eFXplus DATA

• AUD/USD back to 0.7145 after making 0.7168 high post-jobs data nL3N21801G
• Australian yields also slip back to pre-jobs data levels as US yields weigh
• Resistance is at 61.8 Fibo at 0.7184 and major res. at 200 DMA at 0.7217
• Techs support for now, support seen at 10 and 21 DMAs at 0.7090/96
• Close below 0.7090 would turn outlook bearish again target Weds low @ 0.7057
• Fed worries may weigh on AUD going forward nL3N217583 nL1N2171L8

• EUR/USD consolidating between 1.1412/37 in Asia after solid post-Fed gains
• Pair likely to remain bid as market processes Fed's dovish shiftnL1N218003
• Resistance @ post-Fed high @ 1.1448 with break targeting 200-day MA @ 1.1479
• Key will be reaction in Bund yields to large fall in US Treasury yields
• Key support around 1.1365 where the 55 & 100-day MAs converge

• NZD/USD continues firm tone established after NZ GDP nL1N2171Z4
• Trading above trend-line formed from June 06 last year (0.6915)
• Currently testing 200-week MA at 0.6936
• Next resistance at Feb 02 top at 0.6942 and Dec 4 trend high at 0.6969
• Break above 0.6970 targets 61.8 of 0.7437/0.6424 at 0.7050

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Vastly improved momentum suggests EUR could attempt to move to 1.1515.

We indicated on Tuesday (19 Mar, spot at 1.1335), “looking ahead, the prospect for a break of 1.1380 first is slightly higher but in view of the current lackluster momentum, any advance is expected to struggle to move beyond the next major resistance at 1.1420 (the late-Feb peak). While our anticipation for EUR to break above the sideway-trading range was correct, the pace and extent of the rally that blast past the strong 1.1420 level was unexpected (note that EUR registered the largest 1-day gain since late-Jan and closed at a 6-week high). The question now is whether EUR can extend its gain in the coming days. In view of the vastly improved momentum, it appears that EUR should least attempt to move towards the late-Jan peak of 1.1515. What is less clear at this stage is whether EUR can move above this level in a sustained manner. Scanning the longer-term chart, a sustained break of 1.1515 would suggest EUR have made a significant bottom at 1.1174 earlier this month. Meanwhile, EUR is expected to stay underpinned (do not see any strong reason to fade the current rally) until the ‘key support’ at 1.1330 is breach.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP is expected to trade with a positive bias.

GBP is about the only ‘loser’ against USD as it dropped to an overnight low of 1.3147. The low is not far above our 1.3130 ‘key support’. As long as the ‘key support’ is intact, we would hold on the view that “GBP is expected to trade with a positive bias” (same view since last Thu, 14 Mar). That said, the prospect for such a scenario has clearly diminished. In order to ‘revive’ the current rapidly waning momentum, GBP has to move and stay above 1.3270 within these few days or a break of 1.3130 would not be surprising.

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to advance further but 0.7200/20 zone is expected to offer solid resistance.

After trading in a relatively quiet manner for several days, AUD was jolted awake and surged to a high of 0.7150. While upward momentum has picked up strongly, there are several strong resistance levels and for now, it is not clear whether AUD can surmount these formidable levels. All in, we expect AUD to advance further in the coming days but expect 0.7200/0.7220 zone to offer solid resistance. If AUD can break through this zone, it would greatly increase the odds for a move to the year-to-date high near 0.7295. To put it another way, we hold ‘positive’ view in AUD now and only a break of the 0.7070 ‘key support’ would indicate the current upward pressure has eased.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD to strengthen further, break of 0.6942 would shift focus to 0.6970.

We have held the same view since last Tuesday (12 Mar, spot at 0.6835) wherein we expected NZD to trade sideways within a 0.6750/0.6885 range. Over the past couple of days, we warned that “the prospect for a break of 0.6885 first appears to be higher but in view of the lackluster momentum, any gain is expected to struggle to move beyond the solid resistance zone of 0.6805/20”. Instead of ‘struggling’, NZD blast past the 0.6805/20 zone and soared to an overnight high of 0.6828. From here, we expect NZD to move above the 0.6942 top seen in early-Feb. A break above 0.6942 would shift the focus to 0.6970, the high in December last year. The high in December is a significant mid to long-term resistance and a break of this level would suggest NZD could advance further in the months ahead. We would revise our current ‘positive’ view on NZD if there were a break of the ‘key support’ at 0.6845.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD to stay on the defensive but expect solid support at 110.00.

Our expectation that “the bias for USD is tilted to the upside” is proven wrong as it plummeted overnight and cracked the 110.80 ‘key support’. While the impulsive drop has shifted the immediate risk to the downside, it is premature to expect a sustained decline. That said, we expect USD to stay on the defensive but any weakness is expected to encounter solid support at 110.00 (minor support at 110.30). On the upside, a break of ‘key resistance’ at 111.35 would indicate the current weakness has stabilized.

