FOREX: Asia FX Wrap - The USD Correction Extends In Asia
The BBDXY has had a range of 1219.81 - 1225.58 in the Asia-Pac session, it is currently trading around 1223. Ben Hunt on X: “The initial USD positive reaction to the tariff block is weird to me. Either the Supreme Court reverses the trade court ruling and we’re back to where we were (only worse) or they don’t reverse and Trump initiates the biggest constitutional crisis of the past 70 years. Both are intensely USD negative. https://x.com/EpsilonTheory/status/1927912996174549490
- EUR/USD - Asian range 1.1210 - 1.1297, Asia is currently trading 1.1250. EUR has had a big drop during the Asian session. The news this morning tipped the USD buying over the edge. Dips back to 1.1000/100 should continue to find support.
- GBP/USD - Asian range 1.3416 - 1.3472, Asia is currently dealing around 1.3445. The GBP could not hold above the pivotal 1.3500 area for now. Look for support to return back towards the 13300/3400 area.
- USD/CNH - Asian range 7.1908 - 7.2087, the USD/CNY fix printed 7.1907. Asia is currently dealing around 7.1975. Sellers should be found on a bounce back towards the 7.2200 area again. Andreas Steno Larsen on X : The elephant in the room. USDCNH needs to go to 6.80 at least. https://x.com/AndreasSteno/status/1926115935200440525
- Cross asset : SPX +1.60%, Gold $3270, US 10-Year 4.50%, BBDXY 1223, Crude oil $62.74
Data/Events : Spain Retail Sales, Italy Consumer Confidence & Industrial Sales
Fig 1: GBP/USD Spot Daily Chart
Source: MNI - Market News/Bloomberg
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OIL: Crude Continues Sell Off During APAC Trading Following Dallas Fed Drop
Oil prices continued declining during today’s APAC session. They fell on Monday with the sharp drop in the Dallas Fed manufacturing index adding to fears that trade agreements wouldn’t be reached with the US. WTI is 0.9% lower to $61.50/bbl, close to the intraday trough, while Brent is down 0.8% to $65.33/bbl. The USD index is up 0.3% which is also likely weighing on dollar-denominated crude.
- Oil’s reaction to the Dallas Fed data puts other releases this week, including GDP, ISM/PMIs and payrolls, even more in the spotlight. Signs that there was weakening in April, the reciprocal tariffs were announced April 2, would likely drive a further sell off as crude has been particularly worried about the impact of increased protectionism on global energy demand.
- China retaliated to US tariffs and while the US says that it is negotiating with it, China continues to deny that talks are taking place. Instead it has promised support for exporters and the economy and threatened others if they impact it negatively to gain favour with the US and warned against giving in to American “bullying”. China is the world’s largest oil importer.
- The supply side remains in focus with OPEC meeting on May 5 and the prospect of successful US-Iran talks resulting in an easing of sanctions. Also, US industry-based inventory data are released today.
- Later US April consumer confidence, March merchandise trade, JOLTS job openings, inventories and February house prices print, as well as the April European Commission survey, Spanish Q1 GDP and preliminary April CPI. The ECB’s Cipollone and Donnery speak.
EURUSD TECHS: Recent Pullback Considered Corrective
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1573 High Apr 21 and the bull trigger
- PRICE: 1.1379 @ 05:56 BST Apr 29
- SUP 1: 1.1308 Low Apr 23
- SUP 2: 1.1236 20-day EMA and a key support
- SUP 3: 1.1144/0986 High Apr 3 / 50-day EMA and a pivot level
- SUP 4: 1.0805 Low Apr 3
Short-term weakness in EURUSD is considered corrective and the trend structure remains bullish. Moving average studies are in a bull-mode position signalling a dominant uptrend, and the latest move down is allowing an overbought condition to unwind. A resumption of gains would open 1.1608 next, the Nov 9 2021 high. Key support is unchanged at the 20-day EMA, at 1.1236. A break of this average would signal scope for a deeper retracement.
FOREX: FOREX G10 Wrap - USD Can’t Hold Onto Gains
The BBDXY has had an Asian range of 1219.50 - 1222.42, Asia is currently trading around 1223. Spain is still searching for answers for Monday's Blackouts, the EU said there are no indications of a cyber attack. Bloomberg - “ Olli Rehn said there’s a danger that inflation will dip below the 2% target and that the euro’s strength has added “further complexity” to policy.”
- EUR/USD - Asian range 1.1374 - 1.1422, Asia is currently trading 1.1382. Intra-day support is around 1.1300, should this area not hold demand should remerge on dips back to 1.1100.
- GBP/USD - Asian range 1.3397 - 1.3444, the GBP continues to lead higher, testing decent Weekly resistance now around 1.3500.
- USD/JPY - Asian range 142.00 - 142.58, has drifted higher for most of the Asia session. On the day the 143 handle should once again offer supply, then more importantly the 145/146 area should once more offer good levels for sellers to reengage.
- USD/CNH - Asian range 7.2692 - 7.2887, the USD/CNY fix printed lower again at 7.2029. Bloomberg - “The yuan was boosted by a report that China vowed to comprehensively rectify all kinds of unreasonable regulations and practices that restrict market access.” This saw USD/CNH break below the 7.2800 support which contributed to sudden spikes in both the AUD and NZD.
- USD/CAD - Asian range 1.3809 - 1.3867, currently trading 1.3860. Canada’s Liberal Party wins the election too soon to know if it's by a majority. Bounces back to 140.00 should find sellers first up.
- Cross asset : SPX +0.21%, Gold 3317, US TYM5 111-27+, BBDXY 1222, Crude oil 61.60.
- Data/Events : Spain GDP & CPI, ECB CPI expectations, Germany consumer confidence
Fig 1 : GBP/USD Spot Weekly Chart
Source: MNI - Market News/Bloomberg
