Morning Forex Report: GBPUSD Short Squeeze

Market Commentary  

With the US offline for Labour Day holidays, European equities were marginally firmer amid ECB’s pledge (last Thu) to do more QE if need arises. FX markets were little changed with USD mixed. On G7 majors, USD was marginally firmer against “safe-haven” currencies.

EUR continues could be caught between a rock and a hard place – dovish ECB (adds to sell EUR on rallies impetus) meets risk aversion (negative equity sentiment sees EUR supported). EUR last seen testing above the 1.12 levels this morning.

GBPUSD reversed nine consecutive sessions of decline overnight; rising to overnight high of 1.5370. There was no known news that saw the move up from 1.5172; while some trading desks attributed the move to positioning adjustment as it may have been oversold ( -700pips) in the short space of nine days. Focus for the week ahead shifts to the BoE meeting and it is likely we see further position paring ahead of the headline risk.

USDJPY remains above the 119 – handle after 2Q GDP print came in better than expected. The Japanese economy contracted by less than initially estimated, falling by 1.2% annualized in 2Q vs. -1.6% in the preliminary estimates and better than market’s -1.8% expectations. At the same time, PM Abe was unchallenged at the ruling LDP elections for the party presidency today and secured his position as prime minister for the foreseeable future.

Technical  Commentary 

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

  • Pivotal 1.11 bids arrest the decline and we now test above 1.12 a close above 1.1250 will ease the immediate downside pressure, with 1.1350 the next upside objective.
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology pierce midpoints from belwo
  • 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

  • Profit taking below 1.52 sparks short squeeze only a close above 1.54 eases immediate downside pressure, while 1.54 caps upside reaction expect drift back towards 1.52. A close above 1.54 targets pivotal 1.5550 again
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish but stalling
  • Monitoring intraday price action and Order Flow indicators on a test of 1.52 or 1.54

gu2015-09-08 07_41_32-

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

  • As 121.50 caps upside bears now target a retest of last spike lows towards 116. Only a close back above 122.50 relieves immediate downside pressure
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology attempting to recapture midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 119 or 122

uj2015-09-08 07_43_21-

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

  • Breach of pivotal 133 range support opens a retest of 2015 lows towards 127 only a close back above 1.35 would reduce immediate bearish pressure, intraday look for 134.50 to cap upside reactions
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology attempting to recapture midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 134.50

ey2015-09-08 07_44_49-

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