Macron’s Government survives by just 9 votes.

Last night a vote of no-confidence was held in France against the Government of Emmanuel Macron. Following the Government’s decision to “force” through a highly unpopular change in the retirement age from 62 to 64 years old, protests erupted leading to clashes between protestors and police forces resulting to arrests being made following the vote as claimed by Reuters. The controversial bill met a lot of resistance with many Unions going on strike in an attempt to “force” the government to change it’s mind. As such fearing the bill would have not passed through the legislative body due to the lack of support, President Macron triggered article 49.3 which allows the Government to force the passage of a bill without a vote unless Parliament votes a motion of no confidence, widely considered the nuclear option and partially undemocratic due to the nature of the article protests erupted all over France. However, following the narrow win in parliament last evening the bill will now go through, effectively raising the retirement age from 62 to 64 in an attempt to curtail the negative effects of an ageing population on the pension schemes. Please note that Macron’s Government invoked the particular article a number of times losing on popularity. Hence we expect the political uncertainty to be maintained in the second largest economy of the Eurozone and thus may weigh on the common currency. Furthermore, ECB President Christine Lagarde was reported stating “The elevated level of uncertainty reinforces the importance of a data-dependent approach to our policy rate decisions”, similar to the rhetoric repeated by the FED potentially indicating that the ECB will place a heavier emphasis on the data thus increasing the uncertainty of its future rate hikes. In addition, we also note that ECB’s Holzman, a known hawk in the ECB watered down his previous call for three more rate hikes adding more dovishness to the bank’s intentions. On the flip side we also note that ECB policymaker Kazaks implied that the bank may not be over hiking rates yet. Overall though we see doubt about ECB’s hawkish intentions settling in and the balance of power within the bank shifting towards a more cautious approach a scenario that could also weigh on EUR. This morning during the Asian session we note the significance in the discussion of the RBA minutes in which “Members agreed to reconsider the case for a pause at the following meeting”, implying the impact of high interest rates are being felt and the comment may weaken AUD. Lastly we note the meeting that took place yesterday between President Xi and President Putin in which Putin is quoted by the BBC saying “We’re always open for a negotiation process,” Implying that Russia may be feeling the effects of international sanctions as such and may wish to finish the war sooner rather than later. The meeting may ease tensions in the international relationships, which could support the Aussie. 

GBP/USD failed to test resistance at 1.2300(R1). Despite this, we maintain a bullish outlook for the pair as it continues to validate the upwards moving trendline, in addition to the RSI figure remaining above 70. For our Bullish outlook to continue we expect 1.2300 (R1) level to break paving the way for the 1.2395(R2) level. If the Bears take control of the pair breaking the upwards trendline then the pair may test the 1.2040(S1) support line and if broken may allow a testing of the 1.1945 (S2) level.

USD/JPY continues in a downwards trajectory, as such we maintain a bearish outlook for the pair if it continues to validate the downwards moving trendline, in addition to the RSI figure remaining close to 30. For our Bearish outlook to continue we expect 130.40 (S1) level to break paving the way for the 128.90(S2) level. If the Bulls take control of the pair breaking the downward trendline then the pair may test the 134.65(R1) resistance line and if broken may allow a testing of the 137.55(R2) level.

Other highlights for the day: 

For the European session we await the release of Germany’s ZEW Economic Sentiment and Current Conditions for March,President Lagarde’s recorded panel discussion ,Camp’s and Enria’s speech in the afternoon. During the American session we note IMF’s Georgievas speech,US Existing home sales figure for February,Weekly API Crude Oil inventories,Canadas Core CPI yoy&mom for February and Retail sales for January.Please note the release of New Zealand’s milk auction figures for March.

USD/JPY H4 Chart

Support: 130.40 (S1), 128.90 (S2), 127.05 (S3)

Resistance: 134.65 (R1), 137.55 (R2), 139.45 (R3)

GBP/USD H4 Chart

Support: 1.2040 (S1), 1.1945 (S2), 1.1860 (S3)

Resistance: 1.2300 (R1),1.2395 (R2), 1.2480 (R3)

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