Greg’s Weekly Analysis W/C 5th March 2018

Fundamentals: It safe to say that the USDollar was the story last week and it will probably be the driving force among G10 currencies with the March meeting rate hike expectation. The new Fed Chair Powell testified in the US and the markets welcomed the further positive and hawkish outlook. ISM manufacturing PMI reached the 60 level and the DXY was soaring ahead however by the end of the week Pres Trumps’ announcement regarding tariffs weakened the USDollar. Next week will put the aussie on the spotlight and the pair could driven based on what the RBA monetary meeting offers. Depending on Australia’s GDP figures along with subdued inflation the RBA could tone down it’s somewhat hawkish and upbeat view while keeping the cash rate at 1.5%.

Technicals: The aussie dollar sold off making a lower low on the daily as per our prediction however as soon as it was reaching the lows of the 0.7710 it quickly retraced erasing some of the losses by the end of the week. If support will be established here we could be looking for a rally especially if the USDollar fails to trend further above.

Fundamentals: The ECB members will commence once again for the March policy meeting and while rates are not expected to change, we start out the week with Markit PMI numbers and the 3rd estimate of Q4 GDP growth. Regardless of the short term volatility that these figures will offer, traders will be tuned in for the main event of the post meeting press conference with ECB’s Mario Draghi and look for signs in the language of the QE gradual exit in which case market participants could act in a bullish manner, but if the dovish stance will be repeated then further losses could be expected on the euro currency.

Technicals: The euro sold off initially but then the 50 ema along with the 1.2200 level supported price into a rally to close above the 1.23000 by week end. If the 1.2400 price level doesn’t show resistance we could be witnessing a rally and even a breakout above the long term trendline, as always waiting for confirmation before jumping the gun is a must.

Fundamentals: The pound slid down to a 7 week low and may or may not find support based on how the USDollar strengthens or weakens as the UK will not offer price driving data points. Services PMI might not give enough clues for market participants and traders will most likely wait for the industrial and manufacturing output on Friday with industrial production expected to grow by 1.1% m/m and manufacturing with 0.2%.

Technicals: The pound sold off below the 50 ema on the daily and many have declared further downside only for the fall to not continue and halt at the 1.38000 showing clue of possible support. We mentioned 2 weeks ago that buying the pound based on the value prices between 1.3600 and 1.3700 would be high yielding in case of an uptrend, the question is will more value be provided or this is the best price to buy from, if price closes on the daily above the 1.38000 we can prepare for long scenarios.

Fundamentals: The Canadian dollar weakened significantly against the USDollar as the pair broke above the 1.2800 price level. The February jobs figures may help the loonie ecover some of the losses but the main event will the BoC meeting which is anticipated to posses downside risks. After 3 rate hikes the BoC may head for a pause cooling down rate hike expectations. January data points were mixed with retail sales and unemployment numbers missing estimates while inflation surprisingly showing growth. Market participants are not fully pricing in a rate hike til July and the BoC will most likely reiterate their data dependent view which in turn will weaken the CAD. Better than expected employment figures on friday could change this scenario as it would bring rate hike expectation closer.

Technicals: Without any major clear price action formation the pair rallied and the pullbacks did not form strong enough price action to go for buy positions on the long term. Now that price is nearing the 1.2900 probability for a pullback is increasing with a chance of a decline from resistance, that could be the opportunity to wait for the bearish momentum pullback to fade and join the bulls for a breakout above resistance.

Fundamentals: There’s no doubt that the GDT price index will have its effect on the pairs’ exchange rate while manufacturing numbers could spur optimism, this however won’t take away from the fact that the RBNZ has been in a wait and see mode and the price could be at the mercy of the US side at least until the RBNZ takes a relatively strong hawkish or dovish stance rather than remaining neutral.

Technicals: The pair formed a dubious double bottom based on a pullback from the 0.72000, this along with the rejection of the daily 50 ema makes a good case for buys, however due to price pulling marginally we need to view this from both sides and if we don’t see bullish confirmation we might be looking for a sizeable sell further down. Waiting for price pattern and breakout confirmation will be key to entering a decent risk to reward positions.

Fundamentals: The Japanese economy has seen some slight improvement which has been cleverly addressed by the BoJ in their last policy meetings. Next week we don’t expect any major shift from the current target and view especially as wage growth has been stagnating which in turn affects the Consumer Price inflation halting the BoJ to start reducing its large stimulus program while the yen appreciation is not helping the case either, the expectation in this manner being no change or hawkish views from the Central Bank of Japan.

Technicals: The pair sold off and it is clear that the 106.00 level only provided temporary support, no that price is below the 106.00 it opens up the possibilities of the 104.00, that said if support forms and confirm the bulls have a chance to take back the losses, especially if the DXY USDollar rebounds once again.

The FTSE was almost about to form a daily higher high before it found resistance at the 7300 and sold off to the lows we could see last week at the 7100 price level. This could still develop into a daily double bottom formation which will see upside. The only way to go for sells is based on a new daily lower low confirmation.

The DAX is in a similar position with the decline occurring but clearly stopping at the 12000 key support level, if bullish price action confirms by higher lows on the intra-days probability will stand with the buyers.

On the DOW the decline even ended up forming a pinbar candle that is rejecting the 50% Fibonacci level, this could become a strong formation if buyers will flock to the index as soon as next week opens.

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