eFXplus DATA

Amends and adds content in second sentence

AUD/USD remains on course for an eventual break higher, but today's price action won't hasten that event.
Though commodities strength helped it shrug ooff its initial drop on unexpectedly weak Australian jobs data, and it even struck a one-month high near the 200-Day SMA, the gains were fleeting and the pair is now down on the day.
The retreat came as oil and copper, two key factors that influence AUD, fell sharply from their highs, while lackluster equity markets did the pair no favors.
AUD/USD is back below the 55-DSMA, and daily techs are leaning bearishly following RSI's divergence on today's high and the formation of a long upper wick on the daily candle.
This means bulls need patience because monthly techs still favor gains, with the trend line off the 2016 low exerting upward pressure and RSI is biased up.
Long-term techs historically trump short term techs.
So, if the slide from today's high fails to break support around 0.7735/50, the recent short-term consolidation phase could extend before the rally resumes.

TD Research discusses GBP outlook and keeps flagging near-term downside risks (see here), noticing that GBP continues to lag the broader G10, as the soggy CPI data and some negative Brexit headlines have inspired some position squaring.

"We think this squeeze has some room to go, which reflects that positioning and valuation look stretched alongside further weakness in the data

What's more, the market has felt comfortable about a BoE hike next month for quite some time, suggesting that the rate hike is priced into asset markets. Instead, we think a market in search of a theme will try to make one when offered some fodder like a data or policy event that alters sentiment. It offers room to fade well-populated long positions," TD argues. 

• Abe-Trump summit non-event, worst fears on trade put aside for now
• Outlook bullish, but U.S-China option protection needed nL1N1RV0IB
• Focus on matching 107.78 Feb 22/Apr 13 highs, stops 107.80+, 108.00+
• Session 107.19-107.52 range, spot stymied by Japanese exporter offers so far
• Spot remains propped by thick daily cloud, expect gains nL1N1RW08J
• Decent support at 107.00 which was the low on Wednesday

Overbought technicals that have developed as EUR/CHF has rallied are warning that the cross' gains above 1.20 may be limited, initially, but there's much debate about the likely longer-term objective once the former SNB floor buckles.
A long-term 50% Fibo off the October 2007 1.6828 high and January 2015 0.8500 low comes at 1.2664 and provides a viable bull target for 2018.
SNB intervention, which has been keeping the CHF soft, is now likely over but at the same time the central bank is unlikely to spoil the EUR/CHF rally with restrictions.
Expect profit-taking on EUR/CHF longs once the 1.20 level trades.
There's possible scope to the 1.2039 January 2015 sell-off point before stalling but pullbacks will probably be limited as fresh positioning underpins.
Monetary policy divergence between the SNB and ECB will likely keep EUR/CHF inflated for the remainder of 2018 nL1N1RV09S.
Keep an eye on a bid USD/CHF too as the spot market squeeze above the 0.9657 200-DMA helps underpin the cross.

• EUR/USD gets a small lift on MNSI news June key for further guidance over QE
• ECB clarity expected. If conditions worsen may boost bond buys nMNS1d5FCL
• Judged by reaction EUR/USD traders only have eyes for taper talk
• Pair boosted 1.2367-1.2400 in reaction. Decent move given prior doldrums
• EUR 1.1 bln option expiries @ 1.2400 add to resistance
• 76.4% 1.2477-1.2215 drop @ 1.2415, 1.2421 30-day boll, 1.2422 Mar 28 high

• EUR/USD bias remains on the upside, as 14-day momentum is still positive
• 10- and 30-DMAs are positively aligned, reinforcing the bullish potential
• Focus is on a major 1.2415 Fibo -- 76.4% retrace of 1.2477 to 1.2215 fall
• Scope also for gains towards the 30-day upper bollinger-band at 1.2421
• 30-DMA, currently at 1.2330, underpins in the near-term
• We are looking to get long at 1.2335 ahead of the 30-DMA

• Japanese exporters, option players, others stymie USD/JPY attempts up.
• USD/JPY from 107.19 early to 107.52 on Tokyo fix demand.
• Firm US yields and early Nikkei rally also supportive.
• Nikkei since back down and US yields sag a touch.
• Offers still from @107.50, trail up, 107.50-60 USD545 mln option expiries.
• Support towards 107.00 - hourly/daily Ichi tenkans 107.35/20, 55-DMA 106.90.

• +0.2%, as buyers emerged on China opening economy comments nB9N1PB04O
• Reversed early jobs led losses - headline & details missed nL3N1RW05K
• Momentum studies conflict, 5, 10 & 20 DMAs head higher - positive setup
• 0.7811, 61.8% Mar fall, 0.7817 200 DMA & 0.7831, 38.2% 2018 fall resistance
• AUD/NZD shorts continue to be squeezed above 1.0600 - +0.2% @ 1.0650
• AUD/NZD & components busy today in Asia - Click here

EUR/USD: Neutral (since 05 Mar 18, 1.2335): Short-term strength has scope to extend to 1.2425. No change in view.

