Morning Report: EUR Bid As Positions Pared Ahead Of FOMC

Market Commentary  

Commodities continued to be clobbered into the back end of last week as oil lead the CRB to fresh six year lows. Stocks down hard on global macro fears, risk aversion; Clinton talk of doubling capital gains tax concerned US investors; China and Euro PMI misses added to nervousness. US short rates down on release of leaked Fed research doc; staff less optimistic about prospects for economy than the policymakers; see inflation below 2% until at least 2020; September rate hike move priced at 40% chance.

EURUSD meandered around 1.0980 Friday but then the pair dropped to a session low of 1.0924 on the Eurozone PMI. Eurozone manufacturing PMI edged down to 52.2 in July, slightly weaker than expected 52.5, while services PMI dipped to 53.8 against 54.2 expected. After holding the 1.09 level again EURUSD is seen testing above 1.1050 this morning.

GBPUSD traded largely around 1.5510 in early Friday trade, but then the pair took a dive to 1.5465 low after the London traders walked in Friday. Cable remained heavy against the dollar after the release of weaker than expected retail sales as it raised some doubts on the timing of BoE rate hike. As with the Euro, cable regained composure late Friday and is now seen back above the 1.55 handle.

USDJPY traded 123.90s area but still remained heavy above 124 level. The dollar pared its fall against the Yen on Friday as a private gauge on US manufacturing activity in July support the view of steady US growth which would enable the Fed to raise interest rates this year. As we start the week USDJPY is once again testing support at the 123.50 level..

Technical  Commentary 

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

  • Test of the near term symmetry objective at 1.1030/50 is under way, a break here opens 1.1140/60 next. Below 1.0860 implies an end to the upside correction and focus shifts back to bids at 1.08
  • Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology bullish
  • Monitoring intraday price and Order Flow indicators on a test of 1.1040/60 or 1.08

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

  • Third attempt to regain 1.57 fails, a sustained break and close below 1.55  would suggest bearish symmetry target at 1.5285 remains in play a close above 1.57 negates near term bearishness.
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression pierces midpoint from above, Psychology bullish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.5750

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

  • Bulls target 125.85 and 128 in extension, expect intraday downside reactions to be supported towards 123 only a failure at pivotal 122.50 concerns medium term bullish view, failure here opens 120 in retest of ascending triangle trend line.
  • Daily Order Flow bearish; OBV sideways, Linear Regression and Psychology pierce midpoints from above.
  • Monitoring intraday price action and Order Flow indicators on a test of 128 or 122.50

uj2015-07-27 07_30_50-

 

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

  • 133/34 range support continues to hold and price is now testing near term trendline resistance a break here targets a retest of 138, advance above here opens 143.
  • Daily Order Flow bullish; OBV sideways, Linear Regression pierces midpoint from above, Psychology pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 138 and 133

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