Talking Points:
- USD/JPY Downside Targets Favored Ahead of Japan Consumer Price Index (CPI).
- USD/CAD Rebounds From Range Support Ahead of BoC Governor Stephen Poloz.
- USDOLLAR Preserves Bullish Formation Despite Dismal Durable Goods Report.
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Chart - Created Using FXCM Marketscope 2.0
- Lack of momentum to hold the low (119.27) following the FOMC meeting raises the risk for a larger pullback especially as the RSI fails to retain the bullish momentum.
- Despite forecasts for a slowdown in Japan’s Consumer Price Index (CPI), the Bank of Japan (BoJ) may continue to endorse a wait-and-see approach as Governor Haruhiko Kuroda remains confident in achieving the 2% target for inflation over the policy horizon.
- Nevertheless, DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY, with the ratio currently standing at +1.90.
USD/CAD
- Despite the pullback from a fresh monthly high (7696), NZD/USD may continue to track higher over the next 24-hours of trade as New Zealand’s Trade Balance is expected to widen to 350M from 56M in January.
- A further improvement in growth prospects may highlight a more bullish outlook for the kiwi especially as the bar remains high for the Reserve Bank of New Zealand (RBNZ) to revert back to its easing cycle.
- Need a close above 0.7675(23.6% retracement) to 0.7700 (50% retracement) to favor a larger advance in NZD/USD.
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11936.62 | 11966.69 | 11907.65 | -0.16 | 69.58% |
Chart - Created Using FXCM Marketscope 2.0
- Despite the unexpected 1.4% contraction in U.S. Durable Goods Orders, the Dow Jones-FXCM U.S. Dollar index continues to consolidate above the low (11,886) following the Federal Open Market Committee (FOMC) meeting; may continue to see near-term support as the bearish RSI momentum appears to be waning.
- May see the dollar face additional headwinds as Chicago Fed President Charles Evans, a 2015 FOMC voting-member, favors a rate hike in 2016; will keep a close eye on the final 4Q Gross Domestic Product (GDP) report as market participants now see the growth rate expanding an annualized 2.4% versus an initial forecast of 2.2%.
- With signs of a near-term bottoming process, topside remain favored with the next region of interest coming in around 11,992 (38.2% retracement).
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| Release | GMT | Expected | Actual |
|---|---|---|---|
| MBA Mortgage Applications (MAR 20) | 11:00 | -- | 9.5% |
| Durable Goods Orders (FEB) | 12:30 | 0.2% | -1.4% |
| Durable Goods Orders ex Transportation (FEB) | 12:30 | 0.2% | -0.4% |
| Non-Defense Capital Goods Orders ex Aircrafts (FEB) | 12:30 | 0.3% | -1.4% |
| Non-Defense Capital Goods Shipments ex Aircrafts (FEB) | 12:30 | 0.3% | 0.2% |
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--- Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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