New York Forex Report: UK Service Sector Slump Deepens – PMI Hits Three Year Lows

New York Forex Report: UK Service Sector Slump Deepens – PMI Hits Three Year Lows

New York Forex Report: Over an otherwise quiet European morning, the latest UK Services PMI printed three year lows following on from weak Construction and Manufacturing PMI’s earlier in the week. Sterling has been under fresh pressure this week following reports the the latest Brexit polls show the “VoteLeave” campaign to once again be in the lead. This latest round of data weakness adds further concern for the economic picture in the run up to the June 23rd UK EU membership referendum.

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

Fundamental: EUR softened over the European morning weighed on by a stronger US Dollar which remains bid following yesterday’s mixed data.

Technical: EUR bulls now target a weekly AB=CD target of of 1.1766, intraday support is now sited back at prior resistance which should now act as support 1.1460/80 area, while this holds expects a grind higher to test previous reaction highs at the 1.1710 level. A failure at 1.1450 suggest a a return to retest 1.1240 support.
Retail Sentiment: Bearish
Trading Take-away: Long

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

Fundamental: Sterling slipped on the session as the latest UK Services PMI printed 3 year lows, rounding off a weak off data weakness for the UK currency which is still weighed upon by Brexit concerns.

Technical: 1.4670 achieved bulls now set their sites on the psychological 1.50 levels. Near term support is sited at 1.45. While this area contains downside reactions expect continued upside pressure. A failure at 1.44470 opens a deeper correction to 1.4280 next.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: USDJPY continues to rebound higher with Some traders square their positions under the backdrop of potential intervention from Bank of Japan on Friday as the Japanese markets resume after the long holiday.

Technical: 105.50 weekly swing objective achieved, 107.50 now becomes resistance a move through here opens a retest of 110 from below.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

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

Fundamental: Japanese markets offline for Golden week national holiday. Modest growth climate in 1Q weighed down on euro area’s household consumption. Retail sales fell 0.5% MoM in March (Feb: +0.3% MOM) which was the first in five months, underscoring sluggish domestic demand in spite of ECB’s stimulus program. A second report showed that the services sector expanded at a similar pace in April and March, suggesting that downside risks will continue to undermine growth this quarter.

Technical: Bears now target weekly symmetry objective at 120.60. Only a close over 126.80 eases immediate downside pressure. Intraday resistance now sited at 123.30.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: The Aussie remains under pressure today following the RBA’s first 2016 rate cut earlier this week. Traders are worried that the RBA’s concerns on embedded low inflation and deflation risks may lead to another rate cut. Also undermining the Aussie were sliding commodity prices with iron ore, Australia’s top export earner.

Technical: Price is probing pivotal .7470/50 support. While this level holds expect a recovery and grind higher to retest .7830 resistance. Failure at .7450 opens .7380 as the next downside objective.
Retail Sentiment: Neutral
Trading Take-away: Neutral

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

Fundamental: The Candian Dollar recovered some of the week;s losses over the European morning. Price has been weighed on this week by a fall in Oil prices alonsgide disappointing domestic trade data.

Technical: The close above 1.2750 negates near term bearish pressure and open a move to 1.30 as the next upside objective. 1.2740/60 should now act as support for further upside corrective action.
Retail Sentiment: Bearish
Trading Take-away: Long