Morning Report: Greece Is The Word…

KEY DATA RELEASES TODAY (GMT) :

1015 EUR Eurogroup Meetings

OVERNIGHT:

A fairly quiet start to the week with regards G10 FX and with US markets closed for President’s Day holiday it’s likely to remain so. Overall, the USD is lightly offered. Euro group meeting today will be the major focus for the start of the week. The market took a breather on Friday with the EURUSD trading confined to a 50 pip range around the 1.1400 handle despite a few reasons for Euro to trade up to the upper part of its recent ranges (stronger EU GDP, Weaker US data). Market looking for any short term rally towards  1.15/16 s as a good opportunity to enter new shorts shorts.

USDJPY through the post-NFP lows of 118.30 in early Asia trading with thin conditions noted. Although the pair recovers with domestic names buying, range-trading has ensued amid a weaker than expected Q4 GDP print. This could be looked at in two ways – either the positive effects of a weak JPY has dwindled (failing to boost manufacturing and consumption), or it will eventually lead to further official stimulus if growth remains tepid. Market action seems to hint at the latter, hence adding support to both the Nikkei (which prints fresh multi-year highs through 18030) and USDJPY (to a lesser extent). Risk for now is consolidation as market conviction remains low.

A big week of data to look forward to this week for GBP traders with Jan CPI,PPI, Employment and Retail sales on the slate this week. Tech wise the break above 1.5350 has held well on the back of hawkish comments from BOE member Weale over the weekend, Cable looks set to run up to the initial corrective target around the 1.55 handle although traders should still look to be nimble with plenty of headlines and data providing opportunities.

Looking ahead, there isn’t much on the table for the USD this week apart from FOMC minutes which shouldn’t be earth shattering ahead of Humphrey Hawkins. Hence, quiet weeks like this leave markets very vulnerable to headlines risk, especially with Greece and Russia on the simmer.

PRICE ACTION OVERVIEW:

EUR: While 1.1270 supports focus on 1.17 upside corrective equality target, below 1.12 targets 1.10
GBP: 1.5330 to act as support for correction targeting 1.5450/55. Below 1.52 suggest trend resumption
JPY:  Anticipated final corrective phase in broader bullish consolidation while 117.50 supports expect break of 120.50
CAD: Bullish consolidation continues to develop while 1.22 trendline supports 1.28 next upside objective ahead of 1.30 key resistance
AUD:  0.79 resistance rejects caution on potential double bottom as base for .8050 corrective target.

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullishAwait new signal
GBPUSDBullishAwait new signal
USDJPYNeutral Await new signal
USDCADBullishAwait new signal
AUDUSDNeutralBuy/ 16Feb 0.78 0.8050 0.77Counter-trend

ANALYSIS:

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

  • While 1.1270 holds as support the EURUSD is on track to test a daily corrective equality target at 1.17, below 1.12 suggest early resumption of downtrend
  • Order Flow indicators; OBV consolidates at  lows, Linear Regression and Psychology bullish but no real upside momentum
  • Monitor price action at 1.16/17 or a break of 1.12 to reset short positions to target 1.10

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

  • While 1.5330 holds as support expect test of resistance 1.5450/55 while this caps upside there is potential for downtrend to resume, above 1.55 target 1.58 next
  • Order Flow indicators; OBV ticking up from lows, Linear Regression and Psychology bullish
  • Monitoring price action at 1.5330 for longs to 1.5450/55 corrective target

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish

  • 117.50/118 should act as base now for resumption of uptrend
  • Order Flow indicators; OBV still consolidating below recent highs, Linear Regression and Psychology bearish
  • Monitoring price action at 117.50/118 to set longs to target 2014 highs

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

  • While 1.2350 support holds expect retest and break of 1.28 on route to key 1.30 resistance.
  • Daily Order Flow indicators; OBV retreating from recent new highs, Linear Regression and Psychology bearish
  • Monitoring price action to set long positions targeting 1.30

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

  • 7620 holds as potential double bottom and broader correction targeting .8030/50, below .7620 targets .75 next.
  • Order Flow indicators; OBV ticking up, Linear Regression and Psychology bullish
  • Longs in play will look to reverse at corrective targets to rejoin broader trend

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