David Long

Putin talks and VIX plunges 7% – Forex Market Analysis – March the 19th 2014

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VIX plunges 7% as Putin announces to Russian Parliament not to be scared of him, he will not carve up Ukraine, just steal Crimea back. Stocks rallied for 2nd day as risk appetite increases and safe haven flowed outwards. Oil and soft commodities jumped higher, which  wasn’t enough to help the Loonie as Canadian Central Banker Poloz warned of weaker economy and “cannot rule out lowering interest rates” to spur it. China seems to be struggling with housing the main concern as the Yuan tumbles. All in all a good night as the relief rally takes hold.

Tonight, or early morning our time, is the FOMC and it is well expected that Aunty Janet cuts 10B off their monthly bond buying program called QE3. She has recently said that the US economy is strong enough now to handle measured tapering.


Once that is out of the way we should see the US$ weaken.


That is odd in itself. By reducing supply one should increase price as demand remains the same. However, in this environment, the free cash the Fed has given has pumped up the US equity market 177% and flattened the yield curve. So, that cash supply is drying up and therefore the cash that has been printed will exit the US looking for better yields, such as the Aussie or Kiwi. This is why the US$ should weaken on the tapering of QE3.


DATA HIGHLIGHTS TODAY – BOJ Kuroda Speaks. UK Unemployment & Interest Rate Vote & Budget release. US FOMC


AUDUSD – Right, the pressure is building now and we have a clean break above the neck line and above resistance. RSI is getting close to overbought so in the pullback I will be looking for the neckline and resistance to become support in the retest of that level. Sometimes we do not get the retest and the market just motors on, I do not see that happening in this case, so I will be patient and wait for the retest and buying action at that time.
Resistance: 9085/9167/9300
Support: 8900/8654/8550/8300


EURUSD – An inside bullish day as the market sways on Crimea/Russia/Sanctions and weaker German sentiment.
Resistance: 14050/14260/14320
Support: 13488/13420/13266


GBPUSD – The 4hr trade went south as the cable weakened for no discernible reason other than other currencies were more attractive, such as the Kiwi. A LHLL but is still hanging on to 1.66 for grim life, fingernails biting into the grout. After FOMC I suspect we will track higher again.
Resistance: 16785/1.69/1.70
Support: 16300/15950/15830


NZDUSD – Just will not stop, good for it. RSI is so overbought the Long White Cloud is now like a carpet and I am getting vertigo. No divergence in the momentum, just pure bullishness. A mere 220 pips from all-time highs.
Resistance: 8676/8842
Support: 8090/7925/7714


USDCAD – Poloz punished the currency with his comments of stagnation and rate cuts. The Loonie stopped however on the trend line of the triangle. I doubt that the trend line is strong enough to hold this down but will wait to see as the price action is not something I will get into yet.
Resistance: 11170/11233
Support: 10859/10715

USDJPY – A HHHL seller bar, not much to trade and less to say about it.
Resistance: 105.57/108.35/110.50
Support: 100.62/100/99.80


GOLD – Sellers stepped in again as the threat of war and sanctions disappeared now that Russia has got Crimea back.
Resistance: 1427/1480
Support: 1,265/1,180/1,040


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