momentum to the upside. However if price will range instead of showing signs of direction in the first 2 trading days the probability for clear rally will fade.

Fundamentals: Both of these currencies will see their highlight on the last day of the trading week with USD waiting for positive jobs numbers and expectation of employment improving to 4%. The Canadian economy is expected to have trade balance as well as jobs report, this will make the USDCAD pair the most volatile pair on Friday on the opening of the US Session, this why trading the NFP without technical signals carries massive risk. Investors and market participants will most likely favour the USDr if jobs figure improve over the Canadian ones.

Technicals: There is no doubt that the 1.28500 price level started acting as support despite not being too evident at first. Now that the daily timeframe has somewhat of a double bottom formation from previous resistance turned support, we can zoom in on the intra-days the 4H and 1H to see if price accelerates upward in which case we would want to join the buyers as quickly as possible.

Fundamentals: Other than being driven by the USD volatility the NZD will see it’s dairy auction index the GDT which always carries higher volatility as investor can gauge GDP outlook and position themselves accordingly. The RBNZ is exercising its neutral right and market participants will most likely concentrate on the USs’ side.

Technicals: Similar to the Aussie pair we have a clean looking and promising chart and price formation which if traders step in, in the first trading sessions to drive price it could present a clear and high yielding opportunity. The 0.72500 price level has is acting as resistance from a retrace of the lows, the 50 EMA is helping price reject its highs and once price moves below the 0.7200 going for a new low is feasible and presents high probability.

Fundamentals: With the Japanese currency strengthening in the last few weeks it is no secret that it will end up hurting exports as well investment despite the strength coming from safe haven flows due to global protectionism. The only reason the BoJ cold shift their view to the hawkish side would be inflation, which remains subdued with no positive outlook as that would reflect a sudden pick up, all these reason will make the BoJ stand by its current stance of ultra loose monetary policy. Knowing all this out of Japan as well as seeing safe haven flows dissipate we could expect weakening in the Yen while the USD could stage a rally, the fundamental picture has been pointing to this for weeks but geopolitical issues stood in the way.

Technicals: The Yen pair experienced a quick rally of more than 200 pips without clear reverse of the price action mainly due to large volume. Price action is staying above the 106.00 and if it remains above that level planning for long position and targeting the 108.00 is not out of the question.

With geopolitical tension and trade wars easing, investors partitioned their assets back into stock and this could be seen throughout all major equity markets and even emerging ones. The Yen gave back its’ high hinting that safe haven outflows are occurring. The FTSE rebounded with clear intent from the lows and if price remains above the 7000 price level going in for the buy will be on market participant’s focus.

The DAX finds itself above the 12000 price level and again this represent a strong bullish counter attack signal which doesn’t show signs of slowing down next week.

The DOW and US stocks largely had the tech stock to worry about which dragged down the major indexes and even kept them from recovering quickly and clearly. In this case if the DOW doesn’t reach above the 24500 in the first 2 trading sessions we might see some ranging until new fundamentals come into play.

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