Morning Report: Grexit Avoided But Euro Pressured

Market Commentary  

USD was the clear winner overnight after Greece reached a deal over its third bailout plan. Euro fell sharply after initially staging a mini rally up to 1.1200 levels before ending the day almost 1.5% lower. With Grexit fears out of the way in the short term , players began to focus their attentions back on the Fed interest rate hike and the policy divergence story. The price action remains generally muted this morning as the pair consolidates around the 1.1000 handle as we await the US retail sales today which could shape expectations for the Fed lift ­off.

USDJPY posts its strongest three ­day gain since last year’s BOJ­ led rally in November 2014, a testament of the saturation of bearish cross JPY positions in the market. The situation in Greece continues to be the main mover of the pair, and while it has taken a positive turn, it is not out of the woods yet (parliament needs to approve the new bailout package first). Key event today is US retail sales, where a strong print could further push US yields and consequently the USD higher.

Event ­filled session for GBP watchers today, beginning with June CPI data followed by Carney’s testimony in front of the House of Commons Treasury Panel. Cable continues to be directly affected by price movements of the EUR, and the pair aggressively gives back its gains after printing a fresh multi­day high of 1.5590, British government bond prices fell sharply along with US Treasuries as investors flocked to riskier assets following Greece’s debt deal.

Technical  Commentary 

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

  • Continue to oscillate in a contracting range trade with a bearish bias. Downside breach of 1.09 should warrant a quick test of 1.08 bids. Trading condition remain choppy and headline driven.but while 1.1240/60 caps upside reaction expect further downside pressure.
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology rotate around midpoints with bearish bias
  • Monitoring intraday price and Order Flow indicators on a test of 1.13 or 1.08

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

  • While 1.5550 acts as intraday resistance (confirmed with yesterdays rejection candle) bears target a symmetry corrective target at 1.5285, below 1.5285 opens psychological 1.50 next. Over 1.56 opens retest of 1.58
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology bearish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.5550

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

  • Above 123 targets 125.85 next and 128 in extension. Failure at 122 again opens 120 in retest of ascending triangle trend line
  • Daily Order Flow bullish; OBV sideways, Linear Regression and Psychology pierce midpoints from below
  • 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): Bullish – Medium Term (1-3 Weeks) Bearish

  • 133/34 support in range trade, breach of 133 opens retest of 2015 lows while above 138 opens 143
  • Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bearish but attempting to test midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 138 and 133

ey2015-07-14 07_27_19-

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