Asian stocks trade lower this morning. Among the major indices, Hong Kong's Hang Seng is down 177.21 points or 0.74% to 23632.90, Japan's Nikkei is down 155.12 points or 1.46% to 10434.38 and China's Shanghai Composite is trading 46.46 points or 1.55% lower at 2955.21. The broader measure of stock markets in the world, Global Dow, is down 9.78 points or 0.45% to 2172.80 at 07:13GMT. The most attention grabbing piece of major news is the aggressive 0.5% interest rate cut by the Reserve Bank of New Zealand at 22:00GMT last night. The NZD is sold heavily this morning along with other commdollars, CAD and AUD. The USD and JPY are the largest benefactors of today's reduction in risk appetite. Among other news was China's weak February trade balance, the data weighs on the emerging Asian currencies and currencies of the countries whose economy is dependent on commodities exports to China, such as Australia, New Zealand, and South Africa.
    The FX market is following the lead from the equity markets as traders are embracing safe-haven unit, the USD and the Japanese yen. The EUR is taking the brunt of the flight-to-safety consequence. The single currency is not helped by the Moody's downgrade of Spain's credit rating to Aa2 with a negative outlook, meaning another downgrade in the next eighteen months is likely. On top of that, German trade balance for January printed 1.4 billion euro below expectations and declined by €2.4 billion from December. The euro bulls aren't having a good time this morning as all the possible data is working against the EUR. The lead pair EUR/USD trades at 1.3816, or 0.61% lower. The EUR/JPY is at 114.47, 0.63% lower, EUR/CAD is at 1.3408 or 0.44% lower. We aren't glad to see the euro bulls suffer, but do take pleasure that our short view on the euro which has been expressed over the past several days is gaining traction. Specifically, the EUR/JPY short recommended two days ago, hit our take profit target this morning.

Traders today will watch the U.K. Manufacturing Production due at 09:30GMT, Canada's and the U.S. Trade Balance reports due 13:30GMT and the U.S. Unemployment claims also due at 13:30GMT. At the wee hours, 02:00GMT, Chinese CPI comes in with a potential to move markets. Higher than expected print in inflation might raise fears of more monetary tightening in China and give another boost to risk-aversion and the USD.





    

Technical Views                      
EUR/USD

 
The EUR/USD will likely retreat to the 20-day MA at 1.3754 if the USD breaks the high of February 23 at 1.3786. The overall longer term picture is constructive however as the rate differential argument is here to stay. Technical picture is still neutral at the moment with the MACD flat. However, RSI study is pointing in the downward direction and a fall below 50 by the RSI may bring on fresh EUR sells.
Daily Support/Resistance Levels:
Support 3    Support 2    Support 1
1.3776    1.3815    1.3862
Resistance 1    Resistance 2    Resistance 3
1.3948    1.3987    1.4034


 


 




GBP/USD

 

The GBP/USD fells through the major support of the mid 20-day Bolli band, currently at 1.6182 and the pair is at 1.6147. Today's session is the key in the sterling's direction further. A closure below 1.6182 will likely encourage more USD bulls to step in and take the pair to 1.6000. If sterling recovers later today and closes above the mid Bolli band, the upper Bolli band will turn into a target, currently at 1.6346.

Daily Support/Resistance Levels:
Support 3    Support 2    Support 1
1.6040    1.6088    1.6145
Resistance 1    Resistance 2    Resistance 3
1.6250    1.6298    1.6355















USD/JPY

 

The technical picture is neutral. MACD is working out a bullish cross along with the RSI fighting to establish its place in the positive territory. The key is the 20-day moving average at 82.68. Should the USD cement a place above the 20-day MA it'll head towards 84.00. Aggressive players might go long here with the top Bolli band at 83.92 as a target.

Daily Support/Resistance Levels:
Support 3    Support 2    Support 1
82.20    82.38    82.56
Resistance 1    Resistance 2    Resistance 3
82.92    83.10    83.28















USD/CAD

 

The CAD is losing its gaining momentum although it still looks strong and is comfortably above the oversold area with the RSI reading at 35.48. At the moment, the USD's best case seems to be a possible recovery to the February 28th high at 0.9790, and only a convincing break of that level will remove the focus from the downside which targets 0.9684 March 1st low and if that gives a way to the CAD, further targets are psychological levels of 0.9600 and 0.9500. The bias here remains lower, albeit in the last seven sessions the CAD's momentum has been spent stuck in a rot and might seed doubt among the Loonie bulls.

Daily Support/Resistance Levels:
Support 3    Support 2    Support 1
0.9616    0.9641    0.9663
Resistance 1    Resistance 2    Resistance 3
0.9710    0.9735    0.9757