Littlefish FX | Jul 28, 2015 05:13AM ET
Market Commentary
The USD remained generally bearish overnight after poor equities performance led by China as shares plunge resulting in continued unwinding of EUR funded carry trades with EUR/USD and euro crosses higher given the risk off sentiment. Given some temporary relief in the equities market and no major Eurozone data, EUR/USD enters consolidation mode this morning with 1.1050 providing the key support level. As volatility pricing creeps higher, expect choppy price action as traders look for Fed clarity on September rate hike from tomorrows FOMC statement.
Given the absence of any data in the overnight Asian session, focus has been on domestic and regional equity performance as well as month end related operations. Interbank flow profiles over last night’s sell off towards 123.00 saw good demand from fast and real money accounts, a testament to a call for further range trading ahead of the FOMC. This morning saw an early push at the lows again as equities gap lower in the red, but a subsequent recovery in Chinese stocks from the lows triggered a healthy dose of short covering in bearish cross JPY positions.
GBP/USD was back above 1.5500 yesterday, but dropped to 1.5489 low on weaker CBI trends orders, then the pair gradually grinded higher to 1.5594 against a broadly weaker dollar. GBP Q2 GDP release will be the focus in today’s session, market is anticipating strength especially after hawkish comments from the BOE.
Technical Commentary
EUR/USD Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
GBP/USD: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
USD/JPY: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks) Bullish
EUR/JPY: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks) Bearish
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