Overall, the markets are rather steady so far in the last trading day of the week. Major Asian indexes are treading water. That followed a late rebound in US markets overnight. Euro weakens mildly and remains the worst performer for the week, followed by Yen and Swiss Franc. Dollar is still the strongest one, support by extended rally in US yields. Aussie and Sterling are the next strongest.

Technically, Canadian Dollar would be a focus today with job data featured too. EUR/CAD recovered mildly after dipping to 1.3586. But outlook stays bearish with 1.3977 resistance intact. Break of 1.3586 will resume the larger down trend. When that happens, the question is whether EUR/USD would also break through 1.0805 low, or USD/CAD would be finally rejected by 1.2591 resistance.

In Asia, at the time of writing, Nikkei is up 0.09%. Hong Kong HSI is down -0.47%. China Shanghai SSE is up 0.31%. Singapore Strait Times is down -0.72%. Overnight, DOW rose 0.25%. S&P 500 rose 0.43%. NASDAQ rose 0.06%. 10-year yield rose 0.043 to 2.652.

Fed Bostic: Appropriate to move policy to neutral, in a measured way

Atlanta Fed President Raphael Bostic said yesterday, “it’s time that we get off of our emergency stance — I think it’s really appropriate that we move our policy closer to a neutral position — but I think we need to do it in a measured way.”

At the same virtual conference, Chicago Fed President Charles Evans said, “I’m optimistic that we can get to neutral, look around, and find that we’re not necessarily that far from where we need to go.”

WTI oil gyrates lower as medium term consolidation extends

WTI crude oil continued to gyrate lower this week. EU has yet confirmed banning Russian coal and even if they do, it’s not expected to take effect until August. Oil embargo is not in sight. Meanwhile, oil demand in China is not looking good as coronavirus lockdowns put activity in Shanghai into a halt.

Anyway, the current fall from 118.57 in WTI crude oil is seen as a leg inside the medium term corrective pattern from 131.82. Deeper decline might be seen through 93.98 support. But strong support should be seen at around 85.92 resistance turned support to bring rebound.

On the upside, break of 106.59 resistance will bring rebound back to 118.57 resistance and possibly above. But there is no scope in break through 131.82 high for the near term. The corrective pattern will take a while to complete.

On the data front

Japan current account surplus came in at JPY 0.52T in February, above expectation of JPY 0.27T. Consumer confidence dropped from 35.3 to 32.8 in March, below expectation of 35.9.

Look ahead, Italy retail sales is the only feature in European session. Later in the day, focus will be on Canada employment.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.0850; (P) 1.0895 (R1) 1.0924; More…

Intraday bias in EUR/USD stays on the downside for retesting 1.0805 low first. Firm break there will resume larger down trend from 1.2248. Next target is 61.8% projection of 1.1494 to 1.0805 from 1.1184 at 1.0758, and then 100% projection at 1.0495. On the upside, above 1.0987 minor resistance will mix up the outlook and bring recovery.

In the bigger picture, the decline from 1.2348 (2021 high) is expected to continue as long as 1.1494 resistance holds. Firm break of 1.0635 (2020 low) will raise the chance of long term down trend resumption and target a retest on 1.0339 (2017 low) next. Nevertheless, break of 1.1494 will maintain medium term neutral outlook, and extending term range trading first.

Economic Indicators Update