Market Commentary
We continued to see US dollar strength throughout yesterday following on from month end themes; however, we did pull back slightly in the Asian session overnight with a minor bounce in euro pairs.
Non-Farm Payrolls is later today, with an expected print of 230k, which is now likely to be the main event of the week. Expect rhetoric around rate hikes to coincide with a hit or miss on the number, but with liquidity driven by Greek headlines, there could be some decent opportunities for further USD buying into the weekend.
Commentary has temporarily stalled out of Greece due to the referendum on Sunday, meaning the ECB will not take any additional action prior to this. Current polls are expecting a yes vote out of Greece to accept the latest proposals from the creditors. There is some doubt as to whether the vote will really proceed, but if it does, expect news around 6pm GMT on Sunday pre-market open.
Beyond NFP, watch for ECB’s Draghi and UK Construction PMI.
US Holiday tomorrow means that we are likely to see some pairing positions into the potential risk events on the weekend, and therefore, we favour intraday plays today, only holding in profit tight stops into the weekend.
EUR/USD saw further weakness yesterday, pushing towards the 1.100 level and the key low set on the 29th of June at 1.0952, although a minor bounce overnight provided some initial relief. We would expect a break below to test the 1.0838 level. We remain Bearish on the pair for the time being, but note the risk event surrounding Greece into the weekend.
GBP/USD dropped yesterday on a lower than expected Manufacturing PMI number out of the UK and a stronger US dollar. We note a major level in GBP/USD at 1.5543 for key support and would expect the pair to test this key level.
USD/JPY has found initial support at the 121.93 level, but has strong head winds above at the 123.81 mark. If we continue to see USD strength into the weekend with the upcoming Greek risk events, we would expect the next major level at 123.81, followed by 124.4. Breaks above these open the door to recent highs.
EUR/JPY continues to show relative weakness at the moment, and we remain Bearish on this pair. A minor bounce overnight with some supportive orders around the 136.16 level offers a good intraday break play. Beyond that, relatively large volume is expected at the 136.88 level, followed by 137.71.
Technical Commentary
EUR/USD
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
We continue to see strong sellers at the 1.1100 level, and this morning, we have seen early sellers just below the 1.1080. Initial supportive bids have been seen around the 1.1051 level, break below eyes low of the day and additional support at 1.1010
Beyond NFP, watch for commentary out of ECB’s Draghi.
Daily Order Flow bearish; OBV down, Linear Regression and Psychology.
Strategy: Intraday plays closing out prior to the weekend. Look for pre NFP breaks of support for small shorts or post NFP breakout plays. Intraday shorts below 1.1040 on strong NFP number, Intraday longs above 1.1080 on weak NFP number.
GBP/USD
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
Relatively light volume until above 1.5680, with strong resistance coming in around the 1.5700 level. Key support comes in at 1.5543. A break of yesterday’s low likely opens up a quick move to this support level.
Daily Order Flow bearish; OBV down, Linear Regression and Psychology both lower.
Strategy: Short Intraday play on weak data UK data or strong US data (NFP). Break below yesterday's low at 1.5587 short to 1.5551, run tight stops to 1.5610
USD/JPY
Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bullish to Neutral
Potential to fill the gap, good support around the 122.90 level, initial resistance around 123.35 / 123.60 then 123.85.
Daily Order Flow Bearish; OBV sideways, Linear Regression lower, Psychology break of midpoint higher.
Monitoring intraday price action around NFP for 123.81 resistance or 121.93 support, breaks eye next key levels.
Strategy: Break above 123.81 on better than expected NFP, target 124.4 initially then trail stops higher. Break below 121.93 on weaker than expected NFP, target 120.82 but lock in profit as early as possible.
EUR/JPY
Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
Strong sellers seen up to 136.85, initial support at 136.14. Currently, we prefer shorts in this pair and prefer looking for intraday rejections at resistance levels for short opportunities.
Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish.
Strategy: Look for key signs of rejection out of ECB’s Draghi comments or NFP print. Look to close out prior to the weekend.
