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26/03/2014: Trading outlook ahead of the US session


Equity markets have continued their recovery from yesterday and the outlook for European bourses looks far more positive. Currencies are a mixed bag. The Euro remains under pressure after the dovish comments from Draghi and Weidmann yesterday. Sterling has been supported by the slightly stronger inflation data. Gold is consolidating.

The US Durable Goods is the only key data to watch for and comes early in the session at 12:30GMT. Consensus is looking for a bounce of between 0.8% and 1.0%, but if the weather related bounce back in data comes through sooner (consumer confidence was much better than expected yesterday) then this number could be beaten. This would be dollar positive (subsequently gold negative) and equities positive.

EUR/USD once more in the past 24 has found resistance around $1.3840 and the drift has moved back below $1.3800 once more. The latest lower reaction high on an intraday basis has been at $1.3821 and the pressure is mounting for a retest of $1.3748. I am still expecting the Euro to come back to around $1.3700 and it looks like rallies remain a chance to sell.

GBP/USD has been supported by yesterday’s UK inflation data, while the US Consumer Confidence number was unable to sell the dollar bulls regain the initiative for too long. I still view this recovery as a bear market rally with this downtrend still in place at $1.6571 and the falling 200 hour moving average the basis of resistance. I am looking to sell around $1.6540. I think that there could be volatility around the 12:30GMT Durable Goods data that needs to be watched.

USD/JPY remains rangebound and stuck. There could be a slight uplift today if the Durable Goods data is positive, but the range 101.95/102.83 is likely to remain intact until the Japanese inflation announcement tomorrow evening.

Gold has had a fairly quiet morning, finding support above $1305, there is a resistance around $1320 that is holding back any recovery. The intraday downtrend has been broken, however i am viewing this as a consolidation rather than the beginning of a recovery. I still expect further downside.

The European indices had seen a second straight positive morning. Both FTSE and DAX have now broken key intraday resistance levels to corm base patterns. The FTSE has moved above 6628 which forms a base pattern implying 6763. The near term overbought position could induce some near term unwinding, but  a band around 6600 should act as a basis of support. The move on the DAX above 9376 suggests the February high at 9721. As with the Footsie, the DAX is overbought on the hourly RSI, and also has a gap open at 9338 which might give rise to a near term correction. A move back towards support around 9300 and the support of the rising 55 hour moving average would be an ideal entry point.


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