Market Commentary
Traders are focused on the minutes of the July FOMC meeting due tonight. USD was broadly stronger thanks to housing starts data. While the rise in housing starts was modest, the level is at its highest since Oct 2007.
EUR stayed soft amid a firm USD overnight. ECB cuts ELA to Greece to EUR89.7bn, from EUR90.8bn, at the request of Greek Central bank, citing improving liquidity conditions. On Greek’s 3rd bailout package, Spain voted overwhelmingly to approve (even though it is not required to vote). German parliament is next to vote today.
GBP/USD rose to high of 1.5717 on better than expected CPI inflation data. July core inflation rose to 5-month high of 1.2% (vs. 0.8% prior); this data keeps the BOE rate move story in play as cable edged to a seven-and-a-half year high against a trade-weighted basket of currencies, bolstered by the expectation of UK rate hike. GBP was last sighted at 1.5665 levels this morning.
USD/JPY is inching lower slightly to around 124.38 on dollar softness and as the JPY is sold off against the EUR this morning. Pair is still trading well-within its current 123.80-125.00 range. July trade data release, which showed the trade deficit widening to JPY268.1bn in Jul vs. Jun’s – JPY70.5bn and cons. estimate of -JPY53bn on the back of rising exports of 7.6% y/y and falling imports of 3.2% y/y, had a limited impact on the pair and it appears players are waiting for tonight’s FOMC minutes before positioning.
Technical Commentary
EUR/USD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
- 1.1010/30 buyers emerge at the 50% retracement of the advance from the August lows; while this area contains downside, expect move back to the 1.1110/30 area. A loss of 1.10 threatens a return to range support at 1.08
- Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish but stalling
- Monitoring intraday price and Order Flow indicators on a test of 1.1250 or 1.10
GBP/USD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
- Range trade persists, 1.57 offers and stops above under pressure, a close above 1.57 targets 2015 highs next at 1.59. A break of 1.5550 would embolden bears and refocus attention back on the 1.5285 bearish symmetry objective.
- Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology testing midpoints from below
- Monitoring intraday price action and Order Flow indicators on a test of 1.5550 or 1.5750
USD/JPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish
- Bulls target 125.85 and 128 in extension, primary support is at 124; only a failure at pivotal 122.50 concerns medium term bullish view
- Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology supported at midpoints
- Monitoring intraday price action and Order Flow indicators on a test of 125.85 or 124
EUR/JPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
- While 136.50 caps downside reactions, bulls now target symmetry objective at 141.70; a failure at 136.50 opens a retest of range support at 134/33
- Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish
- Monitoring intraday price action and Order Flow indicators at 141 and 136.50
