Morning Forex Report: Draghi Doveishness Drags EUR Down

Market Commentary  

ECB President Draghi exceeded doveish expectations, expanding the percentage of outstanding issuance that the ECB can buy from 25% to 33% and sharply lowering inflation forecasts and outlook, EURUSD took out 1.11 falling over a big figure, to trade down to a low of 1.1087. Adding to the doveish read, the decision to downgrade the inflation forecasts and outlook came prior to recent market turmoil.

Attention now shifts to todays NFP a weak print should attract demand in EURUSD on a risk sell off. A strong NFP however should propel Euro to fresh lows and back towards the medium term support between 1.08/1.10

GBP continues to find pressure against the USD as domestic data has shown signs of weakness, The UK services PMI disappointed the market, printed 55.6 in August against the forecasted 57.7, the lowest printing since April 2013

USDJPY remains under pressure, as market caution has increased ahead of the US NFP today. The currency still trades hand in hand with equity performance and hence, the path of least resistance based on price action is to the downside. In USDJPY, 119 is the pivot going into NFP

Technical  Commentary 

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

  • Pivotal 1.11 bids being tested a close below the figure should increase downside velocity enroute to 1.08 range support. Only a close above 1.1250 eases immediate downside pressure. .
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression rejected at midpoint, Psychology pierces midpoint from below
  • Monitoring intraday price and Order Flow indicators on a test of 1.11 or 1.1250

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

  • Symmetry objective of 1.5210 achieved a close below 1.52 emboldens bears for a retest of psychological 1.50 level, a close above 1.54 eases immediate downside pressure
  • Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.52 or 1.54

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

  • As 121.50 caps upside retracements bears now target a retest of last weeks spike lows towards 116. Only a close back above 122.50 relieves immediate downside pressure
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology bearish
  • 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

  • Testing pivotal 133 range support a failure here would open 2015 lows towards 127, a close back above 1.35 would reduce immediate bearish pressure
  • Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish
  • Monitoring intraday price action and Order Flow indicators at 141 and 133

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