FX morning briefing

EURO SUMMARY: The pair opened in Asia at $1.1146 this morning, toward the low side of the $1.1123 to $1.1224 range seen yesterday. Greek debt concerns and rising UST’s continued to put the the euro on the back foot in early dealings today but much of the Asian session this morning was marked by sideways consolidation as the market waited on the European Commission, which is expected release economic growth forecasts for the Eurozone at 0900 GMT. Euro-dollar spent much of the morning between $1.1143 and $1.1152 before being dragged down by a soft euro-yen tone, to $1.1137. It paused for a while there and retraced to $1.1144 before taking another hit down to $1.1132. It further extended the low to $1.1124 just after the RBA decision and last trades at $1.1129. Support is located at $1.1070, which is the top of the cloud on the daily Ichimukos, hourly trendline resistance is located at $1.1165.

EUR/USD: Cracks are starting to appear in the up-trend following the 100-DMA and 21-WMA capping last week combined with a lack of topside follow through and O/B daily studies looking to correct. The $1.1071 support remains key today with bears looking for a close below to shift immediate focus to $1.0844-1.0959. Bulls now look for a close above Friday’s high to confirm breaks of key DMAs and target $1.1394-1.1540.

YEN SUMMARY: Dollar-yen opened in Asia at Y120.13, toward the middle of a very narrow Y120.00 to Y120.28 range witnessed by European and US markets. Tokyo markets are again closed today celebrating ‘golden week’, and trading was expectedly subdued through the entire Asia-Pacific morning. The pair traded between Y120.10 and Y120.17 through much of the morning before edging higher around mid-morning to mark a morning high of Y120.20. The pair backed away in the early afternoon but remained well within the early range to last trade at Y120.11. Traders report decent demand seen around Y119.80, while resting Japanese exporter offers are seen on an approach to Y120.50. Initial support is seen at Y120.03 (Cloud top on the ichimukos), below there, Y119.80 (55 DMA). Euro-yen meanwhile opened in Asia at Y133.91, and the range so far has been a narrow Y133.75 to Y133.98. Euro-yen support is noted at Y133.70 (May 4 low), topside resistance lies at Y134.49 (100-DMA). It is also worth noting that the pair has not closed above that moving average since Jan. 5. Euro-yen last traded at Y133.78.

USD/JPY: The recovery from the Y118.24-46 support region last week resulted in closes above key DMAs Friday that now sees bulls regain the upper hand with immediate focus having shifted to the Y120.86-121.21 region. Layers of key support are now clustered tightly Y119.30-119.99 with bears needing a close below the 100-DMA to end bullish hopes and shift focus back to the Y118.24-46 region. Daily studies are perfectly placed for a fresh leg higher.

EUR/JPY: The rally that began from fresh 2015 lows saw the pair flirting with the 100-DMA Friday although the failure to close above is an issue when combined with O/B daily studies and the proximity of the Bollinger band top. In saying that, bears need a close below Y133.69 to confirm an easing of bullish pressure with below Y132.92 needed to shift focus back to the Y129.71-130.78 region where 21 & 55-DMAs are located.

AUSSIE SUMMARY: The aussie opened at $0.7838 and traded within a $0.7830 to $0.7858 range through much of the Asia-Pacific session today. The majority of the session was spent trading sideways in a tight $0.7830 to $0.7847 range. Weaker AiGroup service index and Australian trade data largely went unnoticed, with the aussie essentially marking time ahead of the RBA rate decision. Odds on a rate cut had reduced to 66% from 81% yesterday, together with a rally in the price of iron ore (Dalian iron ore futures +3.0%) saw some nervous shorts bail, the aussie climbed above $0.7847 to $0.7858 and was trading at $0.7853 just before the RBA decision. After the RBA announced the 25 bps rate cut, aussie-dollar dropped sharply to a $0.7788 low. The drop was however very brief as the market homed in on RBA comments which suggested it may be on hold for now. Aussie-dollar rallied to a new session high of $0.7909 after the initial drop, and has since held near there. It last traded at $0.7903. Resistance lies at $0.7940 which marks the 50% fibo retracement of the $0.8076 to $0.7803 fall, 61.8% fibo of the same move is at $0.7972, while support remains at $0.7804 marking the 50% fibo retracement of the $0.7533 to $0.8076 rise.

STERLING SUMMARY: Cable closed in NY Monday at $1.5120 after rate had further extended its recent slippage to $1.5091 with sterling feeling the pressure from pre election polls suggesting no outright winner, the political uncertainty weighing. Rate did manage to recover to $1.5149 during the NY afternoon before settling around $1.5120 into the close. Trade through Asia was fairly subdued, with Tokyo closed until Thursday, and as market awaited the RBA rate decision, leaving cable to consolidate between $1.5113/25. Euro-sterling held within a range of stg0.7361-0.73725. UK construction PMI provides the domestic data interest at 0830GMT with focus this morning on EZ Spring Economic Forecasts at 0900GMT. Greece debt woes continue in the background, traders noting an FT story suggesting the IMF may cut off their part of the funding. Cable support remains at $1.5090 ahead of $1.5080-70 and $1.5055/50. Resistance $1.5150/55 ahead of $1.5170/80. Euro-sterling support noted at stg0.7360-50, resistance into stg0.7400 ahead of stg0.7420.

GBP/USD: The cracks that appeared in the up-trend last week resulted in a sell-off and close below the 100-DMA ($1.5165) that sees focus having shifted to the 21 & 55-DMAs. Overall bears now look for a close below the 21-DMA to confirm an end to bullish hopes and to shift focus back to the 2015 low. Layers of resistance are now accumulating with bulls needing a close back above $1.5298 to regain the upper hand and target $1.5555.

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