Greece: New elections approach
On September 20, Greek legislative elections will be held in Greece. Prime Minister Alexis Tsipras has announced his resignation on August 10. Initially, elections were not due until February 2019. Syriza which was, according to polls, certain of the victory, could now face a victory of New Democracy, another political party. In our opinion, we consider that Alexis Tsipras has failed in his mandate. There is now a clear signal that no country willing to stay inside of the euro can decently negotiate with the ECB.
The debt-to-GDP ratio for Greece has exploded and is over 180%. On the other side, Germany seems the only country that is still able to control its debt. On a medium-term basis, we remain bearish on the EUR-complex as we think that Quantitative Easing will only create a fake sentiment of money flooding in the market which will bring equities up, at least for a while. The impossibility for any country to debase its currency is in our opinion the major issue. The pace of the Eurozone economy is set by the strongest economy, Germany. For the other European countries, the only way to follow this pace is to increase austerity policies.
ECB to stay on hold
Today’s ECB rate decision should of limited relevance for FX traders (in the context of China volatility and NFP). It’s universally expected that policy will remain unchanged. ECB staff macroeconomic projections are anticipated to get downgraded with headline HICP inflation y/y lower to 1.0% from 1.5%. Markets primary focus will be on any indication that QE will be held past September 2016. Lowering inflation projections would be a clear dovish act, inspire plenty of QE forever conversations. However, President Draghi is unlikely to provide real clarity towards QE extension. There certainly will be questions on the filter-through effect of a stronger EUR, yet again we don’t expect any firm disclosures. As for the EUR it remains a funding currency within the G10 and therefore subject to fluctuating risk appetite. Further dovish tone from today’s ECB meeting will only encourage euro sellers. For the EUR/USD we remain bearish focused on the 1.1210 support line ahead of 1.0900 uptrend channel floor.
USD/CAD - Targeting Year-High 
The Risk Today
EUR/USD is now moving in either direction. We consider that we are in a short-term upside momentum. Hourly resistance is given at 1.1332 (01/09/2015 high) and stronger resistance lies at 1.1714 (24/08/2015 high). Hourly support can be found at 1.1236 (27/08/2015 low). In the longer term, the symmetrical triangle from 2010-2014 favored further weakness towards parity. As a result, we view the recent sideways moves as a pause in an underlying declining trend. Key supports can be found at 1.0504 (21/03/2003 low) and 1.0000 (psychological support). We have broken the resistance at 1.1534 (03/02/2015 reaction high). We are entering an upside momentum.
GBP/USD is now targeting hourly support at 1.5171 (01/06/2015 low). Hourly resistance is given at 1.5930 (18/06/2015 high). The 50% Fibonacci retracement at 1.5248 is at stake. In the longer term, the technical structure looks like a recovery bottom whose maximum upside potential is given by the strong resistance at 1.6189 (Fibo 61% entrancement).
USD/JPY is still holding below the 200-day moving average. The volatility has been weak for the last three days. Hourly support is given at 116.18 (24/08/2015 low). Stronger support can be found at 115.57 (10/11/2014 low). A long-term bullish bias is favored as long as the strong support at 115.57 (16/12/2014 low) holds. A gradual rise towards the major resistance at 135.15 (01/02/2002 high) is favored. A key support can be found at 118.18 (16/02/2015 low).
USD/CHF is pushing upward. Hourly resistance is located at 0.9690 (31/08/2015 high) has been broken. Hourly support is given at 0.9259 (24/08/2015 low). On the very short-term term, the pair is setting higher highs. In the long-term, the pair has broken resistance at 0.9448 suggesting the end of the downtrend. This reinstates the bullish trend. Key support can be found 0.8986 (30/01/2015 low)
