Global FX: Traders Sat This One Out

EUR/USD traded steady for much of the session, as did its major counterpart GBP/USD, as market participants chose to sit on the sidelines ahead of the German Federal Constitutional Court (FCC) hearing on Tuesday and Wednesday in regards to the European Stability Mechanism (ESM) and the ECB’s Outright Monetary Transaction programme (OMT). Technical support levels for EUR/USD are seen at the 100-DMA line at 1.3103 and then at the key 200-DMA line at 1.3050. On the other hand, resistance levels are seen at 1.3306/19 and then at the 61.8% retracement of the February to April slide at 1.3341.

GBP/USD
The pair traded in tandem with EUR/USD for much of the session and settled the session in minor negative territory as market participants refrained from committing ahead of the eagerly awaited German Federal Constitutional Court hearing on the ESM and the OMT. Even though the actual vote itself is not expected until after national elections in September, there is a risk that any delay may deter policy makers at the ECB to push for further policy easing until clarity on the above mentioned programs is provided. In terms of UK specific commentary, Chancellor Osborne is expected to use his Mansion House speech in 10 days time to reveal the sale of the state's 39% stake in Lloyds, raising up to GBP 17bln. Shares in Royal Bank of Scotland will be sold at a later date, according to the reports. Also, press reports indicated that the National Employment Savings Trust (NEST) has slashed its investment in gilts to only 2% of its portfolio. The Times reported that Nest is shunning conventional government bonds and other sovereign bonds in the face of the possibility of negative real returns from the asset class. Finally, technical support levels are seen at 1.5384, the 100-DMA line at 1.5336 and then at the 10-DMA line at 1.5332. On the other hand, resistance levels are seen at the 21DMA upper Bollinger level at 1.5566, 1.5690 and then at the 200-DMA line at 1.5705.

USD/JPY
USD/JPY grinded higher overnight, back toward the key 99.00 level, which once broken, opens the door toward the psychologically important 100.00 level as market participants over in Asia reacted to the release of the latest jobs report from the BLS. Also, the latest release of the GDP report surprised to the upside and was partly due to an upward revision in capital spending. Technically, resistance levels are seen at 99.36, which is the Kijun line and the 50% retracement of the 103.74 to 94.98 move. On the other hand, support levels are seen at 97.43, 96.23 and then at 95.40, which is the Ichimoku Cloud base.