Morning Report: USD Bid As Another Greek Deadline Looms

KEY DATA RELEASES TODAY (BST) :

10:00 EUR German ZEW Economic Sentiment 55.6 v 54.8
10:00 EUR ZEW Economic Sentiment 63.7 v 62.4

OVERNIGHT:

A combination of the recent reduction in rate divergence and the ever looming tape bomb potential from the Greece debt repayment scenario appear to have left a number of intraday players jittery and reluctant to express any meaningful views in the market. Market continues to expect USD performance overall and with the recent position adjustment continuing to favour selling rallies with a keen eye on the notable 1.0880 resistance level which is seen as key in the near term.To the downside focus is on 1.0660/20 as support which is pivotal for further downside gains. Little in way of data today with main event being ZEW survey this morning.

Those brave (or rather, patient) enough to catch the falling knife last night were rewarded… Risk sentiment remains buoyant, and it felt like some players were caught on the wrong side at bad levels. USDJPY closes back above the pivotal 118.95 level (which should be the initial support today). Market remains bullish, although the market and USDJPY implied vols still suggest topside is limited from here however. 119.60/70 should serve as the pair’s initial resistance.

Greek concerns continue to weigh on the EUR and the GBP, and GBPUSD continues its drift lower from the 1.5000 handle late last week. Market maintains a bearish bias, although mindful of the rather tepid behaviour in spite of the national elections only being weeks away. Retail sales and BOE minutes will be the key catalysts to watch for this week. Levels to watch from here: 1.4860 initial support, followed by 1.4810… Topside at 1.4935 initially, followed by 1.4980

PRICE ACTION OVERVIEW:

EUR: 1.0620 key support for further corrective upside failure here suggest downside trend resumption targeting year to date lows
GBP: Below 1.4840 revives bearish bias
JPY:  While 118.30 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: 123.50 former support now becomes key resistance second close below here forewarns further downside
AUD:  While .7860/80 contains upside anticipate third test of key .7550 failure here opens the  bearish target of .72, above .7880 alleviates downside pressure

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDNeutral Await new signal
GBPUSDNeutralAwait new signal
USDJPYNeutralLong/Apr 19 118.90 Open 118.90
USDCADNeutral Await new signal
AUDUSDNeutralAwait new signal

ANALYSIS:

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

  • Watching 1.0730 on a 240min closing basis a close below  opens up a test of key corrective base at 1.0620 failure here suggests trend resumption with year to date lows next objective. While 1.0730 survives on a closing basis still potential to retest last weeks highs.
  • Order Flow indicators; OBV ticking down, Linear Regression pulling back to test midpoint form above, Psychology bullish but stalling at elevated levels
  • Monitor price action and Order Flow for shorts positions targeting 1.0460 initially and 1.0240

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

  • 1.4840/10 key support for continued corrective move, while this area contains there is a window to retest break last weeks highs but ultimately fail the key 1.5130 resistance before medium term down trend resumes. Only a close above 1.5150 negates medium term bearish bias
  • Order Flow indicators; OBV pulls back form recent highs, Linear Regression and Psychology bullish but stalling
  • Monitoring price action and Order Flow for shorts targeting 1.45 initially and 1.42 in extension

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USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • Key 118.30 survives and prompts reversal, while 118.90 supports on an intraday basis further upside potential will face stiffer resistance towards 120.
  • Order Flow indicators; OBV ticking up, Linear Regression and Psychology bearish but attempting midpoint test from below
  • Risk free longs in play

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

  • 123 gives way suggesting a broader corrective phase, 124.50 becomes near term resistance, a close above here will re energise bullish bias, below 120 opens 117.50 and forewarns a more significant top in place.
  • Daily Order Flow indicators; OBV consolidates off highs, Linear Regression and Psychology bearish but ticking up to test midpoints from below
  • Monitoring price action and Order Flow indicators to reset long positions targeting 1.30

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

  • .7850 offers hold and price rotates lower, 240min close below .77 refocuses attention back on the triple bottom at .7550 which will be heavily pressured on a potential fourth test
  • Order Flow indicators; OBV consolidating recent gains, Linear Regression and Psychology break midpoints from above.
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8050

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