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Forex majors analysis – April 2018

April 05, 2018

After the month of March we are now entering the month of April, in which the seasonality produces its effects.

Among the majors we have to report particularly the seasonal statistics of the British pound, the Australian dollar and the Canadian dollar. GbpUsd has risen in 16 of the last 20 years, UsdCad has fallen in 14 of the last 20, AudUsd has risen in 15 of the last 20 years. The market enters this month with various uncertainties related to Trump commercial policies that aim, at least in their intentions, to reduce the American trade deficit. Equity markets do not best interpret this situation with increasing volatility and falling long-term interest rates. Inflation and economic growth would seem to have lost passivity. China itself has decided to raise custom duties against American products. Let's now see in detail the main exchange rates.



Still low volatility for EurUsd that is still swinging between a fairly tight trading range that should soon start moving with more directionality. The ADX indicator and Bollinger bands clarify the concept quite well. When the ADX falls below 15 as it’s happening now, the trend is practically absent; when the Bollinger bands are close to the trading range, we can expect an explosion of volatility coming soon. The approach of the uptrend line continues to favour the long side with the overcoming of 1.25 which represents the natural confirmation of this technical event.



If the seasonality of April will be confirmed, GbpUsd should try and wipe out the resistance of 1,425 which has stemmed the rise in March. The trend has been bullish for over a year and is well guided by an upwardly inclined channel without major excesses. The main support zone represented by 1.37 is evident at a graphical level and any eventual fall from those parts will be taken as a bullish opportunity to return to increase the long exposure on the Cable.



At the beginning of February, a top on AudUsd was hit at 0.81, while March closed on the low of 0.76, a coast to coast that confirms our view of last month that contemplated an Aussie intended to come back on the support of the lower channel of the bullish trend line. Aussie is playing here an important match and the seasonal aspect should avoid to the commodity currency, at least for now, the trend reversal and should close this brief positive parenthesis against a very weak US dollar.



Even for the Canadian dollar, the seasonality of April seems to be providential and this statistical event could send away the Loonie from dangerous levels. UsdCad in fact has come close to 1.32, a transit zone of the bearish trend line in place since 2016. A similar fate to that of AudUsd, UsdCad could now move its perimeter of action lower in April. Between 1.2350 and 1.24 we can find the key short term supports.

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