Talking Points:
– USD/JPY Retail Crowd Increases Long Exposure as Fitch Cuts Japan’s Credit Rating.
– GBP/USD Near-Term Advance Vulnerable to Weak 1Q Gross Domestic Product (GDP) Report.
– USDOLLAR Outlook Mired by Slowing Recovery- Bearish RSI Momentum in Focus.
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USD/JPY
Chart – Created Using FXCM Marketscope 2.0
Even though Fitch Ratings cut Japan’s credit-rating to A from A+, USD/JPY remains at risk for a further decline as it continues to carve a series of lower highs & lows, while the RSI retains the bearish momentum.
Despite bets for a further expansion in the Bank of Japan’s (BoJ) JPY 80T/month asset-purchase program, may see the fresh developments coming out of the policy meeting improve the appeal of the Japanese Yen should Governor Haruhiko Kuroda endorse a wait-and-see approach.
DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains net-long USD/JPY as the ratio sits at +2.63, but seeing a decline in open interest heading into the end of April.
GBP/USD
Despite the weaker-than-expected data series from the Consortium of British Industries (CBI), GBP/USD pushes to fresh monthly highs to threaten the bearish RSI momentum carried over from 2014.
Nevertheless, the British Pound may face near-term headwinds as the 1Q Gross Domestic Product (GDP) report is expected to show the U.K. economy growing an annualized 2.6% after expanding 3.0% during the last three-months of 2014.
With the ongoing series of higher highs & lows, the next topside region of interest comes in around 1.5340 (78.6% retracement) to 1.5350 (50% retracement).
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USDOLLAR(Ticker: USDollar):
Index
Last
High
Low
Daily Change (%)
Daily Range (% of ATR)
DJ-FXCM Dollar Index
11886.69
11945.74
11884.18
-0.21
86.93%
Chart – Created Using FXCM Marketscope 2.0
Dow Jones-FXCM U.S. Dollar pushes to fresh monthly lows as the ongoing series of weaker-than-expected data prints drag on Fed interest rate expectations; will continue to favor downside targets as a bearish setup takes shape.
Bearish RSI momentum continues to highlight the risk for a larger correction in USDOLLAR especially as the softening recovery dampens the Fed’s scope for a June rate hike.
Close below 11,899 (61.8% retracement) to 11,901 (78.6% expansion) to open up the next downside targets around 11,828 (78.6% retracement) to 11,836 (61.8% retracement).
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Release
GMT
Expected
Actual
Markit Purchasing Manager Index- Services (APR P)
13:45
58.8
57.8
Markit Purchasing Manager Index- Composite (APR P)
13:45
—
57.4
Dallas Fed Manufacturing Activity Survey (APR)
14:00
-12.0
-16.0
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— Written by David Song, Currency Analyst
To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.
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Source: Daily fx