Morning Forex Report: Traders Tentative, USD Longs Trimmed

Market Commentary  

Traders continued to trim long USD positions yesterday. Currently, USD positioning is the lightest since July 2014 (according to CFTC data) when the USD rally began, as traders are uncertain whether the Fed will hike rates this Thursday.

USD traded sideways amid little data flow overnight. Data flow kicks off today with retail sales, IP and Empire manufacturing today but key focus for the week remains fixated on Thursday’s FOMC.

EUR was a touch softer overnight. EC July industrial production (released yesterday) was better than expected,  surprisingly up 0.7%, came in at 1.9% YoY, much better than the forecasted 0.6%.

GBP edged down from a three week high against the dollar ahead of  some key UK economic data. The UK CPI and PPI data due this morning, expected to come in at zero, which would be supportive of the argument against a move higher in UK interest rates and leave GBP vulnerable to a push lower.

Most markets participants expected the BOJ to maintain the current pace of monetary stimulus as they have. As the BOJ ends its two-day policy meeting today, markets will watch for any signs of further hints towards monetary easing during Governor Kuroda’s presser. Trading on the backfoot USDJPY has dipped below 120 handle overnight.

Technical  Commentary 

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

  • Initial rejection at the upper end of the broader 1.14/1.11 range, offers towards 1.14 cap upside advance look for retest of bids towards 1.1250 next
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bullish but stalling and rolling over to retest midpoints from above
  • Monitoring intraday price and Order Flow indicators on a test of 1.1250 or 1.14

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

  • The close above 1.54 targets pivotal 1.5550 while 1.5350 caps intraday downside reactions expect sustained upside to test 1.5550 offers ahead of 1.57. Failure at 1.5350 opens retest of range lows towards 1.52
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bearish but attempting retest of midpoint from below
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5350 or 1.5550

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

  • As 121.50 continues to cap upside expect retest of 119.50. Only a close back above 122.50 relieves downside pressure
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology rolling over to pierce midpoints from above
  • Monitoring intraday price action and Order Flow indicators on a test of 119 or 122

uj2015-09-15 06_56_41-

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

  • While 135 supports intraday downside reactions expect a retest of range resistance towards 138.50. A failure at 135 would target a breach of 132 next
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bullish but stalling and rolling over to retest midpoints from above
  • Monitoring intraday price action and Order Flow indicators at 138 or 132

ey2015-09-15 06_57_34-

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