Morning Report: Draghi & Yellen Speak Ahead of Long Weekend

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
09:00 EUR ECB President Draghi Speaks
09:00 EUR German Ifo Business Climate 108.3 v 108.6
09:30 GBP Public Sector Net Borrowing 7.8B v 6.7B
10:45 GBP MPC Member Shafik Speaks
12:00 GBP BOE Gov Carney Speaks
13:30 USD CPI m/m 0.1% v 0.2%
13:30 USD Core CPI m/m 0.2% v 0.2%
14:30 EUR ECB President Draghi Speaks
18:00 USD Fed Chair Yellen Speaks

OVERNIGHT:

EURUSD squeezed to 1.1181 high from 1.1079 low when London traders came to their desks, but the pair eased to 1.1112 as Greek concerns weighed although reports are suggesting the sides are closer to reaching a deal suggesting a deal should be in place within the next ten days. Eurozone Composite PMI in May was lower to 53.4, worse than the expected 53.9; whereas job creation hit a 4 -year-high, signalling the optimism of corporates towards the economy

GBPUSD was the outperforming currency pair yesterday; GBPUSD surged over 150 pips and hit 1.5699 high on better-than-expected UK retail sales in April. UK retail sales in April rose 1.2 percent MoM against 0.4% expected, the strongest increase since November which has led to a solid bid in UK Gilt yields which supports the cable bounce.

USDJPY traded steadily ahead of the central bank monetary policy decision today. Markets expected that BoJ would keep its asset-purchase plan unchanged as they have done. Trades expect some pre weekend paring of positions and some profit taking in the USDJPY run up. All eyes turn to FED Char Yellen who is due to speak after European markets close today so there is the potential for some added volatility into the close tonight.

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBearish Await new signal
GBPUSDNeutralLong/21 May1.5445 Open 1.5545Intraday signal
USDJPYBullishAwait new signal
USDCADBullish Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • Bids towards 1.1030/60 continue to support expect .1240/60 to cap upside for a second leg of corrective action to ensue for a test of the base at 1.10
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology bearish but attempting retest of midpoint from below
  • Monitoring price action and Order Flow indicators to set shorts against 1.1550

eu2015-05-22 07_25_27-

GBPUSD: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBearish

  • Ascending trendline support at the 1.55 sets potential base for 1.60 attempt, failure here opens 1.5350 before higher
  • Order Flow indicators; OBV ticking up, Linear Regression and Psychology pulling back to test midpoints from above
  • Risk free longs in play

gu2015-05-22 07_28_34-

USDJPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 WeeksBullish
  • While 120.00 supports intraday pullbacks bulls target a break of 122 en route to 124 target. Below 119.50 concerns near term bullish bias.
  • Order Flow indicators; OBV ticks down, Linear Regression and Psychology bullish but rolling over to test midpoints from above
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

uj2015-05-22 07_30_19-

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

  • Descending trendline resistance at 123 arrest the upside advance while this area contains the bulls potential to retest the pivotal 120 level.A break of 123 target pivotal 124.50
  • Daily Order Flow indicators; OBV ticking down, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators at 123/24

uc2015-05-22 08_15_59-

AUDUSDShort Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBearish

  • While .7850 supports downside reactions expect a break of .82 en route to test offers at .83, below .78 invalidates bullish bias and bears target .77 initially.
  • Order Flow indicators; OBV sideways to up, Linear Regression and Psychology bearish but stalling and rotating to test midpoints from below
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8350

au2015-05-22 08_17_30-

 

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