USDCAD TECHS: Southbound

Sovereign rating reviews of note from after hours on Friday include:

• Morningstar DBRS upgraded Cyprus to A (low), Positive Trend
• Morningstar DBRS confirmed Finland at AA (high), Stable Trend
• Morningstar DBRS affirmed France at AA (high), Trend changed to Negative
• Morningstar DBRS confirmed Norway at AAA, Stable Trend

• There was a slight hawkish bias to Thursday’s MPC meeting from the 8-1 vote in favour of maintaining Bank Rate at 4.50%.
• The guidance was largely unchanged although there were some tweaks to the first guidance paragraph, however, with the main addition being a more explicit reference to potential second-round effects from near-term inflation increases.
• Perhaps the most significant thing to come out of the March MPC meeting was not an explicit view for now, but the lack of any discussion over the three cases that have previously been the bedrock of MPC communication for the past few months. Instead, the MPC outlined the intention for how its guidance would evolve under new scenarios.
• We note that Governor Bailey is due to deliver a speech on “growth in the UK economy” on Monday 24 March and it would be very possible that he could set out these new cases more granularly. If this was the case, we would expect other MPC members to stick to this new script and to move away from the old case 1/2/3 rhetoric.
• We have only seen one sellside forecast change following the March MPC meeting: All 24 analyst reviews that we read look for the next 25bp cut in May, 63% of analysts (15/24) expect a further 75bp of cuts across the year to 3.75% while over 3/5 of analysts (15/24, 63%) have their terminal rate base case in a 3.00-3.50% range.

For the full MNI BOE Review click here.

• RES 4: 154.80 High Dec 12 ‘24 and a key resistance     
• RES 3: 152.70 50.0% retracement of the Jan 10 - Mar 11 bear leg  
• RES 2: 151.01/30 50-day EMA / High Mar 3  
• RES 1: 150.15 High Mar 19 
• PRICE: 149.64 @ 06:57 GMT Mar 24 
• SUP 1: 148.18/146.54 Low Mar 20 / 11 and the bear trigger   
• SUP 2: 147.02 1.0% 10-dma envelope
• SUP 3: 145.00 Round number support 
• SUP 4: 144.13 76.4% retracement of the 16 ‘24 - Jan 10 bull leg 

The primary trend direction in USDJPY is down and recent gains are considered corrective. Key resistance to watch is 151.01, the 50-day EMA. A clear break of this average would signal scope for a stronger rally. For bears, a resumption of weakness would refocus attention on key support and the bear trigger at 146.54, the Mar 11 low. Clearance of this level would resume the downtrend.