Daily Outlook - Euro Higher on ECB Rate Hike Talk

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U.S. Dollar Trading (USD) with stock markets doing little to open the week the FX market looked to differing central bank outlooks for inspiration. Oil fell back on rebel advancement in Libya and this encouraged a third day of gold profit taking. February Pending Home Sales came in stronger than expected at 2.1% vs. -1% previously. In US stocks, DJIA -22 points closing at 12197, S&P -3 points closing at 1310 and NASDAQ -12 points closing at 2730. Looking ahead, January Case Shiller HPI forecast at -1% m/m.

The Euro (EUR) ECB President Trichet inspired a fresh rally in the Euro across the board stating that inflation was beginning to show signs of being persistent. EUR/GBP hit multimonth highs above 0.8820. German political concerns and Portugal bailout suggestions are being overlooked for now. Overall the EUR/USD traded with a low of 1.4025 and a high of 1.4117 before closing the day around 1.4075 in the New York session.

The Japanese Yen (JPY) the market grinded higher on support for risk and strong crosses. EUR/JPY pushed back above Y115. USD/JPY resistance was found at Y81.80 before stabilizing. GBP/JPY has been underperforming in recent session as Cable falls back but is holding above Y130. Overall the USD/JPY traded with a low of 81.49 and a high of 81.87 before closing the day around 81.70 in the New York session.

The Sterling (GBP) we the underperforming as MPC member Posen talked down the inflation threat and GBP/USD broke below 1.6000. Broad GBP weakness has been seen in recent session with the market struggling to find buyers on most pairs. Overall the GBP/USD traded with a low of 1.5934 and a high of 1.6040 before closing the day at 1.5990 in the New York session.

The Australian Dollar (AUD) printed new highs again above 1.0300 before staging a sharp reversal on profit taking and weak US stocks into the close. AUD/JPY was briefly above Y84 to trade near year highs at Y84.50 with plenty of demand noted. Overall the AUD/USD traded with a low of 1.0224 and a high of 1.0316 before closing the day at 1.0240 in the New York session.

Oil & Gold (XAU) Was sold on rallies to head lower on profit taking. Overall trading with a low of USD$1409 and high of USD $1428 before ending the New York session at USD$1419 an ounce. Oil moved lower on reports that Libyan Rebels have taken control of key Oil ports. WTI Oil Closed -$1.50 at $103.86 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3942

1.3981

1.4080

1.4215

1.4249

USD/JPY

78.83

80.00

81.70

82.01

82.45

GBP/USD

1.5748

1.5822

1.5985

1.6142

1.6267

AUD/USD

1.0038

1.0113

1.0240

1.0400

1.0425

XAU/USD

1386.00

1402

1420

1438

1450

OIL/USD

100.00

103.50

103.75

105.00

107.00

Euro – 1.4080

Initial support at 1.3981 (Mar 18 low) followed by 1.3942 (61.8% retrace of 1.3752-1.4249). Initial resistance is now located at 1.4215 (Mar 23 high) followed by 1.4249 (Mar 22 high)

Yen – 81.70

Initial support is located at 80.00 (Major Level) followed by 78.83 (Mar 18 low). Initial resistance is now at 82.01 (Mar 15 high) followed by 82.45 (Mar 14 High).

Pound – 1.5985

Initial support at 1.5822 (Jan 31 low) followed by 1.5748 (61.8% retrace of 1.5345-1.6401). Initial resistance is now at 1.6142 (Mar 25 high) followed by 1.6267 (Mar 24 high).

Australian Dollar – 1.0240

Initial support at 1.0113 (Mar 24 low) followed by the 1.0038 (Mar 22 low). Initial resistance is now at 1.0400 (Big Figure Resistance) followed by 1.0425 (0.9706 plus 0.9537-1.0256).

Gold – 1420

Initial support at 1402 (Mar 18 low) followed by 1386 (Mar 17 low). Initial resistance is now at 1438 (Mar 25 high) followed by 1450 (Round Number).

Oil – 103.75

Initial support at 103.50 (Intraday Support) followed by 100.00 (Intraday Support). Initial resistance is now at 105.00 (Intraday resistance) followed by 107.00 (Year High).

Written by Anthony Darvall

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