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Feb 23 - 05:00 PM
USD/JPY: Is USD/JPY Cheap Enough For Japanese Investors To Buy? - BofAML
First appeared on eFXplus on Feb 23 - 03:30 PM

Bank of America Merrill Lynch Research discusses USD/JPY outlook, and thinks that it's less likely to see a further deterioration in the domestic USD/JPY supply/demand balance reminiscent of 1H16.

"In fact, we think selling in USD/JPY has been mostly driven by foreign money rather than domestic money this time. We believe Japan would be a marginal buyer if volatility subsides or the USD/JPY slides to ¥105...

...We believe 105 will be supported by Japan flows, hence we leave the bottom of our range forecast at 105 (our range forecast has been 105-127) ," BofAML argues. 

In line with this view, BofAML revised down its USD/JPY forecasts but "still thinks the pair will move up conditional on 1) stock market stabilization, 2) the BoJ's unchanged stance under the new leadership, and 3) USD supportive flows from the US (repatriation) and Japan (financial institutions' USD buying)," BofAML adds. 

BofAML now expects USD/JPY to trade around 111 by end of March, to peak around 117 in 2Q18, and to correct toward 112 by year-end.

BofA Merrill Lynch Research
Feb 23 - 02:36 PM
EUR/USD - Can't Gain On USD Weakness
First appeared on eFXplus on Feb 23 - 11:00 AM
  • NY sees the USD slide but EUR/USD cannot benefit and slides near day's low
  • Firming JPY sinks EUR/JPY below 200-DSMA and November's low
  • EUR/USD supports near 1.2280 and 1.2260 should slide extend
  • Break of the latter puts 1.2235 and 1.2200/10 supports in play
  • Longer-term bulls welcome the slide, likely sit near 1.20/1.21 and 1.16

chart: Click here

Thomson Reuters IFR Markets
Feb 23 - 01:24 PM
EUR/USD: Uptick Set To Take A Short Break N-Term Within Broad 1.21-1.26 Range - Danske
First appeared on eFXplus on Feb 23 - 11:15 AM

Danske Research discusses EUR/USD outlook, and believes that in the short term, the uptick in EUR/USD is set to take a short break and sees the pair staying broadly within the 1.21-1.26 range.

"We could see EUR/USD dip into the lower end of the range in the very short term as USD funding costs are rising due to the expectations of tighter USD liquidity and repatriation of overseas earnings in relation to the US tax reform.

On a 6-12M horizon we still expect EUR/USD to move higher, and target 1.25 in 6M and 1.28 in 12M, and we see the risks as skewed towards EUR/USD moving higher than we currently project. While relative rates would normally indicate EUR/USD should move lower, other factors are dominating at the moment," Danske argues. 

Danske Research
Feb 23 - 12:12 PM
AUD/USD - COMMENT-AUD/USD In Trouble As A Test Of 200-Day Avg Looms
First appeared on eFXplus on Feb 23 - 10:15 AM

AUD/USD is on the verge of accelerating its slide as a test of the 200-day moving average approaches.
It's been sliding from the 21-day SMA since mid-month, though that move paused yesterday.
Monetary policy supports further losses after markets interpreted this week's Fed minutes as hawkish.
By contrast, the RBA is expected to keep rates on hold for quite some time, so the divergent central bank paths are likely to temper any AUD/USD rallies.
Technicals also highlight the downside risks.
The pair is holding below the 10- and 21-Day SMAs, while time spent above the 55-Day SMA has been short-lived.
RSI studies are also biased in favor of more losses.
A break of the 200-Day SMA and February's low should increase additional bearish sentiment.
This could also accelerate losses and put the spotlight on the 0.7625/55 support zone.
If that support gives way there is little to stop bears until December's low near 0.7500.

chart: Click here

Thomson Reuters IFR Markets
Feb 23 - 11:00 AM
USD/CAD: Canadian Inflation 'Heating Up'; But BoC Likely To Stay 'Patient' - CIBC
First appeared on eFXplus on Feb 23 - 08:50 AM

CIBC Research discusses the reaction to today's release of Canada CPI for the month of January.

"You wouldn't know it from the headline number, but Canadian inflationary pressures are heating up. A stronger than expected 0.7% advance in total CPI still left the annual rate two ticks weaker at 1.7% in January. But focus will be on the Bank of Canada's core measures, which are now averaging 1.8%, within shouting distance of the 2% target. 

Overall, while today's inflation readings are somewhat stronger than expected this doesn't change our forecast that the Bank of Canada will be patient in terms of rate hikes. Indeed, the economy is still facing a number of potential headwinds, including NAFTA renegotiations, US tax cuts and new mortgage rules.

The data will be positive for the loonie and negative for fixed income," CIBC argues. 

