Morning Report: USD Bounces ECB To Intensify Purchases

KEY DATA RELEASES TODAY (BST) :                                                                                                                                                                   
09:30 GBP PPI Input m/m 0.8% v 0.3%
09:30 GBP RPI y/y 0.9% v 0.9%
09:30 GBP CPI y/y 0.0% v 0.0%
13:30 USD Housing Starts 1.02M v 0.93M
13:30 USD Building Permits 1.06M v 1.04M

OVERNIGHT:

EURUSD traded around 1.1450 for most of yesterdays Asian session, but the pair slipped to 1.1300s on the recovery of USD during the US session as Greek headlines hit the wires. A “Junker plan” is being coordinated by the European Commission to reach a deal, even though officials refused to acknowledge its existence. ECB highlight that they are to intensify purchases ahead of likely summer lull in market liquidity

GBPUSD fell against a broadly stronger USD after hitting 1.5814 high last Thursday as the pro business Conservative party unexpectedly won the UK election. Traders now focused more on the risks of a looming referendum on Britain’s EU membership and new government spending cuts. All eyes on this mornings inflation readings.

USDJPY strengthened against the yen and tested 120 handle as weaker-than-expected Japanese industrial production data weighed on the yen. Markets are now focusing on Thursday’s FOMC and Friday’s Japan monetary policy meeting minutes as a potential catalyst to resolve the extended range trade.

KEY TRADES:

FX PairShort TermPosition/DateEntry LevelTargetStopComments
EURUSDBullish Await new signal
GBPUSDBullishAwait new signal
USDJPYNeutralAwait new signal
USDCADBearish Await new signal
AUDUSDBullishAwait new signal

ANALYSIS:

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

  • As suggested a bull trap type trade has ensued late longs trapped as we test bids back at 1.13, while 1.1350 caps intraday expect deeper pullback to pivotal 1.12 support, bids here should provide a platform to test the key 1.1550 resistance. failure at 1.12 suggests deeper pullback to 1.10 base
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology bullish but stalling to retest midpoints from above
  • Monitoring price action and Order Flow indicators to set shorts against 1.1550

EU

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

  • 1.58 achieved now bulls focus on the equality target at the the psych 1.60 level. Offers above 1.58 halt the advance expect bids at 1.56/1.5550 to support for the next leg higher.
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology bullish but stalling
  • Monitoring price action and Order Flow for long positions targeting 1.60

GU

USDJPY: Short Term (1-3 Days): Neutral  – Medium Term (1-3 WeeksBullish
  • Price continues to compress in very constricted range as bids towards 119/118.80 support expect further upside pressure, this mild upside bias would be invalidated on a loss of 118.25
  • Order Flow indicators; OBV ticking up to sideways, Linear Regression pierces midpoint from below, Psychology bearish
  • Monitoring price action and Order Flow indicators to set longs against 118 targeting 124

UJ

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

  • Bids below 120 continue to be filled and we are currently tracking a triple bottom on the daily chart, as this triple bottom support holds anticipate test of trendline resistance at 122
  • Daily Order Flow indicators; OBV sideways, Linear Regression bullish, Psychology pierces midpoints from below
  • Monitoring price action and Order Flow indicators at 118 or 123/24

UC

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

  • While .7950 supports downside reactions expect a break of .82 en route to test offers at .83, below .79 concerns near term bullish bias
  • Order Flow indicators; OBV sideways, Linear Regression and Psychology bearish
  • Monitoring price action and Order Flow indicators to set shorts targeting .72 against .8350

AU

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