We highlighted yesterday that “while upward momentum is still not as strong as preferred, the current short-term strength has scope to extend further to the next resistance at 1.2425”. There is no change to the view as EUR subsequently hit a high of 1.2413 before easing off. As long as the ‘key support’ at 1.2310 is intact, we continue to see chance for another push higher towards 1.2425. As noted previously, this is a rather critical resistance as a clear break of this level would increase the odds for a move beyond last month’s peak at 1.2475. In view of the current lackluster momentum, we feel that it is premature to anticipate such a move. All that said, in order to maintain the current mild upward pressure, EUR should move higher quickly as a prolonged consolidation at these levels would lead to a rapid loss in momentum.

GBP/USD: Neutral (since 07 Mar 18, 1.3895): GBP has moved into a correction phase.

The weaker than expected UK inflation data sent GBP crashing below 1.4230 and the break of this ‘key support’ has put paid to our expectation for the rally in GBP to extend further to 1.4400. The 1.4377 high registered on Tuesday (17 Apr) is acting as a very strong resistance now and this level is unlikely to be threatened, at least not for the next several days. That said, the current GBP weakness is viewed as part of correction/consolidation phase and not the start of a major bearish reversal. From here, we expect GBP to trade sideways even though the near-term bias is for a probe lower towards the bottom of the expected 1.4080/1.4320 consolidation range.

AUD/USD: Neutral (since 22 Mar 18, 0.7770): Diminished odds for rebound to extend higher.

After trading in a quiet manner for a couple of days, AUD registered an ‘outside day’ yesterday and closed on a positive note. As highlighted yesterday, another ‘up-leg’ is not ruled but 0.7825 is a major resistance and is unlikely to yield so easily. However, a clear break of this level would shift the focus towards the next resistance at 0.7865. Overall, in order to maintain the current fledgling momentum, AUD has to make a run for the upside soon or the odds for a stronger rebound would diminish further. On the downside, a break of the ‘key support’ at 0.7720 would indicate that the current mild upward pressure has eased. On a shorter-term note, 0.7745 is already a strong level.

NZD/USD: Neutral (since 05 Feb 18, 0.7280): NZD has moved into a consolidation phase.

We noted yesterday “the weakened undertone suggests that the immediate bias is for a probe lower towards the bottom of the expected 0.7290/0.7390 consolidation range”. NZD subsequently touched a low of 0.7304 before staging a mild rebound. The undertone remains on the soft side and we continue to hold the view that any weakness is part of a consolidation range and is unlikely to be sustained.

USD/JPY: Neutral (since 21 Feb 18, 107.35): USD is expected to trade sideways. No change in view.

The 35 pips range registered yesterday is the smallest one-day range so far this year (24-hour range has been 106.85 between 107.20). The muted price action offers no fresh clues and we continue to hold a neutral stance and expect USD to trade sideways. The key levels are at 106.20 on the downside and 107.90 on the upside but for the next couple of days, 106.60/107.65 is likely enough to contain the movement in USD.

• Fraction softer, tight range this morning, opened flat with an inside day
• 1.2300-10 2BLN, 1.2315-25 1.3BLN, 1.2350-60 1.1BLN, 1.2400 1.3BLN strikes
• Neutral momentum studies, 5, 10 & 20 DMAs climb - modest positive setup
• 1.2414, 76.4% March/April fall caps this week - tough resistance
• Sustained 1.2420 break would target 1.2476 March trend high
• London 1.2342 low & earlier Asian 1.2383 high support/resistance

• USD/JPY bid up into Tokyo fix, 107.19 early to 107.47.
• Demand into Tokyo fix, higher US yields, another Nikkei rally helps.
• Resistance/offers from @107.50 however still however - Japanese exporters.
• Option player offers too, USD545 mln expiries 107.50-60, 108.00 525 mln.
• Japanese exporter offers trail up, 107.78 high 4/13, stops 107.80+, 108.00+.
• Sentiment towards risk better than heretofore, Abe-Trump talks inconclusive.

