New York Forex Report: ECB Walk Back Weighs on EUR

New York Forex Report: ECB Walk Back Weighs on EUR

New York Forex Report: The USD retains a firmer undertone in quiet trade. Traders are awaiting the return of US markets from the long weekend, and the release of some key US data, to get a better sense of direction for markets broadly. Although the USD has picked up a little ground over the past session or two, there is not much conviction behind the rebound at present. The EUR has lost modest ground as ECB officials nudge back against the notion that policy changes are imminent. The GBP has slipped on weaker domestic data. JPY is weak, down 0.3% against the USD and underperforming all of the G10 currencies, fading shortlived Asian session gains driven by renewed concerns surrounding North Korea.

US Secretary of State Rex Tillerson confirmed that North Korea has test-launched an intercontinental ballistic missile (ICBM ) for the first time on Tuesday morning. Reports suggested that the new missile had a range of more than 8,000 km which meant that significant parts of the US could be in range. Tillerson said the US would seek “stronger measures” at the UN Security Council to hold the North Koreans accountable for the latest missile test. Any country hosting North Korean workers, providing economic or military benefits to Pyongyang, or failing to implement UN sanctions ‘is aiding and abetting a dangerous regime’. The UN Security Council will hold an emergency meeting today.

USD US markets ended mixed amid a shortened trading day in observation of US Independence Day holiday. The Federal Reserve will release minutes from its 13/14 June policy meeting in which officials raised interest rates by 25bp to a target range of 1.00% to 1.25%

EUR Eurozone’s factory gate inflation rose 3.30% YOY in May, slowing down from the 4.30% YOY increase in April amid moderating price growth in Germany, France and Italy. CPI dropped to a six-month low in June, accentuating ECB’s stance to keep monetary policy accommodate at this juncture.

GBP UK’s gauge of the construction sector registered a weaker print in June but underlying details suggest that the sector continued to expand at a firm pace in the face of Brexit negotiation. Construction PMI dropped to 54.8 in June from a seventeen-month high of 56.0 in May

JPY The broader tone remains key, note the absence of any meaningful reaction to the release of disappointing CPI and industrial production data. Local media are also highlighting the risk of a potential lowering of the BoJ’s inflation outlook at the next policy meeting in July (20th)

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

Technical: 1-3 Day View – 1.1430 containing the advance for now as 1.1350/30 supports bulls target 1.1530 as the next upside objective, a daily close below 1.1290 concerns the near term bullish bias and open a test of 1.11

1-3 Week View – While 1.0830 supports 114.30 becomes the primary upside objective. A 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: Sidelines

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

Technical: 1-3 Day View – As 1.2940/20 supports on an intraday basis 1.3048 is the next upside objective, ahead of the pivotal 1.3238 Only a closing breach of 1.2810 concerns the near term bullish bias.

1-3 Week View – The weekly failure to close above 1.3045 ahead of the broader symmetry swing objective sited at 1.3238 suggest underlying weakness persists 1.2450 becomes pivotal for the medium term perspective

Retail Sentiment: Bearish
Trading Take-away: Sidelines

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

Technical: 1-3 Day View – The daily closing breach of 111.80 level resets focus on upside objectives principally 114.35, near term support is now sited at 112.80/60, only below 111.80 would arrest the near term advance and return to 110/112 range.

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: Bearish
Trading Take-away: Long

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

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