CIBC Research
Feb 23 - 09:48 AM
First appeared on eFXplus on Feb 22 - 10:30 PM

EUR/USD: Neutral (since 06 Feb 18, 1.2375): Outlook for EUR is negative, odds for further weakness to 1.2204 have increased. No change in view.

We highlighted yesterday (22 Feb, spot at 1.2340) that the mild downward pressure in EUR would increase further unless it can reclaim 1.2435. EUR slipped further in overnight trading and is pressuring the solid 1.2275 support at the time of writing. Downward pressure has clearly improved and the odds for further weakness towards the month-to-date low of 1.2204 have increased considerably. Looking further ahead, a clear break below 1.2204 would indicate that EUR has moved into a bearish phase. For now, we hold a ‘negative’ outlook for EUR unless it can move back above 1.2400 within the next few days. On a shorter-term note, 1.2360 is already a strong resistance.

GBP/USD: Neutral (since 30 Jan 18, 1.4075): Pressure shift to the downside, could lead to further weakness to 1.3764. No change in view.

In the update on Tuesday (20 Feb, spot at 1.4000), we were of the view that the consolidation phase “could last for a while more”. The sharp drop yesterday that cracked the bottom of the expected 1.3920/1.4200 consolidation phase came as a surprise and has shifted the immediate pressure to the downside. In other words, the outlook for GBP has turned negative and this could lead to further weakness towards the 1.3764 low seen earlier this month. Only a move back above 1.4020 would indicate that the immediate downward pressure has eased.

AUD/USD: Neutral (since 15 Feb 18, 0.7925): Weakened undertone could lead to a test of 0.7730. No change in view.

After trading mostly sideways for several days, the sharp and abrupt decline yesterday that sliced through the 0.7820 support was unexpected. While it is too early to expect that AUD has moved into a bearish phase, the undertone has weakened considerably and this could lead to a test of the solid support at 0.7730 (the month-to-date low near 0.7760 is acting as a strong intervening support). Overall, we expect AUD to stay under pressure, at least for the next several days unless it can reclaim 0.7910.

NZD/USD: Neutral (since 05 Feb 18, 0.7280): Potential double-top forming.

Despite the relatively strong recovery yesterday, the recent price actions still appear to be forming a potential ‘double-top’. As highlighted previously, downward momentum is not strong but the longer NZD stays below the critical 0.7435/40 level, the higher the risk of a deeper down-move. On the downside, 0.7270 is acting as a strong support and a break of this level could lead to a rapid drop towards the ‘neckline’ support at 0.7176.

USD/JPY: Neutral (since 21 Feb 18, 107.35): USD has moved into a consolidation range.

Despite the sharp retreat in USD yesterday, it is too soon to expect a resumption of the recent bearish phase. We turned neutral on USD 2 days ago and there is no change to the view. We continue to expect USD to trade sideways for now, likely within a 105.80/108.30 range (instead of the 106.30/108.50 expected previously).

UOB Research
Feb 23 - 08:36 AM
USD/JPY - Tokyo And London Sold USD/JPY, Stops Vulnerable Sub 106.50
First appeared on eFXplus on Feb 23 - 06:25 AM
  • USD/JPY recovery from 105.55 may be over as a top forms
  • Tokyo and London have persistently sold USD/JPY on EBS, stops below at risk
  • Recall 106.60 was the low on Thursday, stops said clustered below 106.50
  • Near-term bulls have been stymied by the tenkan line at 107.16 Friday
  • Range on Friday has been 106.66-107.14 so far on the EBS
  • USD/JPY has negative skew, targets 30-day lower bolli-band

EBS Flow Chart: Click here

Thomson Reuters IFR Markets
Feb 23 - 07:24 AM
USD/CAD - COMMENT-USD/CAD Vulnerable To Buy Rumour, Sell Fact Post-CPI
First appeared on eFXplus on Feb 23 - 05:00 AM

If USD/CAD traders have been influenced to buy on the back of Canadian inflation forecasts, the pair could well be vulnerable to a buy rumour sell fact reaction after the data is released.
Forecasters have tipped a big drop in January inflation to 1.4% yr/yr from 1.9% yr/yr which is due for release at 1330GMT.
However, USD/CAD has rallied strongly, 3.72% since the end of January and around 3% since December CPI data was released on Jan 26.
Potentially the stimulus of a weaker currency will boost February's inflation data and with that in mind, it may be worth betting against the current upswing that has reached the 200-DMA at 1.2702, a technical level usually hard to break.
Despite trading over the 200-DMA the pair is yet to close above it, so while there has been bullish activity there has not been bullish confirmation.
Traders are longer of U.S. dollars and there's a strong chance of USD/CAD sell-off after the data.
A close below 100-DMA at 1.2629 should confirm a top is in.

