US Dollar At Crossroads, Greece Fate Hangs In Balance

GBPUSD – technical overview

The market has broken to a fresh 2015 high beyond the previous peak at 1.5815, with the push exposing a test of the next key psychological barrier at 1.6000. Any setbacks from current levels should now be well supported above 1.5550, with only a break back below this level to take the immediate pressure off the topside.

• R2 1.6000 – Psychological – Strong
• R1 1.5930 – 18Jun/2015 high – Medium
• S1 1.5805 – 18Jun low  – Medium
• S2 1.5700 – 21May high  – Strong

GBPUSD – fundamental overview

What an impressive run for the Pound these past several days, with the UK currency racing to another 2015 high against the Buck. Though Wednesday’s BOE Minutes may have carried a slightly more hawkish tone, it was the surge in UK earnings via the labour market report that triggered the latest wave of demand. Thursday’s better than expected UK retail sales then helped to keep the market supported. Dealers cite interest to 1.6000, with decent bids supporting on dips. Looking ahead, UK public finances and public sector net borrowing are the only notable releases in Friday trade, though Greece headlines will probably have a greater influence on direction.

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 124.44 – 17Jun high – Strong
• R1 123.80 –16Jun high – Medium
• S1 122.45 – 10Jun low – Medium
• S2 122.00 – Previous Resistance – Strong

USDJPY – fundamental overview

The Bank of Japan came out and left policy unchanged as was widely expected. Perhaps of note, the BOJ announced that starting in 2016, it will cut the number of policy meetings to 8, like the Fed and ECB, with economic outlook reports to be released 4 times a year versus 2 now. Nothing new from the policy statement, and in a 8-1 vote, the central bank pledged to maintain the JPY80T expansion in the monetary base. The BOJ reiterated it would maintain accommodative policy until the 2% inflation target was reached, while keeping its assessment of a “moderate” economic recovery.

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. Look for a push back above 1.0575 to strengthen the constructive outlook and accelerate gains.

• R2 1.0700 – 19Mar high – Medium
• R1 1.0575 – 4Jun high – Strong
• S1 1.0405 – 17Jun low – Medium
• S2 1.0305 – 7May low – Strong

EURCHF – fundamental overview

Lack of any real progress on Greece has kept the Euro in check, though there is a feeling in the air that we could finally be getting down to it. The latest talk has the ECB and EU extending Greece’s repayment until the end of 2015. But even with all the Greece uncertainty, setbacks have held up rather well. On Thursday, the SNB was comfortable maintaining its current policy and made no changes. Still, the SNB remained committed to act to curb excessive overvaluation in the Franc and based on comments from officials, would be prepared to do so if the Greece saga invited excessive flows into the Franc.

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 0.7849 – 18Jun high – Strong
• S1 0.7710 – 18Jun low – Medium
• S2 0.7646 – 17Jun low – Strong

AUDUSD – fundamental overview

The outlook for the Australian Dollar is quite negative at the moment, with this week’s dovish RBA Minutes being followed up by a downbeat Aussie Westpac leading index. Throw in slumping iron ore prices, a cooling China and a general uneasiness surrounding the outcome for Greece and deeper setbacks are on the cards for the commodity currency. There has also been talk in recent days of the potential for additional cuts from the RBA which shouldn’t help the beleaguered currency. Dealers cite plenty of solid offers ahead of 0.8000.

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 1.2361 – 15Jun high – Strong
• R1 1.2300 – Figure – Medium
• S1 1.2200 – Figure – Medium
• S2 1.2127 – 18Jun low – Strong

USDCAD – fundamental overview

Thursday’s softer US CPI data along with ongoing support for OIL prices and broad based US Dollar selling, have all contributed to recent gains in the Canadian Dollar. But overall, risk for any sustained Loonie strength from current levels is limited, with the Fed still on course to raise rates this year and the monetary policy divergence theme still quite pronounced. Looking ahead, volatility is to be expected in Friday trade, with Canada CPI and retail sales due, and the market also very much focused on Greek headlines.

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 0.6800. Any rallies should now be well capped below 0.7400.

• R2 0.7081 – 11Jun high– Medium
• R1 0.7012 – 17Jun high– Strong
• S1 0.6879 – 17Jun/2015 low – Medium
• S2 0.6800 – Figure – 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 en route to 0.6500 against the Buck, testing levels not seen since 2010. Macro players continue to reposition to the short side, particularly with the risk correlated US equity market starting to show signs of rolling over. Thursday’s much softer New Zealand GDP release and Friday’s negative Kiwi NZ FinMin comments have only strengthened the bearish case.

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 2128.00 – 18Jun high – Medium
• S1 2070.00 – 9Jun 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 over the past couple of weeks has 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. Thursday’s FOMC decision confirmed the likelihood for a sooner Fed rate hike.

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. Buy stops reported above $1235.

Feature – technical overview

USDSGD setbacks have been very well supported in the 1.3150 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 1.3630 to confirm and open the door for a retest of the 2015 high at 1.3937 further up. Ultimately, only a daily close below 1.3150 delays.

• R2 1.3629 – 8Jun high – Strong
• R1 1.3499 – 17Jun high – Medium
• S1 1.3283 – 18Jun low – Medium
• S2 1.3148 – 29Apr low – Strong

Feature – fundamental overview

Some bids in the Singapore Dollar this week are less a function of any positives on the domestic front and more a function of some broad based profit taking on USD longs. While the Fed has still left the door open for a September rate hike, the fact that Janet Yellen has stressed the Fed will remain accommodative, suggesting any hikes will be slow and gradual, has helped an EM FX market that is very sensitive to yield differentials and monetary policy divergence. Still, with Greece uncertainty abound and the Fed expected to hike in the coming months, any additional SGD demand should be limited. Looking ahead, Singapore inflation data is out next Tuesday.