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MUFG Research discusses USD/JPY tactical outlook and adopts a slightly bearish bias for the week ahead.

"There is strong uncertainty about what lies ahead. USD/JPY could easily come under downward pressure. But the lower bound for USD/JPY is firm, given the shrinking trade surplus and Japanese investor’s strong JPY selling flows.

All in all, we expect a slight downward USDJPY bearish bias," MUFG notes. 

AUD/USD will probably revert to gains even though its retreat from three-week highs hit after the surprisingly dovish Fed projections [nL1N2171MY] and unexpectedly strong Australian unemployment will disappoint bulls in the short term. The daily cloud top capped the rally and the ensuing slide nL1N2180UU, aided by Brexit uncertainties driving GBP/USD toward 1.30, has the pair threatening to trade below the 21-DMA.
But, the market's view of the monetary policy backdrop favors AUD/USD bulls and a test of the 200-DMA and January high. U.S.
interest rate futures rallied sharply after the Fed, with March 2020 Eurodollar prices rising above trend-line resistance from 2016's high.
The U.S. short-term interest rate market contradicts the Fed's view of no 2019 hike and one hike in 2020.
Eurodollars and fed funds pricing now suggest Fed rate cuts are due in either Q1 or Q2 of 2020.
Those expectations should keep the U.S. dollar on the defensive, especially since positioning remains long the greenback.
The market also remains net-short aussie.
The combination of potential Fed cuts and position adjustments should limit AUD/USD's downside.
As long as key support near 0.7000 holds buying AUD/USD dips might be preferred going forward.

• Cable tests 1.3005 (March 12 low) after extending south from 1.3226
• 1.3226 was early Europe high, as continent digested dovish Fed steer
• GBP is suffering due to heightened fears of a "no-deal" Brexit
• It is expected that MPs will reject May's Brexit deal via "MV3" next week
• JP Morgan sees UK general election more likely than approval for May's deal
• See: nL1N2180Q4. GBP will take a fresh hit if a snap election is called

ING discusses EUR/GBP technical outlook and flags the 0.8630-0.8690 area as a key for the next near-term direction.

"The short-term strength is not a real surprise as we expected a continuation of the consolidation after the trend change below the 0.8690-0.8630 support area. Prices closed above the steep falling trend line and the first horizontal resistance, both around 0.8630, yesterday," ING notes. 

"Prices are currently nearing the next strong resistance area at the declining MA-50 line and horizontal line, both around the 0.8690 area. This still suggests a pull-back towards the former breakout area 0.8630-0.8690 before turning lower again.

A close above the horizontal resistance around 0.8690 suggests further upside, but a test of the declining EMA-200 line at 0.8804 still suggests the development of a lower top," ING adds. 

The Fed has abandoned any plans to raise rates this year nW1N20H00I, and that helped EUR/USD register its biggest one-day rise since Jan.
25.
Bulls broke above the 1.1420 Fibonacci, a 61.8 percent retrace of 1.1570 to 1.1177 (EBS) fall.
A close above the 1.1420 Fibo will unmask the 2019 1.1570 peak, set in January and expose stubborn EUR/USD shorts.
In the week ended March 12, the futures market was short an equivalent EUR/USD cash position of 9.5 billion euro, down from 9.8 billion euro the previous week, IMM data showed.
However, EBS flow data since March 12 shows many of those euro shorts may have been re-established, even as EUR/USD rose in reaction to the Fed-inspired slide in the dollar.
That means associated buy stops remain vulnerable to a even greater EUR/USD recovery.
Many of those buy stops are likely be clustered above the 1.1477 Fibonacci level, a 76.4 percent retrace of the same 1.1570-1.1177 fall.
Related nL1N21801R.

MUFG Research discusses GBP outlook in light of the latest Brexit vote developments.

"The recent pound sell off has been triggered by the outlining of both the EU’s and UK’s demands for an extension to Article 50 beyond the end of March. Prime Minister May has chosen the higher risk option of asking for just a short extension until the end of June...At the same time, the EU have clarified that they would be open to a short extension but only if PM May is able to pass her Brexit deal," MUFG notes. 

"The best outcome for the pound in the near-term would be if the intensified pressure proves successful in passing a Brexit deal by the end of this month. It could lift cable lift towards the 1.3600 level and lower EUR/GBP further below the 0.8500-level....

However, the odds currently do not look good for such a favourable outcome. It is more likely that MPs will continue to reject PM May’s Brexit deal, and then both the UK and EU will have to more seriously weigh up the alternative options of a “No Deal” Brexit or a longer extension to Article 50. The heightened risk of a “No Deal” Brexit could see cable briefly fall back towards the 1.3000-level and EUR/GBP rise back towards the 0.8800-level in the week ahead," MUFG argues. 

