USD Strength Retreats


U.S. Dollar Trading (USD) was under pressure from the open as the Euro rally flowed over from Friday and dragged the rest of the pairs higher against the Greenback. February Core PCE was 0.0% vs. 0.1% forecast. US stocks rallied on the large move higher in Oil. In US stocks, DJIA +45 points closing at 10895, S&P +6 points closing at 1173 and NASDAQ +9 points closing at 2404. Looking ahead, March Consumer Confidence is forecast at 50 vs. 46 previously. Also released, January Case Shiller House Prices are forecast at -0.2%m/m.

The Euro (EUR) tested 1.3500 in early Asia but was capped from heavy profit taking above the figure and fell back to the mid 1.34 range. March Consumer Sentiment was unchanged at -17. EUR/JPY struggled above the Y125 once again. Overall the EUR/USD traded with a low of 1.3418 and a high of 1.3508 before closing at 1.3480. Looking ahead, February Import Prices are forecast at 0.4% vs 1.7% previously.

The Japanese Yen (JPY) was on the back foot for most of the day as crosses led by AUD/JPY continued their recent rally. USD/JPY was contained on USD weakness to the Y92 level but the prospect of further gains still remain. February Retail Sales surged 4.2% vs. 1.8% forecast y/y. Overall the USDJPY traded with a low of 92.33 and a high of 92.81 before closing the day around 92.40 in the New York session. UPDATE February Unemployment Rate remains at 4.9%. February Industrial Production at -0.9% vs. -0.5% forecast.

The Sterling (GBP) traded briefly above 1.5000 but resistance was strong and the pair held under just the figure for the rest of the day. EUR/GBP continued to pivot the 0.9000 level as the market waits for further direction. February Mortgage Approvals at 47k vs. 48k. Overall the GBP/USD traded with a low of 1.4890 and a high of 1.5022 before closing the day at 1.4980 in the New York session. Looking ahead, Q4 GDP is forecast to remain at 0.3%. March Nationwide House Prices are seen at +0.2% vs. -1% previously.

The Australian Dollar (AUD) was the strongest currency in the market Monday on the back of RBA Governor Steven's unprecedented TV appearance in which he warned against over-speculation in the Australian housing market. AUD/JPY also rallied up to the key Y85 level. Overall the AUD/USD traded with a low of 0.9045 and a high of 0.9181 before closing the US session at 0.9180.

Oil & Gold (XAU) was steady above the $1100 level failing to track the Oil rally higher. Overall trading with a low of USD$1103 and high of USD$1115 before ending the New York session at USD$1108 an ounce. Oil enjoyed a major rally on the back of a weaker Dollar. Crude Oil was up +$2.17 ending the New York session at $82.17.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3247

1.3270

1.3485

1.3507

1.3569

USD/JPY

91.09

91.77

92.50

92.96

93.77

GBP/USD

1.4704

1.4784

1.4985

1.5049

1.5113

AUD/USD

0.8936

0.8978

0.9160

0.9199

0.9250

XAU/USD

1078.00

1085

1109.00

1124

1133.00

OIL/USD

80.00

82

82.50

83.2

85.00

Euro - 1.3485

Initial support at 1.3270 (March 26 low) followed by 1.3247 (May 6 low). Initial resistance is now located at 1.3507 (Mar 24 high) followed by 1.3569 (Mar 23 high)

Yen - 92.50

Initial support is located at 91.77 (Mar 25 low) followed by 91.09 (Mar 24 low). Initial resistance is now at 92.96 (Mar 25) followed by 93.77 (Jan 8 high).

Pound - 1.4985

Initial support at 1.4784 (Mar 1 low) followed by 1.4704 (April 30 low). Initial resistance is now at 1.5049 (Mar 24 high) followed by 1.5113 (Mar 23 low).

Australian Dollar - 0.9160

Initial support at 0.8978 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9199 (Mar 23 high) followed by 0.9250 (March 17 high).

Gold - 1109

Initial support at 1085 (Mar 24 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1124 (0.618 of 1144.98-1092.47) followed by 1133 (Mar 17 high).

Oil - 82.50

Initial support at 82.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 83.20 (Intraday Resistance) followed by 85.00 (Intraday Resistance).