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Dean's Daily FX Update – 25 April 2017
As discussed in the report yesterday, Monday would be all about the aftermath of the French election. The polls had correctly predicted the outcome which was a far cry from both the US election and Brexit polls and so the market was feeling good about itself, with the smart money now banking on Macron again, yesterday was all about risk off.
In the Zone
- EURUSD
- GBPUSD
- AUDUSD
- USDCAD
Recap
We saw a wall of investor money back into the equities markets with all the major bourses registering handsome gains, gold and oil also slid some as investors celebrated the French outcome. We have a lot of fundamental event risk in the next two weeks and so I suspect that the market may need to cut short the celebrations and come down to planet earth.
Comments by Treasury Secretary Mnuchin last week and reports out of the Wall Street Journal, Trump is going to release his tax reform on Wednesday and in his own words – it is going to be “very tremendous.” After the flop in the healthcare repeal, it would seem as though the White House are going all in on this reform. The problem with this trade is that President Trump has proved to be unreliable thus far in his term, it wasn’t long ago that this reform would only be released in August. The dollar will be on standby today, but I hope for the greenbacks sake that this reform is released tomorrow, and at the very least doesn’t disappoint.
The EURUSD had the obvious gap open on Sunday evening and yesterday was all about how much higher the second wave could take the pair. The market closed at 1.0865, which is lower than the 1.0910 open but it did manage to stay above the 200 day MA at 1.0835. This MA will be a key level to watch today and a close above this level will see the sellers come in an attempt to close the gap. Resistance will come in at 1.0875 and then tougher resistance at 1.0900, these levels were the highs from June 2016 and so a break here will see the buyers excited.
The USDJPY is our barometer for risk and with risk off yesterday it was inevitable that the pair would trade higher. The pair initially moved as high as 110.50 but the safe haven traders would have been encouraged by the move back below the 100 hour MA at 109.80. I suspect that the buyers will wrestle back the initiative today and we could see this pair test topside resistance at 110.50 again.
News last night that President Trump is to place a 20% import tax on Canadian timber really hit the USDCAD hard, and it wasn’t long before the CAD was trading as high as 1.3560. It won’t be long before London traders add to this woe, my concern is that Trump may back track on this (he seems he often shoots from the hip before he thinks) and I suspect that this may turn into a nice move to fade later this evening or tomorrow morning – keep an eye out for divergence.
Majors
EURUSD
Resistance 1.0880 – 1.0910
Support 1.0800 – 1.0780
GBPUSD
Resistance 1.2830 – 1.2850
Support 1.2740 – 1.2720
AUDUSD
Resistance 0.7580 – 0.7600
Support 0.7540 – 0.7520
NZDUSD
Resistance 0.7020 – 0.7040
Support 0.6960 – 0.6940
USDCAD
Resistance 1.3570 – 1.3590
Support 1.3470 – 1.3450
USDJPY
Resistance 110.30 – 110.50
Support 109.50 – 109.30
USDCHF
Resistance 0.9980 – 1.0000
Support 0.9940 – 0.9920
Rand
USDZAR
Resistance 13.1000 – 13.1450
Support 12.9750 – 12.9370
EURZAR
Resistance 14.2440 – 14.2840
Support 14.0460 – 14.0200
GBPZAR
Resistance 16.7580 – 16.8500
Support 16.5750 – 16.5250
Minors
AUDCAD
Resistance 1.0250 – 1.0270
Support 1.0180 – 1.0170
AUDJPY
Resistance 83.31 – 83.50
Support 82.70 – 82.50
EURCHF
Resistance 1.0835 – 1.0860
Support 1.0770 – 1.0750
EURGBP
Resistance 0.8500 – 0.8520
Support 0.8420 – 0.8400
EURJPY
Resistance 120.20 – 120.50
Support 118.60 – 118.40
GBPJPY
Resistance 141.20 – 141.40
Support 140.20 – 140.00
GBPCAD
Resistance 1.7360 – 1.7380
Support 1.7200 – 1.7180
GBPCHF
Resistance 1.2770 – 1.2800
Support 1.2710 – 1.2700
Indices
DE30
Resistance 12450 – 12480
Support 12300 – 12280
UK100
Resistance 7380 – 7400
Support 7340 – 7320
US500
Resistance 2370 – 2380
Support 2340 – 2320
US30
Resistance 20790 – 20800
Support 20650 – 20620
SA40
Resistance 46800 – 47000
Support 46000 – 45500
Commodities
BRENT
Resistance 52.50 – 52.80
Support 51.80 – 51.50
XAUUSD
Resistance 1280.00 – 1285.00
Support 1270.00 – 1260.00
XAGUSD
Resistance 17.90 – 18.00
Support 17.70 – 17.50
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