Morning Report: USD Declines On Data and Greek Optimism

Market Commentary  

USD on the backfoot as Bund yields and commodities regain composure, EURUSD gained nearly two percent on further unwinding of the Euro QE trade, ECB data regarding bond purchases failed to support the ‘front loading’ threatened in recent ECB rhetoric.

EURUSD rallied to its highest levels in over a week as growing optimism regarding Greece’s ability to avert a default on loans owed to international creditors. Eurozone inflation in May had an above-forecast rise of 0.3% yearly. European Central Bank will announce its rate decision later today and the ECB President Mario Draghi will give a press conference following the decision.

GBPUSD spiked to its overnight high of 1.5366 as weak US data showed a drop of factory orders in May. UK construction PMI surprised the market by rising to 55.9 in May from April’s 22-month low of 54.2 attention turns to The Bank of England and today’s monetary policy meeting and rate decision.

USDJPYsold off overnight led by weak US factory data, it was the eighth contraction in nine months, this was further compounded by dovishness from Fed’s Brainard. USDJPY ended a seven straight day rally and as with the other majors corrected recent gains (although at a lesser extent), technical indicators are calling for some consolidation, especially around this 124 handle interbank reports suggest market is long gamma as of last week                      

Technical  Commentary 

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

1.1050 offers filled, while this area now acts as support bulls target retest of 1.1466 May highs en route to testing the descending trendline at 1.15, only below 1.09 concerns near term bullish bias

Daily Order Flow bullish ; OBV sideways to up, Linear Regression and Psychology bullish

Monitoring intraday price and Order Flow indicators on a test of 1.15

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

Descending trendline support prompts corrective reversal now targeting topside of descending channel at 1.5450

Daily Order Flow bearish; OBV sideways to up , Linear Regression and Psychology bearish

Monitoring intraday price action and Order Flow indicators on a test of 1.5050 or 1.5450

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

First test of 125 attracts profit taking while 125.50 caps upside expect pullback to 123.50 to attempt base for next leg higher below 122 concerns near term bullish bias.

Daily Order Flow bullish ; OBV sideways to down, Linear Regression and Psychology rolling over to test midpoints from above

Monitoring intraday price action and Order Flow indicators on a test of 125.50 or 122

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

Bulls now target topside of projected channel towards 140/141, bullish bias remains in place above 137, only below 134 threatens reversal .

Daily Order Flow bullish; OBV sideways to up, Linear Regression and Psychology bullish but stalling

Monitoring intraday price action and Order Flow indicators on a retest of 140/141

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