Talking Points:
- GBP/USD Retail Crowd Flips Net-Short Following BoE- Inflation Report in Focus.
- NZD/USD Fails to Hold Support Ahead of RBNZ’s Financial Stability Report.
- USDOLLAR Outlook Remains Mired by Bearish RSI Momentum.
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Chart - Created Using FXCM Marketscope 2.0
- With GBP/USD climbing to a fresh 2015 high, next topside region of interest comes in around the December high (1.5785) as the bullish RSI momentum gathers pace.
- Even though the Bank of England (BoE) sticks to its current policy in May, the quarterly inflation report may boost the appeal of the British Pound should the central bank adopt a more hawkish tone for monetary policy and highlight a risk for faster inflation.
- DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped net-short GBP/USD following the BoE interest rate decision, with the ratio currently standing at -1.42.
NZD/USD
- NZD/USD remains at risk for a further decline as it fails to hold above near-term support around 0.7430 (61.8% retracement) to 0.7440 (38.2% retracement); will keep a close eye on the RSI as the bearish formation takes shape.
- Beyond expectations for a slower rate of expansion in 1Q New Zealand Retail Sales, the Reserve Bank of New Zealand’s Financial Stability Report may dampen the appeal of the kiwi should the central bank highlight a weakened outlook for the region & show a greater willingness to revert back to its easing cycle.
- Break/close below 0.7330 (23.6% retracement) may spark a more meaningful run at 0.7140-50 (78.6% expansion).
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COT-Position Flip in Swiss Francs
USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 11796.85 | 11829.05 | 11786.19 | 0.03 | 61.33% |
Chart - Created Using FXCM Marketscope 2.0
- Ongoing series of lower-highs in Dow Jones-FXCM U.S. Dollar raises the risk for a further decline as the bearish RSI momentum remains in play; will keep a close eye on the February low (11,736).
- Ahead of the U.S. Retail Sales report, will keep a close eye on the fresh commentary from San Francisco Fed President John Williams as he serves as a voting-member on the Federal Open Market Committee (FOMC).
- Lack of momentum to push back above 11,826 (61.8% expansion) to 11,843 (38.2% retracement) may open the door for a lower-low as market participants continue to weigh the outlook for Fed policy.
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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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