Battle Between Short-Term, Medium-Term Players

GBPUSD – technical overview

A nice pullback for this market since breaking to fresh 2015 highs in the previous week. However, there is some solid previous resistance turned support in the 1.5400-1.5500 area, and if the market can hold above this zone on a daily close basis, there is risk for another run to the topside, back through recent highs and towards 1.6000. Inability to hold above 1.5400 will negate and put the pressure back on the downside for a more meaningful medium-term bearish trend resumption.

• R2 1.5638 – 18May low – Strong
• R1 1.5600 – Figure – Medium
• S1 1.5446 – 19May low  – Medium
• S2 1.5393 – 11May low  – Strong

GBPUSD – fundamental overview

Wednesday’s Bank of England Minutes were perceived to be more hawkish by the market, with the Pound standing out as an outperformer on the day. It seems the assessments of BOE’s Weale and McCafferty the policy outlook was ‘finely balanced between keeping rates on hold and raising them,’ was enough to convince participants the next move would be higher (whenever it may come). Looking ahead, more volatility is expected today as the market takes in the latest UK retail sales figures, and then looks to US data in the form of initial jobless claims, existing home sales and the Philly Fed. Fed Vice Chair Fischer is also slated to speak.

USDJPY – technical overview

Although the market remains locked within a well defined uptrend, lack of upside follow through has been discouraging, with the pair more content on deferring to a period of consolidation. Still, overall, the broader trend remains highly constructive and any setbacks should continue to be very well supported in favour of the next major upside extension through 122.03 and towards key psychological barriers at 125.00 further up. At this point, only a close below 118.23 would delay.

• R2 122.03 – 10Mar/2015 high – Strong
• R1 121.48 – 20May high – Medium
• S1 120.58 – 20May low – Medium
• S2 119.83 – 19May low – Strong

USDJPY – fundamental overview

Exporter and option related sell interest has been doing a good job of capping gains in this market above 121.00. It also seems as though some participants have been comfortable booking profits on long positions post Fed Minutes, after it was confirmed a June rate hike would be ‘unlikely.’ Overall, this market hasn’t really gone anywhere over the past few months and with the pair trading towards the top of the range, it only seems fitting to see some resistance into the upper bound. Moreover, with the BOJ not looking to ease further, there is less incentive to be selling Yen at the moment.

EURCHF – technical overview

The market has finally put in an impressive rebound after a multi-day drop out from the February, 1.0815 recovery high. From here, there is risk for additional upside back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported ahead of 1.0300. Look for a push back above 1.0525 to confirm and accelerate gains. Ultimately, only below 1.0235 negates.

• R2 1.0600 – Figure – Medium
• R1 1.0525 – 30Apr high – Strong
• S1 1.0350 – Mid-Figure– Medium
• S2 1.0305 – 7May low – Strong

EURCHF – fundamental overview

This market has come back under some pressure in recent trade on the back of Euro outflows as market participants fear the worst in Greece. Greece has said it will not make the June IMF loan repayment if a deal is not reached by the payment deadline and this has fueled declines. Still, SNB measures on sight deposits and an ongoing commitment from the central bank to continue to act to curb excessive overvaluation in the Franc, should help to support this market on dips. Meanwhile, ongoing demand for global equities has also been supportive of this correlated exchange rate. Dealers cite solid demand, with no meaningful stops until below 1.0200.

AUDUSD – technical overview

A recent recovery rally has stalled out ahead of 0.8200 and overall, the broader downtrend remains intact. Look for a lower top to be in place at 0.8163, in favour of the next major downside extension back towards and eventually below the current multi-year base from early April at 0.7433. Ultimately, only a break back above 0.8163 would delay.

• R2 0.8010 – 19May high – Strong
• R1 0.7934 – 20May high – Medium
• S1 0.7861 – 20May low – Medium
• S2 0.7787 – 5May low – Strong

AUDUSD – fundamental overview

A softer round of China HSBC PMIs has been shrugged off by the Aussie market, with the Australian Dollar finding some renewed bids into Thursday. It seems much of the price action has been driven off post Fed Minutes profit taking on USD longs than anything else. The RBA has already expressed concern over the cooling in China and negative impact on the Australian economy, and this in conjunction with some Wednesday setbacks in commodities, could open more downside pressure once the profit taking works its way through. Looking ahead, we get US initial jobless claims, existing home sales, the Philly Fed and a speech from Fed Vice Chair Fischer.

USDCAD – technical overview

The market looks like it may finally have based out at 1.1920, putting in a meaningful medium-term higher low, ahead of the next major upside extension and bullish trend resumption. At this point, a break back above previous support at 1.2350 will strengthen the outlook.