Thomson Reuters IFR Markets
Feb 23 - 06:12 AM
GBP/USD Catches Bid With EUR/GBP Down To Eye 0.8800
First appeared on eFXplus on Feb 23 - 04:00 AM
  • Pound catches bid with cable up half-a-cent to eye 1.3989 (Thursday's high)
  • Offers expected near 1.40 . 1.4002 = 50% of 1.4145-1.3858
  • EUR/GBP down to threaten 0.8800 for the third time this week
  • 0.8806/07 = Tuesday/Wednesday lows. 0.8004 = technical support level
  • Cross has not traded below 0.8800 since Feb 9: 0.8779 was low that day
  • 70% chance of BoE rate hike in May is source of support for sterling

EURGBP: Click here

Thomson Reuters IFR Markets
Feb 23 - 05:00 AM
GBP/USD - Offers Expected Near 1.40 Again Amid Brexit Focus
First appeared on eFXplus on Feb 23 - 02:45 AM
  • Fresh offers expected near 1.40 if GBP/USD catches pre-weekend bid
  • Offers ahead of 1.40 capped rise from eight-day low of 1.3858 Thursday
  • Huge 1.4000 option expiry Monday (Feb 26), GBP 2.15bln strike
  • 1.4008 was Wednesday's high, before USD boosted by rise in UST yields
  • UK PM May to set out "the way forward" for Brexit next week nL8N1QC88P
  • Guardian-May at risk of defeat as Labour shifts on Brexit. Link:nNRA5ls72q

GBPUSD 1.40: Click here

Thomson Reuters IFR Markets
Feb 23 - 03:48 AM
EUR/USD - Risks Drop To Big 38.2% Fibo, 30-Day Lwr Bolli Band
First appeared on eFXplus on Feb 23 - 02:30 AM
  • EUR/USD's bias remains on the downside
  • Scope is for losses to the 30-day lower bollinger-band now at 1.2175
  • Bollinger-band is near the major 1.2173 Fibo
  • 1.2173 Fibo -- 38.2% retrace of 1.1553 to 1.2556 (Nov to Feb) rise
  • Fourteen-day momentum remains negative, bearish market structure
  • Only a daily close back above 30-DMA, now at 1.2344, defers

EUR/USD Trader:

Daily Bollinger Chart: Click here

Thomson Reuters IFR Markets
Feb 23 - 02:36 AM
USD/JPY - Better Bid On USD Strength But Upside Limited
First appeared on eFXplus on Feb 23 - 12:35 AM
  • USD/JPY buoyant on broad USD strength, upside limited however.
  • Range limited to 106.66-107.03, option expiries, some sales help cap.
  • Total USD 572 mln option expiries at 106.99-107.00, 107.40-50 835 mln.
  • Sell-rally strategies back in vogue after brief hiatus.
  • Eyes on 100-HMA at 107.09, descending daily Ichi tenkan at 107.16.
  • Nikkei rise and firm US yields supportive.

USD/JPY: Click here

Thomson Reuters IFR Markets
Feb 23 - 01:24 AM
USD/JPY: Could USD/JPY Mirror EUR/USD In 2017? What's The Trade? - BNPP
First appeared on eFXplus on Feb 22 - 08:05 PM

BNP Paribas Research discusses USD/JPY outlook, and notes that its recent decline looks likely to mirror EUR/USD upward price action in 2017 in terms of the correlations' breakdown with yields spreads, which points to the possibility of further USD/JPY weakness over the coming months.

"The breakdown in these correlations has raised the possibility that USDJPY could be on the verge of a structural break towards long-term equilibrium fair value, similar to the path of EURUSD over the past year

We think eurozone investors, seeking to reduce exposure to USD accumulated during the peak ECB quantitative easing (QE) years, played an important role in EURUSD’s rise," BNPP argues.

"We expect the move lower in USDJPY to be quite gradual. Still, if our view becomes increasingly consensus, we may see more periods of intensified hedging activity, which could see USDJPY decline towards 100 more quickly," BNPP adds. 

To express this possibility, BNPP likes to remain positioned for CHF/JPY downside via an options structure throughout 2018 (expiry 23-Jan-19).

BNP Paribas Research
Feb 23 - 12:12 AM
USD/JPY - In Stasis Between 106.50-107.00, Neutral Bias Now
First appeared on eFXplus on Feb 22 - 10:00 PM
  • USD/JPY in stasis, Asia range so far 106.66-107.00, heavy from 107.00.
  • USD572 mln option expiries at 106.99-107.00 help cap, more above.
  • Nikkei up small and US yields off highs but relatively firm - supportive.
  • Market Fed expectations solidifying - 3 hikes this year, possibly 4.
  • Initial support 106.50-60 - 106.60 low yesterday, 106.56 February 20.
  • More support @106.00, talk stops sub-106.50, 106.00, 105.55 2/16 trend low.

