London Forex Report: Risk Reversal Pressures Commodity FX Pairs

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

Fundamental: EUR firmed amid risk off sentiment overnight. Most European equities fell more than 2% yesterday. A strengthening euro, together with falling oil prices, has continuously put downward pressure on inflation, fueling speculation of an expansion of the ECB’s QE programme.

Technical: Breach of 1.1150 intraday resistance, resets focus on upper end of recent range, bulls now target stops above the 1.13 handle.

Interbank Flows: Bids 1.12/1.1180, 1.1150/30 stops below. Offers 1.1310/30 1.1380 Stops above.
Retail Sentiment: Neutral
Order Flow: Bullish
Trading Take-away: Buy pull backs against 1.12 targeting 1.1380

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

Fundamental: The pair continued to hover around 5-month lows amid mixed US data on Personal Spending and Pending Home Sales. Traders will keep an eye on August’s individual net lending figures being released from the BoE, as well as Governor Carney’s speech at Lloyds of London later for further signs regarding rate hike expectations.

Technical: Remains under pressure while capped by 1.52 resistance, first test of 1.5150 support attracts buyers/profit takers on the initial test. While 1.5250 caps intraday upside reactions expect stops below 1.5150 to be pressured as 1.50 psychological support is targeted next.

Interbank Flows: Bids 1.5130/10 stops below Offers 1.5250/1.53 stops above
Retail Sentiment: Bullish
Order Flow Indicators: Bearish
Trading Take-away: Sell pullbacks against 1.5250 targeting 1.50

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

Fundamental: USDJPY is back on the slide as risk global appetite waned as the weakness in mining and auto sectors were added to concern that slowing growth in China will weigh on the global economy, sending investors to safer havens. The JPY was higher against most of the other majors this morning.

Technical: Sharp reversal from test of the upper end of the recent range sees price retesting range support towards 119. Failure below 119 opens test of stops below the September low of 118.58 next.

Interbank Flows: Bids 119/118.80, 118.50/30 stops below. Offers 120.50/80 stops above
Retail Sentiment: Bullish
Order Flow Indicators: Bearish
Trading Take-away: Sidelines for now

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

Fundamental: The cross was supported as a bid returned to the EUR as it maintains its funding status, the cross flows helped EURJPY to reverse intraday losses.

Technical: 135 offers contained the upside reaction suggesting a rotation back to 132 through interim support at 134. A close above 135 opens a retest of offers at 137 next.

Interbank Flows: Bids 133.80/50 stops below. Offers 135.10/30. 135.50 stops above
Retail Sentiment: Neutral
Order Flow Indicators: Bullish but stalling.
Trading Take-away: Sidelines for now

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

Fundamental: AUDUSD slip below 0.7000 overnight and hovered around 0.6960, weighed by the fall in key commodity prices including copper. The diverging rate outlook between the United States and Australia, coupled with the decline in commodity prices leaves the Aussie vulnerable to further downside.

Technical: Downside pressure persists stops below year to date lows of .6893 are likely tested. Potential for daily double bottom to set up dependent on today’s close.

Interbank Flows: Bids .6850 stops below. Offers .7080/.7100 stops above
Retail Sentiment: Bullish
Order Flow Indicators: Bearish
Trading Take-away: Sidelines for now

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

Fundamental: USDCAD is revisiting its recent 11-year high of 1.3417, buoyed by falling oil prices. Canada Economic Mood Index showed Canadian consumer confidence rebounded to its highest in nearly two months due to reasons such as cheap gasoline, low interest rates and weaker dollars.

Technical: Retesting 2015 highs, while 1.33 supports intraday downside reactions expect a breach of highs en route to test projected ascending trend line resistance at 138 next.

Interbank Flows: Bids 1.33 stops below. Offers 1.3450 stops above
Retail Sentiment: Bearish
Order Flow Indicators: Bullish but stalling
Trading Take-away: Sidelines for now

uc2015-09-29 08_24_53-