Morning Forex Report: Month And Quarter End Flows Ahead

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

Fundamental: A series of weaker-than-expected Eurozone data released yesterday, including German CPI, German Import Prices, Spanish CPI, appeared to have little effect on the currency pair. Markets are consolidating ahead of Friday’s US non-farm payrolls report. EUR/USD gave back some of its gains after US CB consumer confidence index marked its highest reading since January this year.

Technical: While 1.12 contains intraday downside reactions, near term focus is on upper end of recent range, bulls now target stops above the 1.13 handle. A sustained breach of 1.12 sets up a retest of bids below the 1.11 handle

• Interbank Flows: Bids 1.12/1.1180, 1.1150/30 stops below. Offers 1.1310/30 1.1380 Stops above.
  
• Retail Sentiment: Neutral
  
• Trading Take-away: Risk free longs from 1.12 in play. Caution around month/quarter end volatility today.

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

Fundamental: Sterling fell to its weakest in almost five months amid investors concerns ahead of UK current account and final GDP data being released today. The pound fell to 1.5126, its weakest since early May as traders bet the Federal Reserve will raise US interest rates well before the BoE.

Technical: Remains under pressure while capped by 1.52 resistance, first test of 1.5150 support attracts buyers/profit takers on the initial test. While 1.5250 caps intraday upside reactions expect stops below 1.5150 to be pressured as 1.50 psychological support is targeted next.

• Interbank Flows: Bids 1.5130/10 stops below Offers 1.5250/1.53 stops above.
  
• Retail Sentiment: Bullish
  
• Trading Take-away: Sell pullbacks against 1.5250 targeting 1.50. Caution around month/quarter end volatility today.

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

Fundamental: USD/JPY declined to 119.71 yesterday and has declined a net 2.3 percent this quarter. The yen is set for its biggest quarterly gain against the dollar in three years as market turmoil fueled demand for safe haven assets, overriding the prospects of US interest rates hike

Technical: Sharp reversal from test of the upper end of the recent range sees price retesting range support towards 119 where buyers emerge. Failure below 119 opens test of stops below the September low of 118.58 next. Likely range bound trade persists ahead of Friday’s NFP release.

• Interbank Flows: Bids 119/118.80, 118.50/30 stops below. Offers 120.50/80 stops above.
  
• Retail Sentiment: Bullish
  
• Trading Take-away: Sidelines for now.

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

Fundamental: EUR/JPY continues to be confined by cross flows capped on the upside by a risk off JPY bid. Supported on the downside buy the euro's recovery above 1.12.

Technical: 135 offers continue to contain the upside reactions suggesting a rotation back to 132 through interim support at 134. A close above 135 opens a retest of upper end of the recent range and a retest of offers at 137 next.

• Interbank Flows: Bids 133.80/50 stops below. Offers 135.10/30. 135.50 stops above.
  
• Retail Sentiment: Neutral
  
• Trading Take-away: Sidelines for now.

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

Fundamental: The Aussie slipped yesterday as more disappointing figures came out of China and falling commodity prices sent traders to the safety of the yen. AUD/USD tested day low at 0.6934 near the 0.6893 low printed earlier this month, which had marked the weakest level in six and a half years

Technical: Downside pressure persists, stops below year to date lows of .6893 remain vulnerable. While offers at .71 cap upside attempts bears targets new lows.

• Interbank Flows: Bids .6850 stops below. Offers .7080/.7100 stops above.
  
• Retail Sentiment: Bullish
  
• Trading Take-away: Sidelines for now.

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

Fundamental: USD/CAD made a fresh 11-year high of 1.3457 on Tue, underpinned by the fall in industrial product price. Pair seems to be resuming its uptrend. July GDP growth is due today and consensus expects growth to slow to 0.2%m/m compared to 0.5% in June.

Technical: New highs for 2015 highs and for the past decade. While 1.34 supports intraday downside reactions expect new trend highs en route to test projected ascending trend line resistance at 138 next.

• Interbank Flows: Bids 1.33 stops below. Offers 1.35 stops above
  
• Retail Sentiment: Bearish
  
• Trading Take-away: Sidelines for now