• Shade softer in Asia after yesterday's GBP/Brexit led 1.1% bounce
• EU to accept short Brexit delay, if May's deal wins vote nL8N2176SB
• Topside breakout leaves momentum studies rising, 5, 10 & 21 DMAs base/climb
• Turns the daily chart bullish with a base in place at the 0.8472 March low
• 0.8679 March high break would target a test of 0.8713, 38.2% of 2019 fall
• NY 0.8590 low and today's 0.8662 Asian high initial support/resistance

• AUD/USD pushing higher after Aus Feb unemployment eased to 4.9% from 5.0% nS9N1ZZ00O
• Resilient jobs sector likely to keep RBA side-lined in short-term at least
• AUD/USD edged above 100-day MA at 0.7160, but no follow-through
• Next resistance at 61.8 of 0.7295/0.7003 at 0.7182
• US/China trade deal uncertainty/global growth concerns likely to limit rally
• Very strong resistance eyed at the 200-day MA at 0.7216

• +0.1% in Asia, as NZD +0.4% leads the USD lower after GDP nL1N2171Z4
• Strong close - +0.5% on dovish Fed and EUR/GBP demand nL1N21722Z
• Leaves a positive setup, as momentum studies, 5, 10 & 21 DMAs climb
• Targets a test of 1.1477/79, 76.4% 2019 fall and 200 DMA, capped since May
• 1.1400 1.7BLN strikes support and 1.1415-30 1.3BLN may prove sticky in Asia
• Asian 1.1412 low and NY 1.1448 high are initial support/resistance

• AUD/NZD fell to 1.0300 after details of NZ Q4 GDP were positive
• Data may curb dovish RBNZ expectations in the short-term at least
• Aus employment up next, as RBA expectations have become decidedly dovish
• Soft Aus jobs report would intensify dovish RBA outlook and pressure AUD/NZD
• Support at March 13 low @ 1.1294 & break targets Sept 2016 low around 1.0235
• Resistance at the 21-day MA at 1.0378 and break suggests bottom in place

Societe Generale Research discusses GBP outlook and sees a scope for the pound to stay offered on an increasing demand in GBP puts as the clock ticks on another meaningful Brexit vote.

"Last-minute Brexit nerves? The press tells me that UK PM May is seeking a short extension to the Brexit timetable. The EU insist that they will only consider an longer extension only if there's a good reason, such as a new election, cross-party initiative, or a new referendum. The market still thinks that an extension and a deal is the most likely outcome, and that a new referendum, with a vote to stay in the EU, is slightly more likely than a no-deal exit," SocGen notes.

"Vol has fallen and the pound has risen in recent weeks. A bout of nerves as the clock ticks down may create demand for GBP puts," SocGen adds. 

• EUR/USD's 1.1175-366 March rebound has major resistance in sight
• But first must close above 100-DMA at 1.1367 to extend its rise
• Feb 28 peak, 61.8% of Jan-Mar drop & 38.2% of Sep-Mar drop @1.1420
• Bit o/b on daily Slow Stochs so 1.1420 hurdles a bigger ask now
• Need a 1.1420+ close to end 2019 series of lower highs and lows
• If done, the 200-DMA, last at 1.1480, is the next target
• Limited breach of 61.8% of 2017-18 rise at 1.1186 bolsters bulls

• GBP/USD 1.3175-1.3200 on Brexit headlines, 1-wk/3-mos vol drifts higher
• PM May & EU's Tusk, discuss May's proposal, Tusk- short extension possible
• Tusk: June 30 deadline has merits, conditional on supt from House of Commons
• May: talks w/DUP ongoing, expects to discuss Art 50 extension at w/EU Thurs
• No deal: Risks of a GBP collapse are much greater nL1N2170F7
• UK to debate Brexit plan Monday nS8N20F037 See nB5N1XP04W & nL8N2175CP

NAB discusses AUD/NZD outlook and warns from a possible breach below 1.02 in the coming weeks.

"AUD/NZD has been tracking lower this year, as expected, and reached a fresh closing low mid last week below 1.03. The cross rate is in an overshooting phase relative to current economic fundamentals, based on concern that the Australian economy is on a much weaker trajectory, driven by the housing market. This is reflected in short positioning in AUD, with the market anticipating that bad news for Australia relative to NZ will continue," NAB notes. 

"At this juncture the risk is that the bottom of our suggested trading range for 1H19 (1.02) is breached. The best chance for this to happen would be the run of data continuing to be on the soft side for Australia, alongside a building political risk premium closer to the Federal election. The opposing view is that a shift in data momentum occurs – stronger Australian data imposing some doubt on RBA rate cuts and encouraging a closing of short AUD positions; or weaker NZ data fuelling RBNZ cut expectations," NAB adds. 

