Market Commentary
Fed’s Dudley commented that an interest rate increase in September is “looking increasingly in doubt”. Equity investors might have taken heart as Wall Street continued its yo-yo with another 4% rise overnight. Data was also supportive with a stronger than expected US durable goods order at 2.0%y/y. Excluding military component, the print was an even stronger 2.2%y/y. That lifted the USD above the 95-figure.
This morning it is ECB’s Coeure’s turn to speak. Executive Board member Praet warned last night that the central bank will increase QE if necessary. Praet said there “should be no doubt ECB will act if needed”; “downside risks to ECB’s inflation goal have risen, as a result of recent development in world economy and commodity markets”. There could be more jawboning from Coeure to temper recent EUR’s strength.
GBP took a turn and head lower towards 1.5453 overnight amid broad USD strength. The pair hit fresh two week lows, breaking below the 1.5500 level. If the second revision of Q2 GDP and pending home sales out of US beat expectations, the pair looks set to challenge stops below 1.54.
The USDJPY rebounded overnight as risk aversion waned, touching a intraday high of 120.37 this morning. Pair has slipped back below the 120-handle, possibly on comments by BOJ governor Kuroda in New York that there are no plans for now for further easing as the BOJ board continues to believe that the 2% inflation target would be achieved with the current QQE. He however added the caveat that if necessary, the BOJ would “certainly make necessary adjustment of QQE”.
Technical Commentary
EURUSD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
The descent from this weeks 1.17 highs appears to be corrective while 1.1250 survives on a closing basis the 1.18 symmetry objective remains in play if bulls can recapture 1.15 on a closing basis. Failure at 1.12 would suggest a false upside break.
Daily Order Flow bullish; OBV sideways to up, Linear Regression pierces midpoint from above, Psychology bullish but rolling over to test midpoint from above
Monitoring intraday price and Order Flow indicators on a test of 1.18 or 1.12
GBPUSD: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
The breach of 1.55 refocuses bears on the 1.5285 bearish symmetry objective, while 1.5630 caps upside reaction expect a test of stops below 1.54 next
Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bullish but stalling
Monitoring intraday price action and Order Flow indicators on a test of 1.5285 or 1.5650
USDJPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish
While 120.50 contains upside reaction a retest of the spike lows a 116 remains in play. Only a close back above 122 would ease the immediate bearish pressure
Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology pierce midpoints from below
Monitoring intraday price action and Order Flow indicators on a test of 116 or 122
EURJPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bearish
The breach of ascending trendline support at 136 opens a retest of range support at 134/33. A snapback above 137 today would suggest the 141 symmetry objective remains in play
Daily Order Flow bearish; OBV sideways to up, Linear Regression and Psychology bearish
Monitoring intraday price action and Order Flow indicators at 141 and 133
All comments, charts and analysis on this website are purely provided to demonstrate our own personal thoughts and views of the market and should in no way be treated as recommendations or advice. Please do not trade based solely on any information provided within this site, always do your own analysis.
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