Morning Report: Yellen Deflates Dollar Bulls

Market Commentary  


USD on the back foot as Fed downgrades 2015 GDP, rate path; dovish tone sends rate hike odds lower; Fed sees two hikes by year end, futures market sees only 82% of one hike.

EURUSD continued to hover at the one month high of 1.1358 amid the ongoing concern of Greek default but buoyed buy the non committal FED. Eurozone CPI remained unrevised in May, came in at 0.3% YoY and core CPI at 0.9% YoY. Construction output growth was static in May and data in April was revised up from -2.7% to -1.9% YoY

GBPUSD traded around 1.5640 for most of the day but then surged over 200 pips and hit 1.5847 high on the strong wage growth. The employment change was a bit softer than expected, came in at 114k in the quarter to April against 190k expected, while wage data came in much stronger, weekly earnings ex bonus rose 2.7% YoY in April against 2.5% forecast.

USDJPY hit the strongest level in a week at 124.44 during European session, but retreated more than 100 pips overnight as the USD weakened across the board. The Fed signalled a pick up in the economy is keeping it on track to raise interest rates this year, but subsequent rates hike is likely to be more gradual than USD bulls anticipated.

Technical  Commentary 

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

  • Bids at 1.12 retested and support on second attempt, 1.13 primary bullish objective achieved focus shifts to an interim equality target at 1.1340 ahead of the 1.1465 high.
  • Daily Order Flow bullish ; OBV sideways to up, Linear Regression and Psychology bullish but lacking momentum
  • Monitoring intraday price and Order Flow indicators on a test of 1.16 or 1.1050

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

  • 1.5815 breached potential for snap back from double top, 1.5550 should find bids as base to target topside of the projected channel at 1.6350/1.64
  • Daily Order Flow bullish; OBV sideways to down , Linear Regression and Psychology bullish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5550

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

  • 122 pivotal support while 122.50 contains downside expect test of 125, failure at 122.50 opens pivotal 122 and the 121 corrective equality target below.
  • Daily Order Flow bearish ; OBV sideways to down, Linear Regression and Psychology rotate around midpoints
  • Monitoring intraday price action and Order Flow indicators on a test of 128  or 122/21

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

  • While 141.75 area caps the advance look for a retest of 137 as potential base for next leg higher for symmetry swing objective at 143.60’s
  • Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology pierce midpoints from below but lack follow through
  • Monitoring intraday price action and Order Flow indicators at 141.75 or 137/36

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