Morning Report: All Eyes On Yellen

Market Commentary  

Headline risk day with the FOMC meeting the key event. Buoyed by improving data (including May payrolls and retail sales data), and by tentative signs of a pick ­up in wages, markets think the Fed will indicate that the first rate hike is getting closer, and that the first Fed move will be in September.

Weak German ZEW economic sentiment and good US building permit data pushed EURUSD slightly lower overnight to a 1.1205 low as we moved back into familiar territory we have witnessed since last week as we continue to range between 1.11 and 1.14. The pair also seems fairly well supported despite deteriorating developments in Greece as both sides refused to give way. All eyes will be on FOMC today as market appears frustrated and exhausted after all the recent continuous Greek headlines hitting the wires. Clear signs of perceived dovish rhetoric in the statement could cause a short squeeze, pushing the pair initially up to 1.1325 resistance level before testing 1.1387 (10 Jun high) level as it tries to break out of recent range. However, a neutral or hawkish statement should continue to pressure the pair towards 1.1150 and the key 1.1060 support levels.

GBP shook off a lower ­than ­expected core inflation print yesterday to make fresh intra­week highs against the USD. Today we get the release of employment figures and BOE minutes… Both events have upside risks for the pound, given Carney’s comments on unemployment and the possibility of breaking the 9/­0 vote from the previous month.

Price action post ­Kuroda yesterday and interbank order book profiles suggest USDJPY consolidates ahead of this risk event.For those in the camp anticipating that the Fed uses this meeting to gear the market up for a rate hike in Sept, and a confirmation in the dot plot of 2 rate hikes pencilled in for this year could give the USD further support. Nonetheless, a dovish result should see the pair test the 122.40 support level, anticipate decent demand on an approach towards 122. On the upside 124.20 is the level to watch for a potential resumption of the uptrend.

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 is the first bullish objective with an interim equality target at 1.1340 ahead of the 1.1465 high. Failure at 1.12 opens 1.11 and pivotal 1.1050.
  • Daily Order Flow bullish ; OBV sideways to down, Linear Regression and Psychology testing midpoints from above
  • Monitoring intraday price and Order Flow indicators on a test of 1.16 or 1.1050

eu2015-06-17 07_28_14-

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

  • While 1.5650 area contains the upside advance bears require an erosion of 1.5550 support to target 1.5450 next, while 1.5550 supports expect retest of 1.5815
  • Daily Order Flow bullish; OBV sideways , Linear Regression and Psychology bullish
  • Monitoring intraday price action and Order Flow indicators on a test of 1.5050 or 1.5650

gu2015-06-17 07_29_16-

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
  • Daily Order Flow bearish ; OBV sideways, Linear Regression and Psychology pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators on a test of 128  or 122

uj2015-06-17 07_33_44-

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 up, Linear Regression and Psychology pierce midpoints from below
  • Monitoring intraday price action and Order Flow indicators at 141.75 or 137/36

ey2015-06-17 07_35_45-