London Forex Report: Dollar Dips To Two & Half Year Low

London Forex Report: Dollar Dips To Two & Half Year Low

London Forex Report: The USD hit a two and a half year low against the EUR at 1.1846 on Monday on month end portfolio adjustments and uncertainty over the US political outlook after the departure of White House communications director Anthony Scaramucci after only ten days in the role.

USD US data releases on Monday were somewhat mixed, with Chicago PMI pulled back to a reading of 58.9 in July from a prior reading of 65.7 in June whilst Dallas Fed manufacturing staged a surprised uptick to 16.8 in July, reaffirming uneven growth pace across districts in the US. Contrary to weaknesses in recent housing data, pending home sales rebounded more than expected to increase 1.5% MoM in June (May: -0.7% MoM). The improved home sales data yesterday offered hopes that housing demand is stabilising following a three month downturn.

EUR In the Eurozone, unemployment rate for the month of June fell to 9.1% from a revised reading of 9.2% back in May, marking its lowest point of unemployment rate in eight years. In terms of inflation outlook, CPI sustained a 1.3% YoY increase in July, although it is still below the ECB’s target of 2.00%. Market players will still be watching upcoming data releases ahead of autumn debate on the prospects of ECB monetary policy with tapering plans on the cards.

GBP In the UK, weak housing and consumer data added to signs of lingering softness in domestic demand. Net consumer credit came in lower at £1.5bn in June, suggesting consumers are pulling back on their spending. In a separate release, mortgage approvals fell to 64.7k in June versus a prior 65.1k level according to a Bank of England report. Recall, the Bank of England in June responded to rapid buildup of credit, ordering lenders to hold billions of pounds of extra capital and urging banks to strengthen rules on mortgage lending to rein in what officials called “pocket of risks”.

JPY Spreads appear soft leaving JPY vulnerable to further near-term strength with risk centred around the broader market tone in the absence of major domestic releases focus is on the ongoing drama and personnel changes in Washington. Bearish JPY CFTC positioning is extended, with gross longs at levels last seen in 2007.

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

Technical: 1-3 Day View – As 1.1780/60 supports near term bulls target 1.1860/80 , only a daily close below 1.16 concerns the near term bullish bias setting a top for a test of 1.1440

1-3 Week View – While 1.0830 supports the weekly close over 1.1450 sets upside focus on 1.1876. Weekly close below 1.08 neutralises bullish objectives.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – Bulls target test of pivotal 1.3263 near term support is sited at 1.3150/30. a daily closing breach of 1.30 concerns the medium term bullish bias opening a retest of 1.28.

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance
Retail Sentiment: Bearish
Trading Take-away: Long

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

Technical: 1-3 Day View – As 110.60 contains upside reactions 108.93 is the immediate downside objective. Near term 110 support remains vulnerable.

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

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

Technical: 1-3 Day View – As 129.50 supports expect a move through 130.70/80 en-route to 133.36, below 129.40/20 resets 130/128 range trade

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective
Retail Sentiment: Bearish
Trading Take-away: Long

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