London FX: Brexit Brings Out Bears, Sharp Risk
Littlefish FX | Jun 24, 2016 07:07AM ET
UK Brexit confirmed in the early hours devastating risk assets across global markets. Central banks are now on alert to manage the ramifications of the shock results. Wild moves in FX markets overnight with GBP/USD plummeting over 10% after registering new year to date highs above 1.50 testing 1.30 in early European trade. The USD Index strengthened considerably during Asian trade boosted by safe-haven flows. A volatile day is expected ahead as US Index futures are ‘limit’ down.
FX Majors: EUR reversed its early gains as early results from the UK’s vote on European Union membership showed the “Leave” camp holding the lead. EUR/USD dropped from highs of 1.1430s to as low as 1.09 early this morning. GBP 10% reversal to test low 1.30’s continued volatility expected as official reactions to result roll in JPY surges testing bids below 100 benefiting from safe haven flows. BOJ on alert
EUR/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Sharp reversal overnight. Next downside level to watch is 1.08, with 1.10 near term resistance now.
Retail Sentiment: Bearish
Trading Take-away: Sidelines
GBP/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Sharp reversal overnight. Next downside level to watch is 1.30 with 1.38 near term resistance now
Retail Sentiment: Neutral
Trading Take-away: Sidelines
USD/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Sharp decline overnight. Next downside level to watch is 98.00 with 104 near term resistance now
Retail Sentiment: Bullish
Trading Take-away: Sidelines
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EUR/JPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Sharp decline overnight. Next downside level to watch is 107 with 115.50 near term resistance now
Retail Sentiment: Neutral
Trading Take-away: Sidelines
Commodities FX: Gold fly’s boosted safe have flows printing fresh year to date highs. Oil (July contract) falls amid risk aversion as demand concerns are heightened with uncertainty coming from UK shock result to leave EU. AUD driven lower by sharp reversal in risk sentiment and heavy cross selling in AUD/JPY. CAD weakens as USD bid on safe haven flows amidst global uncertainty.
AUD/USD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish
Technical: Sharp decline overnight from symmetry swing objective. Next downside level to watch .7230 with .7500 near term resistance
Retail Sentiment: Neutral
Trading Take-away: Sidelines
USD/CAD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish
Technical: Sharp reversal overnight next level to watch on the upside is 1.32 with 1.27 near term support now
Retail Sentiment: Neutral
Trading Take-away: Sidelines
XAU/USD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish
Technical: Sharp reversal higher next level to watch on the upside is 1390 with 1303 near term support now
Retail Sentiment: Bearish
Trading Take-away: Sidelines
US OIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish
Technical: Only a close below 46 threatens medium term bullish bias, below .46 opens a test of 44 as next downside objective
Retail Sentiment: Bearish
Trading Take-away: Sidelines
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