Morning Forex Report: Central Bank Bait And Switch Continues

Market Commentary

The Central Bank bait and switch continued yesterday, as Central Bank heads try to dial down expectations on both ends of the spectrum, last week we had a doveish Yellen followed by hawkish comments from members over the proceeding days. Yesterday was the ECB’s turn with President Draghi failing to deliver on the promise of the doveish comments from members of the Council in the early part of the week.

EURUSD recovered to a daily high of 1.1213 during New York trading after Mario Draghi’s statement saying more QE would be possible if needed, but it was too early to decide. Traders were speculating that the Central Bank would want to stimulate the economy more due to higher risk of a global slowdown, especially after the doveish comments from ECB officials since Friday.

GBPUSD traded as low as 1.5218 its lowest levels in over two week, weighed by bearish trading in the crosses EURGBP and GBPJPY providing the bulk of the pressure. Domestic data continues to disappoint, figures released showed that the Britain’s public finances deteriorated last month.

USDJPY dropped to this week’s low of 119.63 yesterday before recovering the 120 handle again, The Nikkei came back online for the first time this week posting 2.6% losses into the close weighing on the USDJPY which continues to rotate around the 120 level. Japan’s target of achieving 2 percent inflation by next September may be delayed as China’s economic slowdown affects the price of oil and other natural resources, according to Nishimura, the nation’s deputy economy minister

Technical Commentary

EURUSD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

Expect offers towards 1.1250 to cap the coorective price action from yesterdays 1.11 test, while 1.1250 resistance is respected expect rotation back to retest stops below 1.11 en route to pivotal 1.1050 support. A close above 1.1250 opens 1.1350 symmetry objective as the next upside hurdle.

Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish but lacking downside momentum attempting retest of midpoints from below

Monitoring intraday price and Order Flow indicators on a test of 1.1050 or 1.1250

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GBPUSD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

Continues to trade sub 1.53 support while 1.5350 acts as resistance expect a move back to test bids towards September lows in the 1.5150’s

Daily Order Flow bearish; OBV down to sideways, Linear Regression and Psychology rejected at midpoint test from below

Monitoring intraday price action and Order Flow indicators on a test of 1.5150 or 1.5350

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USDJPY Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish

Range trade persists while bids towards 1119.50 continue to support the price action expect a rotation back towards the 121.50 range resistance, a breach or range resistance target pivotal 122.50 next

Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology rotating around midpoints

Monitoring intraday price action and Order Flow indicators on a test of 119 or 122

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EURJPY Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish

Expected rotation back to test 132 attracts buyers on the initial test. While 132 supports there is potential to retest 135 offers, failure at 132 solidifies bearish tone and targets 2015 lows next

Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology bearish but lack downside momentum

Monitoring intraday price action and Order Flow indicators at 135 or 132

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