USD Bid As Another Greek Deadline Looms

KEY DATA RELEASES TODAY (BST) :

10:00 EUR German ZEW Economic Sentiment 55.6 v 54.8
10:00 EUR ZEW Economic Sentiment 63.7 v 62.4

OVERNIGHT:

A combination of the recent reduction in rate divergence and the ever looming tape bomb potential from the Greece debt repayment scenario appear to have left a number of intraday players jittery and reluctant to express any meaningful views in the market. Market continues to expect USD performance overall and with the recent position adjustment continuing to favour selling rallies with a keen eye on the notable 1.0880 resistance level which is seen as key in the near term.To the downside focus is on 1.0660/20 as support which is pivotal for further downside gains. Little in way of data today with main event being ZEW survey this morning.

Those brave (or rather, patient) enough to catch the falling knife last night were rewarded… Risk sentiment remains buoyant, and it felt like some players were caught on the wrong side at bad levels. USDJPY closes back above the pivotal 118.95 level (which should be the initial support today). Market remains bullish, although the market and USDJPY implied vols still suggest topside is limited from here however. 119.60/70 should serve as the pair’s initial resistance.

Greek concerns continue to weigh on the EUR and the GBP, and GBPUSD continues its drift lower from the 1.5000 handle late last week. Market maintains a bearish bias, although mindful of the rather tepid behaviour in spite of the national elections only being weeks away. Retail sales and BOE minutes will be the key catalysts to watch for this week. Levels to watch from here: 1.4860 initial support, followed by 1.4810… Topside at 1.4935 initially, followed by 1.4980

PRICE ACTION OVERVIEW:

EUR: 1.0620 key support for further corrective upside failure here suggest downside trend resumption targeting year to date lows
GBP: Below 1.4840 revives bearish bias
JPY: While 118.30 contains downside target 121.00 en route to retest of year to date highs, only below 118.30 concerns bullish view
CAD: 123.50 former support now becomes key resistance second close below here forewarns further downside
AUD: While .7860/80 contains upside anticipate third test of key .7550 failure here opens the bearish target of .72, above .7880 alleviates downside pressure