• AUD/USD retreat to 0.7137 influenced by some profit-taking on long positions
• 0.7137 = low since three-week high of 0.7168 in Asia nL1N21803Q
• 0.7058 was Wednesday's low, before dovish Fed negatively impacted the USD
• Wednesday's high was 0.7150 (after Fed). 0.7113 = subsequent pullback low
• U.S. weekly jobless claims and Philly Fed survey due 1230GMT
• AUD/NZD fell to one-week low of 1.03 in Asia after NZ GDP data nL3N21753S

• After USD/JPY's big drop on Wed sparked by Fed, bears tighten grip on Thurs
• Thurs is Tokyo holiday (Vernal Equinox), meaning thinner market conditions
• USD/JPY biggest drop since Jan overcomes 30-DMA, key Fibo next nL1N218049
• On Thursday USD/JPY has seen a drop from 110.74 in Asia to hit 110.30 in Ldn
• USD/JPY longs continue to exit the market according to EBS flow data
• USD hurt by Fed, 200-DMA now key to its direction nL1N21804R, nL1N21801R

• Wed's significant lift almost closed a retracement gap to 0.8679, Mar 11 hi
• Marginally softer Thurs bias could suck in bargain hunters
• Positive 14-day momentum fading slightly but stochs are climbing hard
• Both are confirming the run up from 0.8473 Mar 13 low
• Buying into shallow dips favoured for a move above 0.8700
• A hammer (bullish) is forming on the monthly chart nL1N21708Q

• AUD/USD back to 0.7145 after making 0.7168 high post-jobs data nL3N21801G
• Australian yields also slip back to pre-jobs data levels as US yields weigh
• Resistance is at 61.8 Fibo at 0.7184 and major res. at 200 DMA at 0.7217
• Techs support for now, support seen at 10 and 21 DMAs at 0.7090/96
• Close below 0.7090 would turn outlook bearish again target Weds low @ 0.7057
• Fed worries may weigh on AUD going forward nL3N217583 nL1N2171L8

• EUR/USD consolidating between 1.1412/37 in Asia after solid post-Fed gains
• Pair likely to remain bid as market processes Fed's dovish shiftnL1N218003
• Resistance @ post-Fed high @ 1.1448 with break targeting 200-day MA @ 1.1479
• Key will be reaction in Bund yields to large fall in US Treasury yields
• Key support around 1.1365 where the 55 & 100-day MAs converge

• NZD/USD continues firm tone established after NZ GDP nL1N2171Z4
• Trading above trend-line formed from June 06 last year (0.6915)
• Currently testing 200-week MA at 0.6936
• Next resistance at Feb 02 top at 0.6942 and Dec 4 trend high at 0.6969
• Break above 0.6970 targets 61.8 of 0.7437/0.6424 at 0.7050

EUR/USD: Neutral (since 21 Aug 18, 1.1485): Vastly improved momentum suggests EUR could attempt to move to 1.1515.

We indicated on Tuesday (19 Mar, spot at 1.1335), “looking ahead, the prospect for a break of 1.1380 first is slightly higher but in view of the current lackluster momentum, any advance is expected to struggle to move beyond the next major resistance at 1.1420 (the late-Feb peak). While our anticipation for EUR to break above the sideway-trading range was correct, the pace and extent of the rally that blast past the strong 1.1420 level was unexpected (note that EUR registered the largest 1-day gain since late-Jan and closed at a 6-week high). The question now is whether EUR can extend its gain in the coming days. In view of the vastly improved momentum, it appears that EUR should least attempt to move towards the late-Jan peak of 1.1515. What is less clear at this stage is whether EUR can move above this level in a sustained manner. Scanning the longer-term chart, a sustained break of 1.1515 would suggest EUR have made a significant bottom at 1.1174 earlier this month. Meanwhile, EUR is expected to stay underpinned (do not see any strong reason to fade the current rally) until the ‘key support’ at 1.1330 is breach.

GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP is expected to trade with a positive bias.

GBP is about the only ‘loser’ against USD as it dropped to an overnight low of 1.3147. The low is not far above our 1.3130 ‘key support’. As long as the ‘key support’ is intact, we would hold on the view that “GBP is expected to trade with a positive bias” (same view since last Thu, 14 Mar). That said, the prospect for such a scenario has clearly diminished. In order to ‘revive’ the current rapidly waning momentum, GBP has to move and stay above 1.3270 within these few days or a break of 1.3130 would not be surprising.

AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is expected to advance further but 0.7200/20 zone is expected to offer solid resistance.

After trading in a relatively quiet manner for several days, AUD was jolted awake and surged to a high of 0.7150. While upward momentum has picked up strongly, there are several strong resistance levels and for now, it is not clear whether AUD can surmount these formidable levels. All in, we expect AUD to advance further in the coming days but expect 0.7200/0.7220 zone to offer solid resistance. If AUD can break through this zone, it would greatly increase the odds for a move to the year-to-date high near 0.7295. To put it another way, we hold ‘positive’ view in AUD now and only a break of the 0.7070 ‘key support’ would indicate the current upward pressure has eased.

NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD to strengthen further, break of 0.6942 would shift focus to 0.6970.

