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XAUUSD Fundamentals (based on dailyfx article)
Fundamental Forecast for Gold: BearishUSDJPY Fundamentals (based on dailyfx article)
Fundamental Forecast for Japanese Yen: BullishGBPUSD Fundamentals (based on dailyfx article)
Fundamental Forecast for Pound: BullishThe British Pound struggled to hold above the 1.6800 handle after failing to clear the February high (1.6821), but the fundamental developments coming out next week may generate fresh highs in the GBP/USD as the economic recovery in the U.K. gathers pace.
Even though the International Monetary Fund (IMF) lowered its global growth forecast for 2014, the group sees the U.K. outpacing the other advanced economies as the region is now expected to grow an annualized 2.9% this year, and the Bank of England (BoE) may come under increased pressure to normalize monetary policy sooner rather than later as U.K. Jobless Claims are projected to contract another 30.0K in March, while wage growth is anticipated to pick-up for the third consecutive month in February.
With that said, the U.K. Core Consumer Price Index may continue to highlight sticky inflation in the U.K. amid the ongoing pickup in economic activity, and Governor Mark Carney may do little to halt the ongoing appreciation in the British Pound as it helps the Monetary Policy Committee (MPC) to achieve the 2% target for price growth.
In turn, the BoE Minutes due out on April 23 may sound more hawkish this time around, and a further shift in the policy outlook may heighten the bullish sentiment surrounding the sterling as the central bank moves away from its easing cycle. As a result, we will continue to look for opportunities to ‘buy dips’ in the British Pound, and the GBP/USD may continue to carve a series of higher highs & higher lows this year as it retains the bullish trend carried over from 2013. The next topside objective for the GBP/USD comes in around 1.6850-60, the 78.6% Fibonacci expansion from the October advance, and we will continue look for a higher high as it carves a higher low earlier this month.
AUDUSD Fundamentals (based on dailyfx article)
Fundamental Forecast for Australian Dollar: NeutralThe US dollar had a terrible week, falling across the board. Can it stabilize now, or will the sell off continue? US retail sales, German ZEW Economic Sentiment, US Inflation data, Janet Yellen and US Haruhiko Kuroda speeches, Unemployment Claims and the Philly Fed Manufacturing Index are the highlights of this week. Here is an outlook on the main market movers coming our way.
The greenback took a big hit following the relatively dovish FOMC minutes release where forward guidance was forsaken for a promise of low rates after the bond buying program ends. Fed Chair Yellen also surprised markets by saying that bond buying will finish in 6 months. However, later that week, the Jobless claims release was a positive surprise, plunging 32,000 to 300,000 claims, the lowest level since December 2013, indicating the US job market is on a solid growth trend. Will the US economy continue its growth trend after the QE is over? In the euro-zone, weak inflation data from France was dismissed. Strong industrial data from the UK boosted the pound, upbeat Australian data energized the Aussie and the lack of action from the BOJ fueled the yen.
The Nikkei as you can see fell during the totality of the week, closing below the ¥14,000 level. However, there is a significant amount of support below this level as well, and therefore we are not quite ready to start selling. This area could produce a supportive candle, and we would be willing to take a supportive candle on either the daily or weekly chart, as we believe ultimately this market will test the ¥16,000 level yet again as the uptrend should continue. Selling is not an option at this moment.
The DAX as you can see fell hard during the week, closing near the €9300 level. This of course is a very bearish candle and we believe that the market may very well continue lower from here, especially considering that there was a gap on Friday. The €9000 level has been very supportive in the past, and because of that we think that a supportive candle in that general region would be perfect for a buy signal. It doesn’t have to be on the weekly chart, it can be on the daily chart as well, but either way we would be very interested in buying in that area.
The NASDAQ as you can see initially try to rally during the week, but found enough resistance at the 4200 level, sending the market much lower. We found the 4000 level supportive though, as one would expect. The end of the day on Friday saw the market stopped, and as a result we think that this market will more than likely find a supportive candle in this region. We are more than willing to buy a supportive candle in this region, but recognize that closing at the bottom of the range suggests that we probably have a little bit of selling to do still.
The S&P 500 fell during the course of the week, breaking the bottom of the shooting star from the previous week. This of course is a very negative sign, but as you can see the market has plenty of support down near the 1780 area. Down in that general vicinity we would expect to see support, and then would start buying on that type of candle in that particular area. This signal could come on the daily chart though, but at the end of the day we believe that ultimately this market should continue to go higher
The Dow Jones 30 as you can see fell hard during the week, slamming into the 16,000 region. We are still well within consolidation though, and as a result we think that there’s plenty of support just below in order to keep this market higher. We would not sell this market right now, and as a result we are looking for some type of supportive candle in order to start buying. Ultimately, we think that this market continues higher and breaking above the recent high would of course be given the next leg up.