LATAM FX: Price Signal Summary - USDBRL Bears Remain In The Driver’s Seat
- USDMXN is consolidating. The downtrend remains intact and last week’s fresh lows reinforce current conditions. The bear trigger at 17.4207, the May 15 low, has been cleared and this confirms a resumption of the downtrend. Moving average studies remain in a bear mode position, reinforcing current conditions. Scope is seen for a move towards 16.9791 and 16.7758, the 1.618 and 1.764 projections of the Jun 2 - Mar 9 - Mar 20 price swing. Resistance to watch is the 50-day EMA, which intersects at 17.7041. This is a key short-term hurdle for bulls, where a break would signal a reversal. The 20-day EMA intersects at $17.4134.
- USDBRL maintains a softer tone following the reversal from 5.1277, the May 31 high. The pair has recently cleared 4.8859, the May 15 low and a former key support. The break confirms a resumption of the downtrend. The 4.8000 handle has been tested, a continuation lower would pave the way for a move towards 4.7490, Jun 6 2022 low and 4.6910, the May 30 2022 low. Moving average studies are in a bear mode condition, highlighting a downtrend. On the upside, initial firm resistance is at 4.9794, the 50-day EMA. The 20-day EMA intersects at 4.9143.
- USDCLP continues to trade in a range. The pair pierced (in mid-May) support at 783.10, the Mar 31 low. A clear break of this level would expose the key bear trigger at 776.28, the Feb 3 low. Clearance of this support would confirm a resumption of the broader downtrend. For now, the price remains above the May 15 low, a stronger bounce would refocus attention on key short-term resistance at 837.15, the Mar 17 high.
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USDCAD TECHS: Bullish Short-Term Theme
- RES 4: 1.3695 High Mar 28
- RES 3: 1.3668 High Apr 28 and key resistance
- RES 2: 1.3640 High May 3
- RES 1: 1.3568 High May 15
- PRICE: 1.3520 @ 16:33 BST May 19
- SUP 1: 1.3404 Low May 16
- SUP 2: 1.3363/15 Low May 11 / 8
- SUP 3: 1.3302 Low Apr 14 and a key near-term support
- SUP 4: 1.3275 Low Feb 14
USDCAD remains above Tuesday’s low. The recovery from the May 8 low eased recent bearish pressure and the pair has traded through the 50-day EMA, currently at 1.3513. A clear break of this average would strengthen the case for bulls and signal scope for a climb towards resistance at 1.3668, the Apr 28 high. Key support lies at 1.3302, the Apr 14 low. A break would reinstate the recent bearish theme.
US STOCKS: Stocks Off 3M Highs as Debt Ceiling Talks Hit Snag
Stocks see-sawing in modestly weaker territory after posting the best levels since early February in the first half as debt ceiling negotiations hit a snag in late morning trade.
- "GOP DEBT NEGOTIATORS SAY WHITE HOUSE NOT BEING REASONABLE .. and GOP NEGOTIATORS LEAVE DEBT TALKS" Bbg have triggered late morning unwinds with SPX E-Mini Futures down 11.25 points (-0.27%) at 4205; DJIA down 131.31 points (-0.39%) at 33457.23; Nasdaq down 44.1 points (-0.3%) at 12652.15.
- No substantive reaction to a policy panel event with Fed Chairman Powell, former chair Bernanke highlighting "key issues in monetary policy and the economy and facilitate discussions on the challenges faced by monetary policymakers.
- Echoing previous comments - tighter credit conditions "weigh on economic growth hiring and inflation. As a result, our policy rate may not need to rise as much as it would have otherwise to achieve our goals."
- At the moment: Emini futures have breached key resistance and the bull trigger at 4206.25, the May 1 high. Clearance of this level confirms an extension of the bull trend from Mar 13. This opens 4244.00, the Feb 2 high and the next key short-term resistance. Key support is at 4062.25, the May 4 low. A move through this level would highlight a bearish threat.
AUDUSD TECHS: Key Support Remains Exposed
- RES 4: 0.6921 High Feb 20
- RES 3: 0.6861 50.0% retracement of the Feb 2 - Mar 10 bear leg
- RES 2: 0.6824 High Feb 24
- RES 1: 0.6705/6818 50-day EMA / High May 10
- PRICE: 0.6664 @ 16:26 BST May 19
- SUP 1: 0.6605 Low May 18
- SUP 2: 0.6565 Low May 10 and the bear trigger
- SUP 3: 0.6547 61.8% of the Oct - Feb bull cycle
- SUP 4: 0.6403 76.4% of the Oct - Feb bull cycle
AUDUSD maintains a softer tone following the pullback from 0.6818, the May 10 high, and price is trading closer to this week’s lows. A bearish continuation would expose key support at 0.6565, the Mar 10 low. Clearance of this level would confirm a resumption of the bear cycle that started Feb 2 and highlight a range breakout. On the upside, a breach of 0.6818 is required to reinstate a bullish theme and this would expose 0.6861, a Fibonacci retracement.