• EUR/USD's 2019 pattern of successively lower rebound highs eyed
• Bulls hope March low by 61.8 pct of '17-'18 rise marked a bottom
• Now by 50 pct of '19 drop @1.1373, but Feb 28 peak @1.1420 is key
• Stochs a bit o/b, gentle Fed, less Brexit risk already priced in
• FOMC may prove too steady and Brexit risk too high nL1N2170F7
• GBP under fresh Brexit pressure is a slight drag on EUR as well
• 10-DMA and March 14 pullback low by 1.1294 looks pivotal

MUFG Research discusses USD/JPY outlook and sees a scope for the falling volatility trend to be potential trigger pointing to a potential move higher in USD/JPY.

"The markets look to be very much positioned in expecting a benign FOMC outcome confirming a continued pause. Volatility in FX has plunged notably on a benign global policy outlook. The shift to the sidelines by the Fed has of course been replicated by other central banks signalling a longer delay to any future move higher in rates (ECB, RBA, RBNZ and BoC)," MUFG notes. 

"FX volatility in general is falling notably. Remarkably, 2-year USD/JPY implied volatility has plunged to just 7.46% from a year-to-date peak in January of 9.16%. The current level is the lowest since June 2007 – just prior to the onset of the financial crisis that first showed up in a freezing of money markets in the summer of 2007. If this trend of falling volatility was to continue it would be consistent with a pick-up in carry and as can be seen above, yield per unit of volatility is pointing to a potential move higher in USD/JPY," MUFG adds. 

• Clear above 10DMA and daily momentum flips to positive, first since Feb 15
• Initial resistance 0.8592, 10DMA: cloud twists way abv mkt but could attract
• 61.8% Fibo just behind at 0.8600, taken off 0.8679 to 0.7473 drop
• Test of 200WMA, 0.8392, on hold for now, risk to 10WMA 0.8673
• Monthly bear trend also showing signs of stress: Brexit cited nL1N21606R
• Break into the monthly cloud, 0.8335, off the table for now

• EUR/USD bulls look set to test the key 1.1374 Fibonacci level
• 1.1374 is a 50 percent retrace of the 1.1570 to 1.1177 2018 (EBS) slide
• Spot bullish after it registered the biggest one-week rise since Nov 2018
• We are looking to get long on dips to 1.1310
• Daily kijun line that is now at 1.1298 should underpin
• A EUR/USD close above key Fibo will unmask cloud nL1N21606K

• A patchy bullish continuation pattern on daily chart
• Topside breakout is at 1.3300 and drop below 1.3183 Mon low negates pattern
• 14-day momentum marginally negative and stochs now falling away
• Long upper wick candle Tues hints at demand fade
• However, recent action peppered with daily swings, highlights indecision
• Buying dips towards 10DMA at 1.3195 favoured for 1.3380, stop below 1.3180

• Base of AUD/USD's daily Ichimoku cloud to 0.7000 by Friday
• Traders should expected recent support near 0.7050 to diminish
• U.S. officials concerned China is pushing back in trade talks nFWN2160LF
• Markets seek dovish Fed but that's reason to eye AUD/USD down nL1N21505W
• 21-DMA @ 0.7095 capping. 100/55-DMAs 0.7060/33 may cap new mid-term range
• 21-WMA also 0.7157. Current 0.70-73 range may evolve into 0.6850-0.7150

• NZD/USD down 0.30% and down slightly against the AUD as well
• Talk of US banks buying USD across the board weighing
• Speculation USD buying based on view market Fed expectations overly dovish
• NZD/USD hardest hit, as tomorrow's NZ Q4 GDP a risk nL3N2150U1
• Pair trading around 10-day MA at 0.6832 with break targeting 0.6800/10
• Resistance formed at triple top at 0.6875

The AUD/USD is down 0.2 percent in March and today's drop suggests the bears are gaining control amid widening yield differentials.
Two-year Australian yields have fallen 17bps this month and the 10-year is off 23bps, while U.S. two- and 10-year yields have only fallen 4bps and 10bps.
Futures now price an August RBA rate cut to 1.25 percent at 98 percent versus 52 percent on March 1.
Softer-than-expected Australian GDP nL3N20T0WK and sliding house prices are undermining the outlook for consumption and growth, though the RBA still sounds relaxed nS9N1ZY01R.
The RBA's March meeting minutes showed the bank caught between falling house prices with their likely impact on consumer spending and a resilient jobs market, leaving the next rate move "evenly balanced" nRUAIEEF4V.
The sombre market mood will increase the focus on typically volatile jobs data Thursday nL3N2160GA.
The domestic macro backdrop has turned sentiment toward the AUD bearish, while hopes for a U.S.-China trade deal support nL1N21617G.
Key levels are the 0.7000 support, with 50 percent of the 2019 rebound at 0.7005 and 0.7003 the March low.
A break would initially target 0.6936, the 61.8 retracement.
A close above 0.7111/20, 38.2 percent of the February-March fall and March weekly double top, would undermine the bearish view.