Market Commentary
USD mixed as cross-asset correlations scrambled, although there was decent USD buying into the month end fix. Broadly, EUR was down, as Greece makes another last ditch attempt for last minute deal. DAX ends at new lows for the recent move. Chicago PMI below 50 for 2nd month, US rates ease. Hilsenrath WSJ article warns on global impact of slowing China, seen as mouthpiece for Fed. Fed rate hike odds slip further as international trouble spots grow, which keeps USD picture uncertain.
EUR/USD opened in Asian trade at lower levels, retesting bids towards 1.11. Wire reports from various Greek sources continued to keep traders cautious of establishing large positions ahead of this weekends referendum, especially after the whipsaw gap price action witnessed at the beginning of this week. Most players are sidelined until we get clarity on the Greek situation.
USD/JPY has struggled to gain any meaningful upside traction in the current risk off environment. JPY has been one of the main beneficiaries from the recent turmoil in asset markets. If we see some stabilisation in global equity markets, we would expect that to translate into some near term upside for the USD/JPY. 122 remains the line in the sand for most USD/JPY bulls.
GBP/USD remained supported, buoyed by the upbeat UK GDP beat. Month end flows in EUR/GBP also helped keep cable above the key 1.5650 support level. All eyes turn to manufacturing PMI data today.
Technical Commentary
EUR/USD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
- Bulls failed to secure the 1,13 handle on the squeeze from Mondays lows. Attention shifts back to pivotal 1.1050, while 1.1280 caps upside reactions. Contracting range trade persists with significant headline risk ahead
- Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish, but attempting midpoint test
- Monitoring intraday price and Order Flow indicators on a test of 1.16 or 1.1050
GBP/USD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
- 1.57 survives again on a closing basis, as 1.5830/50 caps upside reactions; expect test of primary trendline support at 1.5550; above 1.5850 opens retest of highs and 1.60 beyond; below 1.5550 opens 1.5350 next.
- Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology pierce midpoints from above.
- Monitoring intraday price action and Order Flow indicators on a test of 1.5550 or 1.6010
USD/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
- 122 pivotal support, while 122.50 contains downside expect test of 125; failure at 122.50 opens pivotal 122 and the 121 corrective equality target below, while 125 caps upside expect test of 122, above 125 targets 127/128 next
- Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology continue to rotate around midpoints with bearish bias
- Monitoring intraday price action and Order Flow indicators on a test of 128 or 122/21
EUR/JPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
- 133/34 supports now retesting of broken trendline support from below towards 138; above 138 reopens 141.75 initial upside objective. While 138 contains upside, expect retest of 134/33
- Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish
- Monitoring intraday price action and Order Flow indicators at 138 and 133
