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Forex Recap: Day of Manufacturing PMIs, FX Markets in Mixed Trading

In terms of fundamentals, China started the week with the HSBC Flash Manufacturing PMI, which came in at 48.1, lower than the 48.5 reading for February, and missing the 48.7 forecast for March. 

Markit's Flash Manufacturing PMI for Germany in March came in at 53.8, below the 54.8 in February, and missing the 54.7 forecast. 

Markit's US Flash Manufacturing PMI in March fell to 55.5 from February's 57.1, and missed the 56.6 forecast. 

Looking at S&P500 as a proxy for risk sentiment, we see that it was generally a risk-off day, until the afternoon of the US trading session where risk stabilized around 1860, the middle of the day's range of 1872 and 1848. Notice that it did break below a rising trendline from last week. 


(S&P500 1H chart)

XAU/USD (Gold) breaks below a rising channel that reflected the 2014 rally. The breaks suggests gold has turned bearish, or at least medium term sideways. It might be worth considering shorting a subsequent pullback.


(gold 4H chart)

The EUR/USD had a wild ride today. After breaking below a flag pattern, the market made a 180 in US trading, and came back up to test a previous top that was formed in the previous couple of weeks.


(EUR/USD 1H Chart)

If the EUR/USD has become sideways, or even slightly bearish, consider resistance at the 1.39-1.3915 area. A break above this line removes the bearish bias within a sideways market, and reintroduces a prevailing bullish bias that can be seen in the 4H chart, despite recently seeing the February trendline broken.


(EUR/USD 4H Chart)

We saw the GBP/USD hold support at the 61.8% retracement level in the 4H chart, and a rising trendline that goes back to July 2013. A return above 1.6570 and a falling channel resistance can reflect revival of the prevailing uptrend. But for now, the bearish momentum is still there, and there is only a slight indication of support so far.


(GBP/USD 4H Chart)

A break below the 1.6460 low and the rising trendline however shows a vulnerable GBP/USD that has downside risk toward the 1.6251, 2014 low.

The USD/JPY continues to consolidate roughly between 102 and 102.68. A break above 102.70 extends last week's bullish swing, and would be poised to test the March high at 103.75. A break below 102 however keeps the USD/JPY consolidating without bullish bias. 


(USD/JPY 4H Chart)

We also had some action in the antipodes, AUD/USD moving into a new 2014 high.


(AUD/USD 4H chart)

AUD/USD's bullish break is not very convincing in the 4H chart but it has been looking but the bullish momentum and price action since the end of January suggests we should consider buying on a dip, perhaps the next time we see the stochastic drop to 20, with RSI at 40.