Morning Report: Draghi Holds The Line; EUR Bid, Bunds Offered
Littlefish FX | Jun 04, 2015 06:51AM ET
Market Commentary
EUR/USD traded with a bid tone yesterday and hit 1.1284 high, as German Bunds 10-Year yields advanced to 0.897%, their highest levels since November 2014. ECB Mario Draghi said he was willing to look through bond market volatility. Draghi expected a stronger economic recovery and higher inflation expectations, reiterated that the ECB is aiming the higher volume and plans to maintain a steady monetary policy stance. Attention once again reverts to the details regarding a Greek debt deal as the June 5th deadline looms.
GBP/USD dropped a full cent to 1.5249 low after the release of UK PMI came in below the forecasts.The UK Markit/CIPS Service PMI was down from 59.5 in April to 56.5 in May and missed the forecast 59.2. Interbank reports suggest Real money and leveraged names remain on the cable offer towards 1.5350.
USD/JPY climbed to day high of 124.68 after the release of better than expected US ADP employment data, while EUR/JPY surged to 140 handle for the first time since January 13th. Bank of Japan Governor Kuroda said that the global economy has been recovering moderately, while he sees more divergence in monetary policy in the US, EU and Japan.
Technical Commentary
EUR/USD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
While 1.11 contains downside reactions, expect retest of 1.11466 and 1.15 above, only below 1.1050 concerns near term bullish bias
Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bullish but stalling
Monitoring intraday price and Order Flow indicators on a test of 1.15 or 1.1050
GBP/USD: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks) Bearish
Descending trendline support prompts a corrective reversal now targeting the topside of the descending channel at 1.5450, while 1.54 caps upside still has potential to test 1.5050 support before a more sustained corrective phase
Daily Order Flow bearish; OBV sideways to down, Linear Regression and Psychology bearish
Monitoring intraday price action and Order Flow indicators on a test of 1.5050 or 1.5450
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USD/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bullish
First test of 125 attracts profit taking, while 125.50 caps upside expect pullback to 123.50 to attempt base for next leg higher below 122 concerns near term bullish bias.
Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology rolling over to test midpoints from above
Monitoring intraday price action and Order Flow indicators on a test of 125.50 or 122
EUR/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish.
Profit takers emerge on primary test of the topside of the projected channel at 140/141, bullish bias remains in place above 137.
Daily Order Flow bullish; OBV sideways to down, Linear Regression and Psychology bullish but stalling
Monitoring intraday price action and Order Flow indicators on a retest of 140/141
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