Morning Report: Position Pairing Ahead of Greek Drama

Market Commentary

Non-Farm payrolls was the major risk event yesterday but failed to spark any real life into the markets who seemed intent on treading water into the US holiday today and the Greek Risk Event on Sunday.

We are expecting light volume and some position pairing into the weekend due to the Greek Referendum, therefore be wary of any volatility out of this.

Non-Farm payrolls came in slightly below estimates at 223k vs Reuters predicted 230k but continues to point towards potential rate hikes in the US later this year thus the overall story has not changed.

As mentioned yesterday, commentary has temporarily stalled out of Greece due to the referendum on Sunday meaning the ECB will not take any additional action prior to this. Current polls are expecting a yes vote out of Greece to accept the latest proposals from the creditors. There is some doubt as to whether the vote will really proceed but if it does expect news around 6pm GMT on Sunday pre market open.

EURUSD saw a minor bid yesterday with good orders seen at the 1.1071 mark and 1.1060 offering decent support. We closed the day slightly above the majority of orders yesterday, therefore we would expect to see a test of the 1.1074 level at some point during the day. Key will be to watch this par this afternoon (GMT) as we could see participants start to unload their EURUSD positions, squaring them ahead of the Greek risk event on Sunday.

GBPUSD dipped initially to find support at the 1.5560 level, all be it on relatively light volume then closed the day towards its open price. NFP undershoot providing the key support to GBPUSD on slight USD weakness.

Major orders in the pair sit slightly below at the 1.5606 to 1.5609 levels. If we remain above this we could see the pair attempt to test yesterday’s NFP spike high which found sellers at 1.5639.

USDJPY ground higher initially then dropped rapidly on the NFP yesterday only to then find solid support towards yesterdays close with the majority of orders kicking in between 123.05 and 123.00 handle. If support fails at the 123.00 handle we would expect the pair to find additional support at 122.90 before testing lower.

We expect most of the London session to be used for small intraday positions. We expect the US session to be dominated by people pairing positions and risk ahead of the Greek risk event on Sunday. Therefore there are some good opportunities to jump on trends formed out of this situation as long as you can close out before the market close.

Technical Commentary

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

We continue to see strong sellers at the 1.1100 level and despite some support below at the 1.1075 and 1.1083 levels. We continue to remain Bearish this pair.

Daily Order Flow bearish; OBV down, Linear Regression and Psychology.

Strategy: Intraday plays on trends formed out of traders pairing positions could offer some good intraday small profit gains. Look for breaks of the 1.1075 level to offer 10 to 15 pip moves to additional order zones.

2015-07-03 EURUSD

GBPUSD

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

Relatively good support around 1.5605 to 1.5615 which was seen out of the weaker NFP.

Given we are now slightly above the major orders we would use those to provide a clue to how price action will go today although we expect two distinct phases.

Daily Order Flow bearish; OBV down, Linear Regression and Psychology both lower.

Strategy: Use strong rejections of the support levels between 1.5605 and 1.5615 for small intraday longs during the London session then look for position pairing trends into the close for further short term gains. Use tight stops and profit targets on these plays.

2015-07-03 GBPUSD

USDJPY

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

Good support around the 123.00 / 122.90 level, initial resistance around 123.35 / 123.60 then 123.85. If we see good rejections of the key support level not far below, intraday longs could work out well with tight stops, if support fails to hold consider small intraday shorts off of the rejection level.

Daily Order Flow Bearish ; OBV sideways, Linear Regression lower, Psychology lower

Strategy: Monitoring intraday price action, could use any trends on risk pairing for small gains intraday. Use tight stops and profit targets.

2015-07-03 USDJPY

EURJPY

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

Strong sellers seen up to 136.85, initial support at 136.14. Currently we prefer shorts in this pair and prefer looking for intraday rejections at resistance levels for short opportunities. We closed the day under pressure with relative resistance at 136.56.

Daily Order Flow bearish; OBV down, Linear Regression and Psychology bearish

Strategy: Use rejections of the strong resistance level around 136.74 to 136.85 for intraday shorts. Alternatively use themes on position pairing ahead of the Greek risk event for small intraday trades with the trend.

2015-07-03 EURJPY