FOMC Positioning, UK Inflation, German ZEW and Greece

GBPUSD – technical overview

A nice recovery for this market over the past several sessions, with the price surging back above 1.5500. Monday’s daily close above previous internal resistance at 1.5550 now opens the door for a continuation of gains and potential retest of the recent 2015 peak at 1.5815. At this point, a break and close below 1.5485 would be required to put the pressure back on the downside.

• R2 1.5700 – 21May high – Strong
• R1 1.5632 – 16Jun high – Medium
• S1 1.5487 – 15Jun low  – Medium
• S2 1.5421 – 11Jun low  – Strong

GBPUSD – fundamental overview

A softer UK Rightmove HPI reading was easily shrugged off, with the Pound extending gains and retaining a healthy bid tone into Tuesday trade. It seems concerns over an overheating property market and the prospect of a rate hike to help cool things down on this front has helped to inspire more Cable bids. Today’s UK CPI data will further contribute to Sterling volatility, with anything on the hotter side to likely open the next push back towards the recent 2015 high at 1.5815. US data in the form of housing starts and building permits will also get some attention ahead of tomorrow’s highly anticipated FOMC decision.

USDJPY – technical overview

Although the bullish structure remains firmly intact, following the recent break to fresh multi-year highs, the market has finally entered a period of healthy correction after stalling ahead of 126.00. Stretched studies are unwinding from overbought, with room for further weakness to 122.00. But any additional setbacks below 122.00 should be very well supported in favour of a bullish resumption.

• R2 124.73 – 9Jun high – Strong
• R1 124.13 –11Jun high – Medium
• S1 122.45 – 10Jun low – Medium
• S2 122.00 – Previous Resistance – Strong

USDJPY – fundamental overview

We’ve entered a choppy bout of consolidation since last week’s Kuroda shake-up, after the central banker came out with Yen supportive comments. Still, dips in the major pair continue to be well supported, with investors betting big on the monetary policy divergence trade. A solid US retail sales print has been doing a good job of supporting US Dollar dips, though there has been some downside pressure on traditional correlations with equities and some softer Monday US data in the form of industrial production and Empire State manufacturing. More chop is expected ahead of tomorrow’s FOMC decision, but for today, the focus will be on US housing starts and building permits.

EURCHF – technical overview

The market has finally leveled out after a multi-day drop out from the February high at 1.0815. From here, there is risk for recovery back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported above 1.0400 on a daily close basis. A recent push back above 1.0525 strengthens the constructive outlook and should keep the pressure on the topside.

• R2 1.0700 – 19Mar high – Medium
• R1 1.0575 – 4Jun high – Strong
• S1 1.0422 – 15Jun low – Medium
• S2 1.0398 – 3Jun low – Strong

EURCHF – fundamental overview

All signs of progress in the Greece saga have once again faded and it appears Greece and its creditors will be back and forth into the final hour when everything will most certainly come to a head. Still, setbacks have held up rather well in the face of this news. Moreover, an ongoing SNB commitment to act to curb excessive overvaluation in the Franc should continue to support on dips.

AUDUSD – technical overview

Overall, the broader downtrend remains intact after the market stalled out ahead of 0.8200 several days back. Look for a medium-term lower top to now 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 0.7533. Any corrective rallies should be well capped ahead of 0.8000, while ultimately, only a break back above 0.8163 will delay the bearish structure.

• R2 0.7934 – 20May high – Medium
• R1 0.7819 – 3Jun high – Strong
• S1 0.7677 – 12Jun low – Medium
• S2 0.7598 – 1Jun low – Strong

AUDUSD – fundamental overview

Though the RBA Minutes came out on the dovish side, the market didn’t get anything it wasn’t expecting from the release, with the RBA reiterating current views for a weaker Australian Dollar while also maintaining that policy should remain accommodative given domestic and international pressures, below trend GDP and contained inflation. A softer round of Monday US economic data has been supporting dips and the market will now look ahead to second tier Tuesday US data and start to position ahead of tomorrow’s all important FOMC decision.

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 towards the 2015 high at 1.2835. Recent setbacks should now be well supported in the 1.2200 area, after the market reached a short-term double top objective. Ultimately, only a daily close below 1.2150 would delay the constructive outlook.

