FOREX: JPY, CHF and GBP Outperform as Greenback Loses Ground
The dollar has traded on the backfoot Monday amid a bull steepening move for treasuries and renewed modest pressure on major US equity benchmarks. This has particularly benefitted the Japanese yen and Swiss Franc, while GBP is also among the best performers in G10. A lack of concrete details surrounding the US administration’s progress on trade deals has allowed the broader dollar weakening trend to resume, although the plethora of data this week and month-end could provide obstacles to short-term sentiment.
For USDJPY, tests of the 144 handle have capped the topside for now, and moving average studies are in a bear-mode position highlighting a dominant downtrend. As such, USDJPY has been edging steadily lower across Monday, printing fresh session lows around 142.40 as we approach the APAC crossover. Key short-term technical parameters are seen at 144.47, the 20-day EMA, and 139.89, last week’s low.
USDCHF held the prior breakdown point well last week around 0.8333 and late weakness towards the 0.82 mark also appears to be confirming last week’s pullback as corrective.
GBPUSD is notably back above 1.34 and spot trades in close proximity to the 1.3424 bull trigger (as well as 1.3434, the Sept'24 high). This is a key medium-term area for cable and it will be eagerly monitored in coming sessions. Further strength would signal scope for a move towards 1.3500 Round number resistance and 1.3550, the Feb 24 ’22 high.
Price action has prompted EURGBP to trade through a major support area we flagged last week at 0.8520-31 - marking both the early April pullback low as well as the 50% retracement of the tariff-inspired upleg off 0.8323.
Downward pressure on equities has relatively hindered the progress for the likes of EUR, AUD and NZD. However, EURUSD is pushing back above 1.14 in late trade and AUDUSD is within 20 pips of a cluster of highs from last week around 0.6435, which represent four-month highs for the pair.
Eurozone inflation data kicks off Tuesday, and in the US, JOLTS and consumer confidence data are highlights.
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USDCAD TECHS: Bullish Outlook
- RES 4: 1.4700 Round number resistance
- RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- RES 1: 1.4402 High Mar 20
- PRICE: 1.4292 @ 16:50 GMT Mar 28
- SUP 1: 1.4235 Low Mar 26 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD traded through support at 1.4242 on Wednesday but has recovered. A return lower and clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance is 1.4402, the Mar 20 high.
US FISCAL: Debt Limit "Extraordinary Measures" Pick Up, But Cash Dipping Pre-Tax
Treasury data shows that there were $207B of "extraordinary measures" available to circumvent hitting the debt limit as of Wednesday Mar 26.
- That's the most since Jan 27th and up from $163B a week earlier, from a total $376B available.
- However, Treasury cash in the TGA fell to $316B as of the 26th (and was down to $280B on Thursday), meaning there were a combined $523B of resources available to avert the debt limit, the lowest since the impasse began in January (and half of the starting amount of just over $1T).
- The next couple of weeks will be very important for Treasury, as they represent the biggest tax take of the year. The Congressional Budget Office reported this week that per its estimates "if the debt limit [$36.1T] remains unchanged, the government's ability to borrow using extraordinary measures will probably be exhausted in August or September 2025." Treasury wrote to Congress this month that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
AUDUSD TECHS: Remains Above Support
- RES 4: 0.6429 High Dec 12 ‘24
- RES 3: 0.6414 38.2% retracement of the Sep 30 ‘24 - Feb 3 bear leg
- RES 2: 0.6409 High Feb 21 and a bull trigger
- RES 1: 0.6391 High Mar 17 / 18
- PRICE: 0.6291 @ 16:46 GMT Mar 28
- SUP 1: 0.6258 Low Mar 21
- SUP 2: 0.6187 Low Feb 4
- SUP 3: 0.6171/6088 Low Feb 4 / 3 and a key support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD is unchanged. A short-term bull theme is intact and the latest move down appears corrective. Key short-term support to watch is 0.6187, the Mar 4 low. Clearance of this level would reinstate a bear threat. First support is at 0.6258, the Mar 21 low. A stronger recovery would refocus attention on 0.6409, the Feb 21 high. Clearance of this hurdle would strengthen the bull cycle and resume the uptrend that started Feb 3.