• Flat into Tokyo open, closed +0.4% - commodities surged, modest risk on
• Aus jobs lead data- polls - jobs 21K, unemployment 5.5%, participation 65.7%
• Momentum studies conflict, 5, 10 & 20 DMAs head higher - positive setup
• Opens within falling cloud - 83.32 cloud base & 82.98 Tenkan line support
• NY 83.57 high then 83.75, 38.2% of 2018 fall initial resistance
• Close outside 82.27 Kijun line or 83.75 38.2% needed for a trending signal

• NZD/USD tests support at 0.7303 ahead of release of Q1 CPI, expected 0.5%
• Annual inflation to drop to 1.1%, near bottom of RBNZ 1 to 3% target band
• Will be lowest annual reading since Sept 2016; is expected to be temporary
• To leave RBNZ firmly on hold, benign surprise to raise prospects of OCR cut
• 38.2% Fibo of March-April rise @ 0.7303 tested as benign expectations priced
• Strong support at 0.7275, initial resistance at 0.7340-45

CIBC Research discusses the reaction to today's BoC policy meeting and notes that the BoC statement struck a fairly balanced tone today, which leaves CIBC comfortable with expecting the next hike to come in July.

"Of course, the overnight rate was left unchanged at 1.25%. In saying that moves higher in core inflation were consistent with an economy operating with "little slack" the Bank hints that another rate hike will be coming in the months ahead. However, in still stressing that inflation is higher than previously expected due to "transitory" impacts such as gasoline and minimum wage, they're clearly in no rush still regarding the pace of future increases.

Markets appear to have seen today's statement as dovish, given little hint of an immediate rate hike. However, that's not the Bank's style and some of the more subtle changes regarding the inflation outlook mean we still see another move coming in July," CIBC argues. 

• GBP/USD met headwind pre-1.4250 after pushing recovery envelope from 1.4173
• 1.4250 is 38.2% of 1.4377 (Tuesday's post-Brexit vote day high) to 1.4173
• Drop to 1.4173 fuelled by waves of GBP long liquidation after UK data
• See: nL1N1RV0HM nL1N1RV0B0. Two cent drop took just over 24 hours
• 1.4267 (pre-UK CPI low) and 1.4283 (Tuesday's low) resistance beyond 1.4250
• ONS Mar retail sales to complete busy week of UK data Thursday nL1N1RV0NK

• Bids into 10-DSMA and Apr 12 low stem the overnight slide, sharp bounce seen
• Copper and oil gains combine with USD sales to help the pair's lift
• 55-DSMA gets pierced again but follow through is limited so far
• Aussie March jobs report looms and likely tempers bulls a bit
• Techs favor bulls, RSIs rising and bull hammer forms off the 10-DSMA
• An upside beat to jobs could see the pair hit new peaks

BTMU Research discusses EUR/CHF outlook and notes that the renewed weakness of CHF is garnering more market attention as EUR/CHF moves to within touching distance of the 1.2000-level for the first time since the SNB dropped their floor at the start of 2015.

"The recent weakening of the traditional safe haven currencies of the yen and Swiss franc remains one of the key trends in the foreign exchange market in the near-term.

 Overall, the developments are likely to keep the Swiss franc under pressure in the near-term with EUR/CHF set to test and a likely breach of the 1.2000-level now imminent," BTMU argues. 

USD/JPY gains the past few weeks have corrected oversold conditions, retracing about half of the risk-off February-April drop in the process, but further gains require confidence the U.S.-China trade conflict won't escalate to trigger repatriation flows into the yen.
The Trump-Abe meetings are unlikely to result in any major policy changes, either on trade or North Korea, which should be slightly USD/JPY bullish.
USD/JPY's main support, rising Treasury-JGB yield spreads, is being undermined by the increasing twin deficits that late-cycle U.S. fiscal stimulus is exacerbating.
Fed tightening would be more USD supportive if it were not causing the yield curve to collapse in a recession warning fashion.
Today's beige book will likely reinforce the notion of at least three rate hikes this year, which is all the market is willing to price in now.
And if the BOJ on April 26-27 hints even marginally at the need to look at normalization options, Japan Inc's 109.66 average forecast for USD/JPY in FY-2018-2019 will look like a ceiling and March's 104.56 low as something to eventually be retested.

TD Research discusses GBP outlook and keeps flagging near-term downside risks (see here), noticing that a mix of Brexit headlines and a dreadful CPI report has socked the pound with the with the one-two punch.

"The inflation miss was the big kicker, leaving GBP as the big laggard on the week. ...The result is that it is likely to lag the broader G10 for now, with GBPUSD most likely to make a break below 1.40 (also seen near the 50dma).

For its part, EURGBP popped after the data and should continue to nudge higher in the aftermath, although the ECB next week should keep it rangebound," TD argues.

• USD/JPY bulls are boosted as the daily cloud base props market nL1N1RV09M
• Spot has seen a modest 107.00-107.39 range so far this session
• The market was better bid in Asia due to Tokyo fix demand and risk-on feel
• Market still seen has heavy from @107.50 which might stymied further gains
• Japanese exporters, other offers said to be from 107.50 and above
• Vice Fin Min Fukuda to quit after allegations of harassment nL3N1RO44R