Traders Position Ahead of Tense Weekend

GBPUSD – technical overview

An impressive rally to fresh 2015 highs has stalled out ahead of the 1.6000 psychological barrier, with the market reversing lower and exposing a drop back towards some internal support at 1.5550. A break and close below 1.5550 will open the door for a more pronounced bearish reversal, while inability to do so will keep the immediate pressure on the topside for an eventual test of 1.6000.

• R2 1.5930 – 18Jun/2015 high – Strong
• R1 1.5803 – 24Jun high – Medium
• S1 1.5667 – 24Jun low  – Medium
• S2 1.5625 – 17Jun low  – Strong

GBPUSD – fundamental overview

The Pound has mostly been weighed down in sympathy with the Euro of late, though the UK currency is holding up relatively well overall. The market is mostly fixated on the fate of Greece, and with little on the economic calendar to distract, Greece headlines will continue to dominate trade into the weekend. However, there is still some local event risk, with Bank of England Governor Carney slated to speak, while UK traders also digest renewed talk over a potential Brexit.

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 consolidation 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 124.45 – 17Jun high – Strong
• R1 124.00 –Figure – Medium
• S1 123.00 – Figure – Medium
• S2 122.45 – 10Jun low – Strong

USDJPY – fundamental overview

It’s been a while since markets have looked at USDJPY as a risk correlated trade, and yet, with Greek impasse tensions running high, we are once again seeing the direction in the major pair predicated on these flows. Renewed demand for the Yen this week has been attributed to the possibility of a Greek default and should this become a reality next week, there is risk for a USDJPY breakdown through critical support at 122.00. But any meaningful dips are then expected to be well supported, with the Fed monetary policy divergence theme ultimately expected to drive the market back to the topside. Solid US data this week is supportive and sets the stage for another impressive NFP showing next week.

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 1.0403 – 19Jun low – Medium
• S2 1.0305 – 7May low – Strong

EURCHF – fundamental overview

Lack of any real progress on Greece is the major story and it looks like another week will go by with no deal. Still, the SNB remains committed to act to curb excessive overvaluation in the Franc, particularly if brought on by a fallout in Greece. We have seen this reflected in the price action with the EURCHF rate mostly supported despite Euro outflows on Greece risk. On Thursday, SNB Jordan confirmed the central bank’s line that the Franc was overvalued and the SNB remained committed to preventing excessive appreciation in 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 0.7849 – 18Jun high – Strong
• R1 0.7771 – 24Jun high – Medium
• S1 0.7679 – 23Jun low – Medium
• S2 0.7646 – 17Jun low – Strong

AUDUSD – fundamental overview

Although the risk for an RBA rate cut has dropped off, the market is still pricing in a 25% chance in July. But even if the RBA remains on hold, the outlook for the Australian Dollar is less stable, with the central bank likely to retain an accommodative tone, while maintaining its bearish view of the local currency. Next week, we get an update from RBA Stevens on Tuesday, followed by building approvals Wednesday, trade data Thursday and retail sales on Friday. For now, ongoing Greece headlines and the fate of this saga will dictate direction, while Fed rate hike expectations will also play a role.

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. Setbacks should now be well supported in the 1.2200 area, while ultimately, only a daily close back below 1.2127 would delay the constructive outlook. Look for a break back above 1.2563 to confirm the constructive outlook and accelerate gains.

• R2 1.2442 – 9Jun high – Strong
• R1 1.2423 – 24Jun high – Medium
• S1 1.2277 – 24Jun low – Medium
• S2 1.2215 – 19Jun low – Strong

USDCAD – fundamental overview

The Canadian Dollar has mostly been confined to consolidation in recent trade, though the general direction over the past several days has been lower. Interestingly enough, Thursday run of solid US economic data, highlighted by healthy US claims, and impressive personal income and personal spending, didn’t factor into trade, with the Loonie recovering a bit. But most of the attention right now is away from Canada and the US, with broader macro themes dictating trade. The ongoing Greece saga is commanding the market’s attention at the moment and will likely play a role into the weekend. There is no economic data out of Canada on Friday and US Michigan sentiment is the only release of note. OIL markets have been quiet but should continue to be monitored.

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. Daily studies are however looking a little stretched and there is risk for a short-term corrective bounce in the sessions ahead. But any rallies should now be well capped well below 0.7200.

• R2 0.7012 – 17Jun high– Strong
• R1 0.6950 – Mid-Figure– Medium
• S1 0.6845 – 24Jun low – Medium
• S2 0.6815 – 23Jun/2015 low – Strong

NZDUSD – fundamental overview

Some mixed developments out of New Zealand on Friday, with a better than expected trade data showing being offset by a fresh wave of downbeat comments from the RBNZ. The central bank was out talking down the local currency, while also expressing concern over headwinds to growth from a declining dairy sector. Overall, it seems the market will be quick to overlook the trade data, with the RBNZ now in accommodative mode and leaving the door open for additional rate cuts in the face of softer GDP, falling commodity prices, weak dairy prices, and concerning export levels. Local officials have been talking 0.6500 for some time and it looks like we are headed in that direction. For now, the Greek impasse and its impact on risk sentiment will also factor into trade for this risk correlated currency.

US SPX 500 – technical overview

The recent 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. Look for a topside failure and daily close back below 2100 to strengthen the outlook open the door for deeper setbacks towards critical support at 2040 over the coming sessions. Ultimately, only a daily close above 2137 negates.

• R2 2137.00 – 19May/Record – Strong
• R1 2130.00 – 22Jun 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 since 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 few weeks has helped solidify prospects for a sooner than later rate liftoff, and this reality is making it less attractive to be long equities at lofty levels. Throw in added uncertainty surrounding Greece and there is risk for further liquidation in Friday trade. The economic calendar is exceptionally thin, with Michigan sentiment the only notable release.

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 1206.00 – 18Jun 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. Sell stops reported below 1160, buy stops cited above $1235.

Feature – technical overview

USDTRY is locked within a well defined uptrend, with the market consolidating off recently established record highs. A medium-term higher low is in place just over 2.5600, with any setbacks expected to be very well supported above the level ahead of the next major upside extension back above 2.8095. Ultimately, only a break and close below 2.5605 would negate.

• R2 2.8095 – 8Jun/Record – Strong
• R1 2.7500 – 16Jun high – Medium
• S1 2.6445 – 29Apr low – Medium
• S2 2.5605 – 21May low – Strong

Feature – fundamental overview

It seems a reminder from one local bank that a coalition or minority government has never finished one full term is shaking up sentiment a bit into Friday trade, with the Lira coming back under pressure after staging a respectable recovery rally from record lows against the Buck. Overall, with the CBRT unlikely to raise rates, even with inflation on the rise, with plenty of risk surrounding Greece, and with the Fed on course to start raising rates sooner than later, the outlook for the Lira continues to be quite negative.