Busy data slate this week, with focus on US data and Fed Speakers. Fed Evans and Fed Williams are scheduled to speak today before Fed Yellen and Bullard speak on Wednesday. Pre-Yellen moves tend to favour the USD in recent sessions. With the Fed still data dependent, eyes are on inflation indicator PCE Core (Aug) on Monday and Sep NFP on Friday as well as Fed speakers this week. Aug PCE will be out today and consensus expects price pressure to steady around 0.1%m/m. Any upside surprise could be USD positive.
EUR maintains its status as a funding currency of choice. Price action continues to suggest that the inverse relationship between risk assets and EURUSD still hold. EUR ended the week on a back foot amid broad USD strength.
GBP traded a low of 1.5136 (Fri) amid broad USD strength, BOE Economist’s comments that next move may be rate cut not hike (continue to spook GBP bulls) and worries of further government borrowing to finance budget deficit. To be clear on the last point – In Aug, UK reported its widest budget deficit in 3 years due to a fall in self-assessment tax receipts. But this decline was due to some seasonal issues.
USDJPY rallied to 121.24 towards the end of last week, lifted by the gains in risk appetite and rising expectations for BOJ to add to its easing measures. Growing market view is for the BOJ to add to its easing measures given the lack of inflationary pressures and sluggish growth
EURUSD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
While 1.1150 caps intraday upside look for a test of stops below the figure and ultimately a test of pivotal support at 1.1050. An upside breach of 1.12 opens a retest of range resistance at 1.14
Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology rotating at midpoints
GBPUSD Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
Bids below 1.52 eroded. While 1.5250 caps intraday upside reactions expect test of key 1.5150 support failure here opens psychological 1.50 next
Daily Order Flow bearish; OBV down , Linear Regression and Psychology bearish
Monitoring intraday price action and Order Flow indicators on a test of 1.5150 or 1.53
USDJPY Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
Offers hold firm ahead of range resistance at 121.50 today, while 119.50 supports intraday downside reactions expect another test of offers at 121.50
Daily Order Flow bullish; OBV sideways, Linear Regression and Psychology and Psychology rotating around midpoints
Monitoring intraday price action and Order Flow indicators on a test of 119 or 122
EURJPY Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
135 offers contain the upside reaction, expect a rotation back to 132. A close above 135 opens a retest of offers at 137 next
Daily Order Flow bearish; OBV sideways, Linear Regression and Psychology bullish
Monitoring intraday price action and Order Flow indicators at 135 or 132