• R2 1.2305 – 21Apr high – Strong
• R1 1.2256 – 20May high – Medium
• S1 1.2129 – 19May low – Medium
• S2 1.2067 – 15May high – Strong

USDCAD – fundamental overview

A mild recovery in the OIL market over the past couple of sessions, along with some solid Canada wholesale sales, have helped to open renewed bids in the Loonie. Also seen supporting the Canadian Dollar a bit into Thursday has been a round of profit taking on USD longs post Fed Minutes, after the Minutes showed the chances for a June rate hike were ‘unlikely.’ Still, we have seen an impressive rebound in this pair this week, and dealers are now talking about good demand on dips towards 1.2100. Looking ahead, the Canada economic calendar is empty, with the focus shifting to US initial jobless claims, existing home sales, the Philly Fed and Fed Vice Chair Fischer speech.

NZDUSD – technical overview

Despite a minor bounce, the market remains locked within a broader, well defined downtrend and looks to be in the process of carving out the next medium-term lower top. As such, look for a more pronounced bearish reversal in the sessions ahead, back towards the key low of 0.7176, below which opens the next major downside extension towards psychological barriers at 0.6500. Ultimately, only back above 0.7890 would compromise and give reason for pause.

• R2 0.7444 – 19May high– Strong
• R1 0.7372 – 20May high– Medium
• S1 0.7282 – 20May low – Medium
• S2 0.7176 – 3Feb/2015 low – Strong

NZDUSD – fundamental overview

Though we have seen a little support for the New Zealand Dollar into Thursday on the back of an upbeat Budget, any gains are likely to be very well capped, with the weight of a potential RBNZ rate cut, another disappointing Fonterra auction and renewed optimism over the outlook for the US economy, all factoring into negative Kiwi flows. Furthermore, one of the encouraging themes for the risk correlated currency has been continued push to record highs in US equity markets. But if this stretched market shows any signs of capitulation in the days ahead, it could be lights out for the New Zealand Dollar.

US SPX 500 – technical overview

The latest break and close above 2126 has opened the door for fresh record highs and the next major upside extension in this market, potentially towards a measured move in the 2200 area. At this point, a break back below 2100 would now be required to take the immediate pressure off the topside.

• R2 2150.00 – Psychological – Medium
• R1 2137.00 – 19May/Record – Strong
• S1 2084.00 – 12May low – Medium
• S2 2062.00 – 7May low – Strong

US SPX 500 – fundamental overview

Investors are feeding back into the broader uptrend in this market, with stocks breaking to fresh record highs earlier this week. However, despite the gains, the market has demonstrated an inability to establish any meaningful bullish momentum thus far, and could be at risk for stalling out yet again. For now, scaled back Fed rate hike expectations have seemingly been supportive of the flows, though there is a sense these gains are lacking in conviction and could be poised for capitulation over the coming sessions. Looking ahead, investors will be paying attention to a Fed Vice Chair Fischer speech and batch of data in the form of initial jobless claims, existing home sales and the Philly Fed.

GOLD (SPOT) – technical overview

The market has been in a corrective mode since recovering out ahead of the 2014 base. The bounce suggests the market could now be poised for additional upside in the sessions ahead, in an attempt to carve out a more meaningful longer-term base. Look for a break back above recent highs at 1232 to strengthen this outlook. Ultimately, only back below 1170 will negate.

• R2 1246.00 – 10Feb high – Medium
• R1 1232.00 – 18May high – Strong
• S1 1170.00 – 1May low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

The GOLD market continues to show signs of demand since stalling ahead of the 2014 base. Many investors already feel that with currencies across the board looking less attractive in a low yield environment, and with global equities looking vulnerable at record highs, there is no better place to be invested than in the yellow metal. Dealers cite plenty of demand ahead of $1170 with buy-stops reported above $1235.

Feature – technical overview

USDTRY has been in corrective mode over the past several days, with the market pulling back sharply from the 2.7430 record high from late April. Though there is still risk for additional corrective weakness, this market remains locked within a more well defined medium-term uptrend and should start to find support ahead of 2.5400 in favour of a bullish resumption and next major upside extension. Ultimately, only a close below 2.5390 would force a shift in the structure.

• R2 2.6225 – 13May low – Medium
• R1 2.6110 – 20May high – Strong
• S1 2.5560 – 6Apr low – Medium
• S2 2.5390 – 23Mar low – Strong

Feature – fundamental overview

As was widely expected, the CBRT came out on Wednesday and left rates on hold across the board. Perhaps more importantly, markets are no longer pricing any rate cuts, with the CBRT expected to hold firm at 7.50% in the months ahead. This has helped the Lira a little in recent trade, though a resurgence in broad based US Dollar demand has unquestionably been the the biggest driver of price action. Equity markets are also starting to look a little shaky again after a recent surge, and if we see any intensified downside pressure in risk assets, this could open more weakness in the risk correlated emerging market currency.