USD retain bullish consolidation undertone against major currencies:
DXY reversal from pre-FOMC high of 100.39 almost met set post-FOMC target at 95.00-96.50 (with low at 96.63). The strategy to close the $ bull-chase from 80-85 at/above 100.00 has worked well. What next? Not withstanding the dovish (and accommodative) monetary policy stance by the FOMC, there are no signs of significant unwind of $ gains. The short term trading range is seen not beyond 95/96.50-99/100 with most trades in the inner-ring. The strategy is to play end-to-end and reinstate strategic "long-dollar" book at/below 95.00 for revisit over 100.
EUR/USD recovery from pre-FOMC low of 1.0456 almost met post-FOMC target at 1.10 (high at 1.0991). The strategy to close short-Euro chase from 1.25-1.26 (since mid Dec'14) at/below 1.05 has worked well. What next? Given the interest rate play (and macroeconomic fundamentals) strongly in favour of the US, Euro zone (and its currency) will stay under pressure through 2015-2016. This outlook sets up strong long term strategic resistance at 1.10-1.12 for revisit of 1.0450-1.05 in the short term, before getting better visibility at 1.0-1.0250, with near term intermediate support zone at 1.0575-1.0725. The strategic focus, therefore is to stay in back-and-forth mode at 1.0575/1.0725-1.0975/1.1125, and to build strategic short-Euro book for revisit to 1.0450-1.05 en route to 1.0-1.0250.
GBP/USD traded end-to-end of set strategic focus range of 1.45/1.4650-1.50/1.5150 for swift intra-day pre-FOMC low of 1.4632 to post-FOMC high of 1.5147. What next? Here again, see firm strategic resistance at 1.5150-1.5300 for revisit to 1.4500-1.4650 with intermediate support zone at 1.4750-1.4900. The strategy is to play end-to-end of 1.4750-1.5150 in the near term, and to build strategic short-GBP for short term target at 1.45-1.4650 en route to 1.42-1.4350.
USD/JPY push-back from pre-FOMC high of 121.85-122 (high at 122.02) found support at post-FOMC target of 118.50-119.50 (low at 119.38). Retain set strategic focus at 118.50/119.50-121.50/122.00, and prepare steam for extended bull-run into 123.50-125 in the short term.
Rupee retains its strongest global currency status with most (if not all) cues in support:
USD/INR rally from 61.65 (post rate-cut and swift DXY rally from 94.00-95.50 to over 100) failed at set resistance at 62.85-63.00 (high at 62.9950). The strategy was to sell 12M $ at 67.35-67.85 (high at 67.57) and cover end Mar'15 exports at 63.10-63.35 (high at 63.25) for post-FOMC spot target at 62.35, which is now met. What next? Both domestic and external cues are in favour of Rupee to keep net flows in $ supply driven mode, keeping RBI busy absorbing excess $ supplies to maintain demand-supply equilibrium for gradual Rupee appreciation with immediate target at 61.95 en route to 61.50-61.65. Any correction (from short dollar squeeze) will be shallow at 62.50-62.70. The hedging strategy may be in traction with 12M $ at 66.10/66.35-67.10/67.35 and 3M $ at 62.75/63-63.75/64.00. For now (into crucial 7th April monetary policy review), would prefer sideways mode at 61.95/62.20-62.45/62.70 with Rupee bullish extension limited at 61.50-61.65.
EUR/INR traded to the script for chase from 71.00-71.25 to 65.75-66.00; thereafter expected correction/recovery failed at 67.75-68.00. The currency pair is under severe pressure both from bearish momentum on EUR/USD and USD/INR. It is good to retain short term focus at 65.75/66.00-67.75/68.00 for sideways play; beyond there, bearish momentum is strong for extended weakness into 63.00-64.50.
Moses Harding
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