USD/JPY: Click here

Thomson Reuters IFR Markets
Feb 22 - 11:00 PM
AUD/JPY - Bears Need A Close Below 83.50 Soon
First appeared on eFXplus on Feb 22 - 08:15 PM
  • Flat in Asia with modest volatility - opened -0.5% - JPY led
  • Soft close validated Wednesday's bearish outside day - negative signal
  • Horizontal Tenkan & Kijun lines suggest short term consolidation
  • Bears need a close below 83.54, 38.2% 2016/17 & 76.4% 2017 rise soon
  • Close below 83.50 would target 81.43 April 2017 low
  • Poll - BOJ seen keeping 10-year yield target at zero in 2018 nL4N1QC053

auj feb 23: Click here

Thomson Reuters IFR Markets
Feb 22 - 09:48 PM
GBP/USD - May To Set Out "the Way Forward" - Negative Setup
First appeared on eFXplus on Feb 22 - 07:40 PM
  • Tight early - opened +0.3% on broad USD weakness, as UST yields slipped
  • May to set out "the way forward" for Brexit next week nL8N1QC88P
  • Devil will be in the details - EU & UK appear a long way from a compromise
  • Negative momentum studies, 5, 10 & 20 DMAs crest/fall - modest bearish setup
  • Targets a test of 1.3764 Feb low, while closes below 1.4000 20 DMA
  • NY 1.3858/1.3989 range initial support/resistance - 1.3900 366M strikes

gbp feb 23: Click here

Thomson Reuters IFR Markets
Feb 22 - 08:36 PM
NZD/USD - Despite The Bounce, Modest Downside Bias Survives
First appeared on eFXplus on Feb 22 - 06:25 PM
  • Fraction firmer early - opened +0.3% - USD led as UST yields slipped
  • Firmer retail sales, +1.7% QQ & +5.4% YY, had little impact
  • Negative momentum studies, 5, 10 & 20 DMAs conflict - modest bearish setup
  • Longer term target is 0.7176/86, 38.2% of 2017/18 bounce & Feb low
  • 0.7307, 50% Feb bounce provided a base yesterday & remains support
  • NY 0.7367 spike high is initial resistance - tight Asian range likely

nzd feb 23: Click here

Thomson Reuters IFR Markets
Feb 22 - 05:00 PM
USD: Stars To Continue To Align For 4 More Fed Hikes This Year - Nomura
First appeared on eFXplus on Feb 22 - 03:30 PM

Nomura Research discusses its Fed call in light of yesterday's FOMC minutes and makes the case for 4 more Fed hikes this year.

"The discussion in the January minutes, positive economic data since the January meeting and the increased certainty in a sizable rise in federal spending, lead us to expect the March Summary of Economic Projections (SEP) to show higher growth, lower unemployment, and perhaps a touch higher inflation.

As this point it seems likely that the next round of FOMC forecasts will show more interest rate hikes. We believe the median forecast for this year is more likely than not to move from three to four hikes, given events since the January meeting. But that remains a close call, in our judgment.

However, we expect the stars to continue to align such that the FOMC will raise rates four times this year," Nomura argues. 

Nomura Research
Feb 22 - 02:36 PM
GBP/USD - Offers Expected Near 1.40 If USD Falls Further
First appeared on eFXplus on Feb 22 - 10:05 AM
  • Offers may emerge near 1.40 if greenback dive continues
  • 1.3960 = intra-day high for cable, three hours after eight-day low of 1.3858
  • Huge 1.4000 option expiry Monday (Feb 26), GBP 2.2bln strike
  • 1.4002 = 50% of 1.4145 (Feb 16 high, pre-UK retail sales miss) to 1.3858
  • 1.4008 was Wednesday's high, shortly after FOMC meeting minutes published
  • Drop to 1.3858 influenced by downward revision to UK Q4 GDP nL8N1QC383

GBPUSD: Click here

Thomson Reuters IFR Markets
Feb 22 - 01:24 PM
EUR/USD: Triple Top Is A Possibility: Confirm & Void Levels & Targets - BofAML
First appeared on eFXplus on Feb 22 - 11:10 AM

Bank of America Merrill Lynch Research discusses EUR/USD technical outlook, notes that daily EUR/USD chart exhibits the characteristics of a triple top, provided spot continues to close below one-month highs.

What would confirm this developing technical pattern?

"To technically confirm this top and potential decline to the measured move in the 1.19s, EUR/USD will have to close below the Feb lows of 1.2212The 50d SMA is rising quickly to this area and will be another technical level to watch/break," BofAML argues. 

What would void this developing technical pattern?

BofAML thinks that provided EUR/USD closes above 1.2512 in the next few weeks,  EUR/USD could continue its uptrend to the next Fibonacci retracement level at 1.3197.

BofA Merrill Lynch Research
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