• R2 1.2442 – 9Jun high – Strong
• R1 1.2351 – 15Jun high – Medium
• S1 1.2202 – 10Jun low – Strong
• S2 1.2129 – 29May low – Medium

USDCAD – fundamental overview

The Canadian Dollar has been bouncing around in recent trade, with the currency under some pressure as ongoing Greece concerns weigh on the global macro picture. However, a nice rebound in OIL prices and run of softer Monday US economic data have helped to support the Loonie on dips. More chop is expected ahead of tomorrow’s FOMC decision, but in the interim, the market will also focus on today’s US housing data and Canada international securities transactions.

NZDUSD – technical overview

The recent break to fresh 2015 and multi-month lows confirms a medium-term lower top at 0.7744 and opens the door for the next major downside extension towards a measured move objective in the 0.6500 area. For now, the market will be focused on trying to establish below the psychological barrier at 0.7000, with the next key support level coming in to 0.6900. Any rallies should now be well capped below 0.7400.

• R2 0.7100 – Figure– Medium
• R1 0.7027 – 12Jun high– Strong
• S1 0.6942 – 12Jun/2015 low – Medium
• S2 0.6900 – Aug 2010 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been a standout underperformer in recent trade, following the completion of a material shift in the RBNZ monetary policy outlook, culminating with last week’s rate cut. A massive unwinding of Kiwi longs is underway and NZDUSD is now looking to establish below 0.7000 against the Buck, testing levels not seen since 2010. A run of softer US economic data on Monday has helped to support a bit, but deeper setbacks are projected, with macro players continuing to reposition to the short side, particularly with the risk correlated US equity market starting to show signs of rolling over. Looking beyond some second tier US data, things heat up late Tuesday with the GDT auction and NZ current account due ahead of the all important FOMC rate decision.

US SPX 500 – technical overview

The latest break to fresh record highs has stalled out, with the lack of bullish momentum suggesting the market could be exhausted at current levels and poised for a significant corrective decline. The recent close back below 2100 strengthens the bearish outlook and could open the door for deeper setbacks towards critical support at 2040 over the coming sessions. Ultimately, only above 2137 negates.

• R2 2137.00 – 19May/Record – Strong
• R1 2115.00 – 11Jun high – Strong
• S1 2062.00 – 7May low – Medium
• S2 2040.00 – 11Mar low – Strong

US SPX 500 – fundamental overview

The equity market has failed to establish any meaningful bullish momentum after recently breaking to fresh record highs in May and could be at risk of forming a major top. A wave of solid first-tier US economic data, highlighted by an impressive US employment report and retails sales, have helped to solidify prospects for a sooner than later rate liftoff, and this reality is making it less attractive to be long equities at lofty levels. Clearly tomorrow’s FOMC rate decision will play a major role in direction, and if the Fed comes in on the hawkish side, this could open a more pronounced acceleration of declines.

GOLD (SPOT) – technical overview

The market has been very well supported on dips since recovering from the 2014 base. The price action suggests the market could now be poised for a fresh bounce 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 a daily close below 1170 will negate.

• R2 1232.00 – 18May high – Strong
• R1 1204.00 – 1Jun high – Medium
• S1 1163.00 – 5Jun low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

Despite recent setbacks, the GOLD market continues to show signs of demand on dips. 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 for capital allocation than GOLD. Dealers cite plenty of interest around $1170.

Feature – technical overview

USDSGD setbacks have been very well supported in the 1.3500 area and the market looks like it is in the process of carving the next medium-term higher low ahead of a bullish resumption. Look for a break back above 1.3629 to confirm and open the door for a retest of the 2015 high at 1.3937 further up. Ultimately, only a daily close below 1.3500 delays.

• R2 1.3629 – 8Jun high – Strong
• R1 1.3571 – 2Jun high – Medium
• S1 1.3510 – 3Jun high – Strong
• S2 1.3337 – 20May low – Medium

Feature – fundamental overview

It’s all about external variables for the moment, with the Singapore Dollar mostly pressured on broader themes. An expectation the Fed will lean more to the hawkish side tomorrow, following a slew of solid US economic data, has been driving yield differentials in the US Dollar’s favour, while another breakdown in Greece talks is weighing on risk correlated emerging market FX.