Financial Market Research and Analysis

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GBP net-shorts at highest since mid-2013
EURUSD opened a notch higher after Friday’s slide to 1.0810. The pair remains rangebound within the minor 23.6% and the major 38.2% retracement on Aug-Nov’15 decline. A breakout on either direction is necessary to assess a short-term direction with stronger conviction. Offers are eyed at 1.0985/1.1000 (January high / optionality) before the key mid-term resistance, 1.1054 (200dma). On the downside, 1.0805/1.0778 area (minor 23.6% on Aug-Dec’15 decline / post-Draghi low) should continue lending support.

USDJPY consolidated the post-BoJ gains. The bullish move should find support at 120.31 (Fib 38.2% retrace) for a sustainable extension of gains through the 200dma (121.50). The key short-term resistance is seen at the daily Ichimoku cloud top (121.83), if surpassed could encourage a rally toward 123.76 (Nov’15 peak).

Failure to clear resistance at 1.4354 (minor 23.6% retrace on Dec-Jan decline) weakened the upside momentum in GBPUSD. The latest CFTC data showed the net GBP short speculative positions hit the highest since mid-2013. With the BoE verdict and the Quarterly Inflation Report ahead, the GBP-bulls may further retreat to the sidelines and open the gate for a slide to 1.4150 (Jan 29th low) before 1.4080 (Jan low).
The key mid-term resistance is eyed at 1.4523 (major 38.2% on Dec-Jan decline). Below this level, traders are expected to remain seller on rallies. From a macro point of view, negative rates from the BoJ revived the BoE doves amid BoE’s Carney hinted at a possibility of a future BoE rate cut last week, although there is little-to-no expectation of a potential rate cut at Thursday’s MPC meeting.
Better-than-expected manufacturing PMI triggered a short-lived rally to 1.4318, yet failed to gain momentum to face offers pre-1.4350.

Although the iron ore rallied past 4% in Asia, the AUDUSD lacked power to challenge 0.7149/52 zone (100 and 50 day moving averages respectively) pre-RBA. The RBA is expected to maintain its target cash rate unchanged at 2%, yet will likely deliver a dovish policy statement. Technically, the AUDUSD is considered in a positive trend above 0.7022 (major 38.2% on Jan 20 –to-date rise), while a break below this level should signal a short-term bearish reversal for a deeper downside correction to 0.6985 (Fib 50%) before 0.6919 (Jan 26 low).
Mid-term critical resistance remains at 0.7380 (Fib 38.2%). Below 0.7380, the mid-term bias remains negative and we see opportunity in selling the rallies.

Gold traded rangebound within 1115/1125 in Asia. The key short-term support is eyed at $1101 (major 38.2% retrace on January rise), resistance should come into play at 1128/1132 ( Jan 27 high /one-month uptrend channel top and 200dma).

Oil opened the week 2.60% lower. Downside risks prevail however and the risk of a slide back below $30 is considerable.

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