Market Commentary
Better than expected ISM Manufacturing PMI data and construction spending overnight sent the USD broadly higher. EUR/USD retreated from 1.0979 and hit a low of 1.0887 before recovering above the 1.0900 handle. Greece missed self imposed deadline for reaching agreement by Sunday contributed to Euro’s continuing weakness. The move is kept contained within 1.0915 and 1.0938 as market prepares to react to signs of deadlock or breakthrough. To the top side, 1.1030/60 pivotal as we enter the week ahead of NFP data and Greece’s IMF payment of 300 million euro on Friday, downside support at 1.0890 and then 1.0830.
Market has focused too much on the US side of things and have ignored the positive developments in Japan the past few days to warrant a stronger Nikkei and USD/JPY. Japan Post has announced a more aggressive investment stance on Friday, and yesterday marked the first day of the implementation of the new corporate governance code (which encourage more growth focused companies who give back to their shareholders). Price action yesterday post US data also indicated the path of least resistance of the pair remains to the topside. 124.50/30 now to be the pair’s initial supports (yesterday’s low of 123.85 key), and anticipate 125.00 (breached this morning briefly) to satisfy as initial pivot for the pair.
GBP continues to trade offered, pressured by residual month end flows GBP dropped to a three-week low of 1.5168 against the dollar after the UK manufacturing sector showed a much slower pace than expected in May. The GBP Market/CIPS manufacturing PMI rose from 51.9 in April to 52.0 in May, but lower than the forecasted 52.5. Cable has traded to a low of 1.5170 overnight, in line with the 50/100 Daily SMAs (currently 1.5162 and 1.5167 respectively).
Technical Commentary
EUR/USD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
While 1.09 bids supports expect test of 1.1050, while offers at 1.1050/70 cap expect retest of last weeks lows.
Daily Order Flow bullish ; OBV sideways to up, Linear Regression and Psychology bearish pierce midpoints from below
Monitoring intraday price and Order Flow indicators on a test of 1.1050
GBP/USD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
Failure at 1.52 opens 1.5050 next while 1.5240/60 caps intraday upside reactions
Daily Order Flow bearish; OBV sideways to up , Linear Regression and Psychology bearish
Monitoring intraday price action and Order Flow indicators on a test of 1.5050 or 1.5250
USD/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
First test of 125 attracts profit taking while 125.50 caps upside expect pullback to 123.50 to attempt base for next leg higher below 122 concerns near term bullish bias.
Daily Order Flow bullish ; OBV sideways to down, Linear Regression and Psychology bullish but stalling
Monitoring intraday price action and Order Flow indicators on a test of 125.50 or 122
EUR/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish.
Retesting the broken ascending trendline from below as this area rejects potential to retest 134 a break here sets retest of highs and potential 138 foray.
Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology bullish but stalling
Monitoring intraday price action and Order Flow indicators on a retest of 133 or 137/138
