Morning Forex Report: USD Bid Ahead Of ECB & NFP’s

Market Commentary  

The USD is broadly bid as US markets rebounded Wednesday, the ADP private payroll report encouraged hopes for a solid payroll reports, although the reading came in below expectations at 190k in August. That said, this has not swung consensus expectations for Friday’s non-farm payrolls which is still at 217k for August.

EUR continues to depreciate. The ADP figure was a little disappointing, but not enough to upset the USD to any degree as it continued to shake off some of the damage done by China’s ongoing stock market woes earlier in the week. The constantly sluggish Eurozone PPI also added to EUR’s woes on Wednesday. There is no shortage of action in the European session today. Eurozone service and composite PMIs will be released alongside Eurozone retail sales. But the key focus will be on the ECB meeting. Markets are not expecting any change to monetary policy but ECB President Draghi will undoubtedly present a more dovish tone and reiterate the possibility for the central bank to take further easing action in future during the press conference. New quarterly staff forecasts for growth and inflation will also be released.

GBPUSD has recovered slightly above the fresh three-month bottom of 1.5265. The UK construction PMI picked up pace and rose to 57.3 in August following the previous month’s reading of 57.1, whilst markets were expecting a reading of 57.5. Today, both service and composite PMIs for August will be rolled out.

USDJPY advanced on Wednesday, benefiting from a slightly improved market sentiment, although the USDJPY pair overall remains under bearish pressure after breaking through the 1.22-figure last week. Markets will now shift their focus to the upcoming non-farm payrolls due Friday as the next directional catalyst.

Technical  Commentary 

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

  • Downside pressure persists bids towards 1.12 support for now but as 1.1240/60 caps intraday upside reactions expect a test of stops below 1.12 to fuel a move down to test last weeks lows of 1.1150 .
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology pierce midpoints from below
  • Monitoring intraday price and Order Flow indicators on a test of 1.12 or 1.1450

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

  • While 1.54 caps intraday upside reactions bears now target a corrective symmetry objective of 1.5210 a failure here will open a retest of psychological 1.50 level.
  • 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 up, Linear Regression pierces midpoint from above, Psychology rolling over to test midpoint from above
  • 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

  • The breach of ascending trendline support at 136 opens a retest of pivotal 134/33 range support a failure here would open 2015 lows.
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression attempting to pierce midpoint from below, Psychology pierces midpoint from below
  • Monitoring intraday price action and Order Flow indicators at 141 and 133

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