Big tests for Trump, Yellen and the markets today

Stocks and currencies have stabilized overnight with the market selloff having run its course and traders looking for the next move. US index futures plus the FTSE, Dax, Nikkei and the Hang Seng are all up or down marginally.

Currency markets have also been steady for the most part. Sterling is up boosted by an even bigger than expected rebound in UK retail sales. JPY and gold are holding on to recent gains. CAD is also up a bit today with crude oil up 0.75% this morning. The Canadian federal budget didn’t have any impact on market sentiment toward the Loonie.

Today brings one of a series of potential turning points for the markets. The US House of Representatives is set to vote on President Trump’s health care reform bill. This is the first big test of his economic plans in Congress and may indicate how smoothly or how difficult it may be to enact his tax reform and infrastructure plans.

The street has been banking big on reforms going smoothly so signs of opposition or delay could have a big impact on sentiment. It wouldn’t take much to send traders jumping off the bandwagon at this point as we have seen over the last 48 hours. ‎If the bill passes, it moves to the Senate next week where it could face even more opposition as the Republican majority is smaller there.

Meanwhile, the US Dollar also could be active around comments from Fed Chair Yellen‎. This is her first public appearance since last week’s press conference. Traders will be looking to see if she will try to dial back the dovish reaction to the last Fed statement and dot plot which has sent the Dollar dropping and the Dollar Index under 100 over the last week.

Energy markets may be active today around the Natural Gas inventory report. Last week’s big late winter storm is expected to cause a big 150+ BCF drawdown. Winter has been mild and demand lower overall, so this could become the gas bulls last stand.

Chart Signals: GBP breaks out, WTI rebound boosts CAD upward

The main focus of today’s trading action is in currencies where Sterling has broken out against both EUR and USD with Cable retesting $1.2500 as support following a rally up toward $1.2530. WTI continues to rebound out of a bear trap/hammer reversal helping oil currencies like CAD to bounce back as well with CADUSD retesting $0.7500.

North American and European Indices

US 30 is trying to stabilize near 20,660 but a lot of technical damage has already been done with the pair well under its 20,785 breakdown point and RSI under 50. Next potential support near 20,565 the recent low then 20,465 the 50-day average. 

US SPX 500 has found support above its 50-day average near 2,340, trading near 2,350. RSI still under 50 suggests this could be just a trading bounce. Next potential support near 2,310 a Fibonacci level.

US NDAQ 100 has held 5,300 and 50 on the RSI for now to keep its underlying uptrend intact for now but it’s bounce appears to be running out of gas at a lower high near 2,370 short of 2,400 resistance. Next potential support on a breakdown near 5,245 then 50-day average. 

UK 100 is testing 5,300 and 50 on the RSI where successful holds would keep its underlying uptrend intact but failures and breakdowns would signal the start of a new downtrend. Resistance falls toward 7.345 with next support possible near 7,277 then 7,230 the 50-day average then a Fibonacci level.

Germany 30 is trying to rebound, having found support near 11,855 above its 50-day average near 11,815. The index has rallied up for 11,900 toward 11,960 but it remains unable to retake 12,000 and refusing to reject the completion of a bearish rising wedge. 

Commodities

Gold has paused in the $1,242 to $1,250 range consolidating its recent rally up off of $1,230. RSI suggests we could be nearing the top of an upswing within a big sideways channel. Next resistance at the 200-day average near $1,260. 

Crude Oil WTI appears to be base building near $47.60 following yesterday’s big bear trap washout and hammer candle that saw the price fall under $47.00, successfully test uptrend line support near $46.40 then rally back up toward $48.00. Oversold RSI indicates potential for a rebound with next potential resistance at the 200-day average near $48.25. 

FX

US Dollar Index has levelled off near 99.55 to digest its recent breakdown under 100.00. RSI steady under 50 indicates a pause within a bigger downtrend. Next potential support near 99.00 with next resistance near 100.20.

USDJPY has paused to digest recent declines near 111.00 with initial resistance falling toward 111.25 a Fibonacci level from 111.60. Falling RSI confirms distribution. Next potential support near 110.70 the recent low then the 110.00 big round number. 

EURUSD continues to struggle with resistance at a Fibonacci cluster near $108.30 slipping back under $1.0800 toward $1.0780 with next potential support near $1.0720 a Fibonacci level. RSI suggests upward momentum levelling off.

EURGBP is breaking down today, taking out 0.8660 a Fibonacci level and falling to test its 50-day average near 0.8600 with next potential support near 0.8560 its 200-day average. RSI dipping under 50 confirms downturn in momentum.

GBPUSD continues to climb, sitting on $1.2500 as it trades up into the $1.2470 to $1.2530 range. Rising RSI confirms increasing upward momentum. Next potential resistance near $1.2565 then $1.2635 on trend.

USDCAD is bouncing around between $1.3320 and $1.3360 having dropped back from a lower high near $1.3400. RSI testing 50 where a breakdown would confirm momentum turning downward. Support in place near $1.3300 then a moving average cluster closer to $1.3200.

CADUSD has bounced back up toward $0.7500 from $0.7455 support. This looks encouraging but RSI still needs to get back above 50 to confirm momentum upturn. Next potential resistance near $0.7525 then $0.7550 a Fibonacci level.

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