We have held the same view since last Tuesday (12 Mar, spot at 0.6835) wherein we expected NZD to trade sideways within a 0.6750/0.6885 range. Over the past couple of days, we warned that “the prospect for a break of 0.6885 first appears to be higher but in view of the lackluster momentum, any gain is expected to struggle to move beyond the solid resistance zone of 0.6805/20”. Instead of ‘struggling’, NZD blast past the 0.6805/20 zone and soared to an overnight high of 0.6828. From here, we expect NZD to move above the 0.6942 top seen in early-Feb. A break above 0.6942 would shift the focus to 0.6970, the high in December last year. The high in December is a significant mid to long-term resistance and a break of this level would suggest NZD could advance further in the months ahead. We would revise our current ‘positive’ view on NZD if there were a break of the ‘key support’ at 0.6845.

USD/JPY: Neutral (since 09 Oct 18, 113.10): USD to stay on the defensive but expect solid support at 110.00.

Our expectation that “the bias for USD is tilted to the upside” is proven wrong as it plummeted overnight and cracked the 110.80 ‘key support’. While the impulsive drop has shifted the immediate risk to the downside, it is premature to expect a sustained decline. That said, we expect USD to stay on the defensive but any weakness is expected to encounter solid support at 110.00 (minor support at 110.30). On the upside, a break of ‘key resistance’ at 111.35 would indicate the current weakness has stabilized.

• Shade softer in Asia after yesterday's GBP/Brexit led 1.1% bounce
• EU to accept short Brexit delay, if May's deal wins vote nL8N2176SB
• Topside breakout leaves momentum studies rising, 5, 10 & 21 DMAs base/climb
• Turns the daily chart bullish with a base in place at the 0.8472 March low
• 0.8679 March high break would target a test of 0.8713, 38.2% of 2019 fall
• NY 0.8590 low and today's 0.8662 Asian high initial support/resistance

• AUD/USD pushing higher after Aus Feb unemployment eased to 4.9% from 5.0% nS9N1ZZ00O
• Resilient jobs sector likely to keep RBA side-lined in short-term at least
• AUD/USD edged above 100-day MA at 0.7160, but no follow-through
• Next resistance at 61.8 of 0.7295/0.7003 at 0.7182
• US/China trade deal uncertainty/global growth concerns likely to limit rally
• Very strong resistance eyed at the 200-day MA at 0.7216

• +0.1% in Asia, as NZD +0.4% leads the USD lower after GDP nL1N2171Z4
• Strong close - +0.5% on dovish Fed and EUR/GBP demand nL1N21722Z
• Leaves a positive setup, as momentum studies, 5, 10 & 21 DMAs climb
• Targets a test of 1.1477/79, 76.4% 2019 fall and 200 DMA, capped since May
• 1.1400 1.7BLN strikes support and 1.1415-30 1.3BLN may prove sticky in Asia
• Asian 1.1412 low and NY 1.1448 high are initial support/resistance

• AUD/NZD fell to 1.0300 after details of NZ Q4 GDP were positive
• Data may curb dovish RBNZ expectations in the short-term at least
• Aus employment up next, as RBA expectations have become decidedly dovish
• Soft Aus jobs report would intensify dovish RBA outlook and pressure AUD/NZD
• Support at March 13 low @ 1.1294 & break targets Sept 2016 low around 1.0235
• Resistance at the 21-day MA at 1.0378 and break suggests bottom in place

Societe Generale Research discusses GBP outlook and sees a scope for the pound to stay offered on an increasing demand in GBP puts as the clock ticks on another meaningful Brexit vote.

"Last-minute Brexit nerves? The press tells me that UK PM May is seeking a short extension to the Brexit timetable. The EU insist that they will only consider an longer extension only if there's a good reason, such as a new election, cross-party initiative, or a new referendum. The market still thinks that an extension and a deal is the most likely outcome, and that a new referendum, with a vote to stay in the EU, is slightly more likely than a no-deal exit," SocGen notes.

"Vol has fallen and the pound has risen in recent weeks. A bout of nerves as the clock ticks down may create demand for GBP puts," SocGen adds. 

• EUR/USD's 1.1175-366 March rebound has major resistance in sight
• But first must close above 100-DMA at 1.1367 to extend its rise
• Feb 28 peak, 61.8% of Jan-Mar drop & 38.2% of Sep-Mar drop @1.1420
• Bit o/b on daily Slow Stochs so 1.1420 hurdles a bigger ask now
• Need a 1.1420+ close to end 2019 series of lower highs and lows
• If done, the 200-DMA, last at 1.1480, is the next target
• Limited breach of 61.8% of 2017-18 rise at 1.1186 bolsters bulls

• GBP/USD 1.3175-1.3200 on Brexit headlines, 1-wk/3-mos vol drifts higher
• PM May & EU's Tusk, discuss May's proposal, Tusk- short extension possible
• Tusk: June 30 deadline has merits, conditional on supt from House of Commons
• May: talks w/DUP ongoing, expects to discuss Art 50 extension at w/EU Thurs
• No deal: Risks of a GBP collapse are much greater nL1N2170F7
• UK to debate Brexit plan Monday nS8N20F037 See nB5N1XP04W & nL8N2175CP