Morning Report: EUR Short Squeeze In Thin Summer trade

Market Commentary  

USD, UST’s and equity markets all reverse recent moves; thin summer markets were swayed by obscure US data release; Fed’s annual IP/Cap U revisions shown broadly lower; plants seed of doubt about rate hikes.

EURUSD rebounded over 1 percent from the three-month low of 1.0810 to 1.0969 high due to the dollar weakness. The Greek parliament will vote on two further reforms today: the new bank financing rules and the changes to the country’s civil justice system.

GBPUSD traded in a tight range between 1.5537 to 1.5590, traders will focus on today’s Bank of England minutes for rate hike clues. BoE Governor Carney spoke about rate hike again during US session, however, there was no impact to Cable.

USDJPY lost the 124 handle amid the weakness of the greenback. BoJ governor Kuroda commented that inflation will reach 2 percent target by September 2016 and, he ruled out any immediate expansion in easing, although he reiterated readiness to act if necessary. A slowdown in Japan’s economy is unlikely to continue this quarter while inflation could pick up “quite fast” from the autumn, according to Kuroda.

Technical  Commentary 

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

  • Aggressive short covering triggered as buyers step in to defend 1.08, bears still have the ball while 1.1050 caps the upside reaction, a breach of 1.1070 opens a retest of 1.112.
  • Daily Order Flow bearish; OBV up, Linear Regression and Psychology bearish but attempting midpoint test form below
  • Monitoring intraday price and Order Flow indicators on a test of 1.13 or 1.0760/80

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

  • While 1.57 caps upside a break back below 1.5550 suggests bearish symmetry target at 1.5285 remains in play a close above 1.57 negates near term bearishness and resets focus on the 1.60 upside psych objective.
  • Daily Order Flow bullish; OBV sideways to up , Linear Regression and Psychology pierce midpoints from below
  • 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): Bullish  – Medium Term (1-3 Weeks) Bullish

  • Bulls target 125.85 next and 128 in extension, expect intraday downside reactions to be supported at 123.50 a failure at pivotal 122.50 again opens 120 in retest of ascending triangle trend line.
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology pierce midpoints from above.
  • Monitoring intraday price action and Order Flow indicators on a test of 128 or 120

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

  • Range trade persists, 133/34 range support a breach of 133 opens retest of 2015 lows while above 138 range resistance, opens 143
  • Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 138 and 133

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