Daily Market Outlook, March 26, 2021
US equities ended higher on Wall Street, supported by positive US data showing further improvement in the labour market and President Biden’s doubling of the vaccine target (to 200 million doses) in his first 100 days in office. US 10-year Treasury yields also appear to be more contained this week after rising in the previous seven weeks. The positive risk tone continued during the Asian trading session, with gains in major equity indices.
UK retail sales, released earlier this morning, increased in February after a dreadful start to the year as a result of the third lockdown. Official figures showed the volume of sales (including fuel) rising 2.1% after the 8.2% plunge in January, in line with the consensus forecast although less strong than anticipated. Sales are down 3.7% from a year earlier. The hope is that positive momentum will build as the economy gradually reopens (including non-essential stores potentially from 12 April in England) and with consumer confidence in March rising to a one-year high. Bank of England policymakers Saunders and Tenreyro are scheduled to speak later today.
The German IFO survey will provide an update of business conditions for March. Last month, there was a pronounced improvement in the expectations component, related to hopes of stronger activity later in the year. The current assessment index, however, lagged behind, with services activity weighed down by the slow vaccine rollout and extended lockdown restrictions. Expect the headline IFO index to rise to 93.0 from 92.4, still below pre-pandemic levels.
In the US, look for February personal consumption to have declined by 1.5%, following the stimulus-led surge in January. That would be in line with weakness in other indicators for the month, possibly reflecting the impact of severe winter weather in parts of the country. Consumption is set to pick up in March, bolstered by the additional $1.9 trillion stimulus package and an improving labour market. Also expect the February PCE deflator (the Fed’s preferred inflation measure) to rise to 1.8% from 1.5%, but the core measure is expected to stay at 1.5%. The advance goods trade balance and the final reading for University of Michigan consumer sentiment are also due.
G10 FX Options Expiries for 10AM New York Cut
(Hedging effect can often draw spot toward strikes pre expiry if nearby)
EUR/USD: 1.1800 (487M), 1.1900(750M)
USD/JPY: 108.75-80 (680M)
EUR/GBP: 0.8600 (416M)
AUD/USD: 0.7500 (539M), 0.7765 (1.7BLN)
Technical & Trade Views
EURUSD Bias: Bullish above 1.20 bearish below
EURUSD From a technical and trading perspective, the failure to recapture 1.20 on the upside leaves the 1.1830 lows exposed, through here bears will press for a test of the yearly pivot at 1.1720.
Flow reports suggest light offers through the 1.1800 area with weak stops on a move through the 1.1820 area with limit with light offers then running through the 1.1840-60 area before stronger offers start to appear on a test through the 1.1880 level and stronger through the 1.1900 area. Downside bids into the 1.1740-50 area and then increasing on a dip through the 1.1720-1.1680 level with congestion through to the 1.1600 areas.
GBPUSD Bias: Bullish above 1.3750 bearish below
GBPUSD From a technical and trading perspective, a retest of 1.3750 pivotal trend support has seen fresh demand develop as this level continues to attract support bulls will target a retest of cycle highs en route to 1.44 upside objective. UPDATE... the loss of 1.3750 is a significant bearish development opening a move to test a corrective equality objective 1.3550
Flow reports suggest downside congestion around the 1.3660-40 area with stronger bids on any push towards the 1.3600 level and weak stops likely on a dip through opening to a deeper move, Topside offers through light through to the 1.3800 level with congestion through to the 1.3850 area before opening up to light offers and weak stops through the 1.3900 level and then stronger congestion.
USDJPY Bias: Bullish above 107.30 targeting 109.85
USDJPY From a technical and trading perspective, as 108.30 continues to attract demand bulls will target a test of pivotal 109.85 ahead of the yearly R1 pivot at 110.
Flow reports suggest topside congestion is likely to soak up some of the weak stops above through to the 109.50 area where strong congestion is likely to appear and increasing offers into the 110.00 and like the previous spikes at the beginning of last year any move is likely to find resistance above and continuing through the 110.00 with break out stops likely to be a little more nervous, downside bids light through to the 108.00 level with weak stops on any retrace through the 107.80 level and opening a dip to the 106.00
AUDUSD Bias: Bullish above .7560 bullish targeting .8200
AUDUSD From a technical and trading perspective, as .7820 contains upside attempts there is potential for a head & shoulders pattern to develop, a loss of pivotal .7560 would open a move to test trend support at .7400 next
Flow reports suggest light topside offers through to the 0.7700 area with weak stops on a move above the 0.7720 area Then stronger offers through to the 0.7840-60 area and then increasing offers onwards through 0.7900, with the offers likely to continue through to the 0.7950 area and likely increasing resistance through to the 0.8000 levels, downside bids into the 76 cents level with strong bids likely through to the 0.7580 area, weak stops are likely to be few and far between with stronger bids likely into the 0.7550 level and likely stronger congestion through to the 0.7500 area.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!