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06 April 2017 – Dean Forex Market Commentary

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For consecutive months the ADP employment rate showed enormous growth, almost doubling the expectation. Considering all the other data that we have seen come out of the US of late, this number does seem a little unbelievable – something just does not make sense. The FOMC minutes didn’t really give us anything either, the focus was on whether there were any clues as to when the Fed will start reducing the balance sheet. Once again the minutes showed the Fed to be a lacking cohesion, and if anything these minutes just cast fresh doubts and very little answers.

Dean's Daily FX Update – 06 April 2017

In the Zone

  • EURUSD
  • AUDUSD
  • USDCAD
  • USDJPY
  • USDCHF

Noteworthy News

  • President Trump spoke strongly on the gas attacks in Syria, he did not mention the need for military action but I think this is something to start monitoring.

Recap

Further headlines came out stating that the “phenomenal” new tax plan would take longer to achieve as congress could not get onto the same page. So US politics sits in a position where one party controls both the Senate and the House, and the there is no new healthcare act, no new tax plan, no border wall, no new immigration plan and a confused Fed. There is still the meeting with his Chinese counterpart this weekend to discuss supposed trade imbalances.

Despite all of this the dollar index still enjoyed a bumper ride today, this is where common sense doesn’t stack up for me. There is no real reason for traders to flock to the dollar and yet it seems to have become a daily routine.

The EURUSD remains in a very tight 50 pip range for the entire week, and we will probably only see a move of substance when the range breaks. This tight range is a perfect illustration of the confusion of both the Fed and the current dollar strength. The range sits at 1.0690 on the topside and 1.0630 on the lower end – this range will have to break before there is any trader interest.

The USDJPY is the only pair that make sense to me at the moment. The pair had a look higher on the back of the US employment report and was able to test above the 200 hour MA at 111.20, this was a pivotal level that buyers would have wanted to remain above to feel comfortable. It wasn’t long before resistance forced the pair to trade as low as 110.40, resistance now gets priced in at 111.00 – 110.77. This is the one pair for me that has followed a logical trading pattern, the risk to this pair is that traders start moving out of safe haven assets.

The GBPUSD traded higher during London and like the JPY traded above the 200 day MA at 1.2480, and this is where the market closed – right in the middle of the range. The pair found a bottom at 1.2420 and this where support still holds. This pair for me, like the others should make gains against the dollar today, but the market does seem indecisive.

We have mentioned above that all that is coming out of Washington, the Fed, China and Syria has left the markets in a state of confusion and the answer seems to climb into the dollar. Considering the ADP Employment report is a precursor to the NFP on Friday, the market could perhaps just be pricing in another show stopping number for Friday – the old “buy the rumour, sell the fact.” There is a lot of divergence starting to form, which means that momentum is starting to wane. I will be watching for divergence to make my decisions today.

Daily Ranges 06/04/2017

Majors

EURUSD

Resistance                                          1.0690 – 1.0710

Support                                                1.0640 – 1.0600

GBPUSD

Resistance                                          1.2480 – 1.2500

Support                                                1.2420 – 1.2400

AUDUSD

Resistance                                          0.7580 – 0.7600

Support                                                0.7530 – 0.7500

NZDUSD

Resistance                                          0.6990 – 0.7010

Support                                                0.6950 – 0.6930

USDCAD

Resistance                                          1.3430 – 1.3445

Support                                                1.3390 – 1.3370

USDJPY

Resistance                                          111.00 – 111.40

Support                                                110.40 – 110.20

USDCHF

Resistance                                          1.0030 – 1.0040

Support                                                1.0000 – 0.9970

Rand

USDZAR

Resistance                                          13.8350 – 13.8550

Support                                                13.6000 – 13.5370           

EURZAR

Resistance                                          14.7540 – 14.8000

Support                                                14.5100 – 14.4500

GBPZAR

Resistance                                          17.2520 – 17.2900

Support                                                16.9430 – 16.9090

Minors

AUDCAD

Resistance                                          1.0160 – 1.0180

Support                                                1.0130 – 1.0100

AUDJPY

Resistance                                          84.20 – 84.40

Support                                                83.30 – 83.00

EURCHF

Resistance                                          1.0712 – 1.0730

Support                                                1.0670 – 1.0630

EURGBP

Resistance                                          0.8570 – 0.8600

Support                                                0.8520 – 0.8500

EURJPY

Resistance                                          118.40 – 118.60

Support                                                117.80 – 117.50

GBPJPY

Resistance                                          138.50 – 138.80

Support                                                137.50 – 137.20

GBPCAD

Resistance                                          1.6740 – 1.6760

Support                                                1.6670 – 1.6630

GBPCHF

Resistance                                          1.2530 – 1.2550

Support                                                1.2460 – 1.2430

Indices

DE30

Resistance                                          12280 – 12300

Support                                                12140 – 12110

UK100

Resistance                                          7350 – 7370

Support                                                7250 – 7230

US500

Resistance                                          2360 – 2380

Support                                                2330 – 2310

US30

Resistance                                          20700 – 20750

Support                                                20600 – 20580

SA40

Resistance                                          46600 – 46900

Support                                                46000 – 45700

Commodities

BRENT

Resistance                                          54.70 – 55.10

Support                                                53.90 – 53.70

XAUUSD

Resistance                                          1255.00 – 1260.00

Support                                                1240.00 – 1220.00

XAGUSD

Resistance                                          18.20 – 18.40

Support                                                18.00 – 17.90

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