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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USD/JPY

USD/JPY Daily Chart

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

USD/CAD Daily Chart
  • 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%

USD/JPY Fails to Hold Post-FOMC Low- 118.20 Up Next?USDOLLAR Daily Chart

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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