Month End, Quarter End Flows Invite More Volatility

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 retest and break above 1.6000.

• R2 1.5930 – 18Jun/2015 high – Strong
• R1 1.5803 – 24Jun high – Medium
• S1 1.5662 – 29Jun low  – Medium
• S2 1.5625 – 17Jun low  – Strong

GBPUSD – fundamental overview

Cross related selling early Monday drove EURGBP down to fresh 7 year lows on the back of the elevated risk to Greece, before the Euro mounted an impressive surge. Lack of first-tier data out of the UK kept the Pound fixated on Greece headlines, with the currency following the Euro’s lead after confirmed SNB intervention and encouraging comments from various EU officials relating to Greece negotiations. The economic calendar in the UK picks up a bit more today and could play a larger role, with some GDP readings and the current account due. UK GfK consumer confidence has already come out in Asia, with the data well exceeding expectations. In the US, consumer confidence is the key standout.

USDJPY – technical overview

Although the bullish structure remains firmly intact, following the recent break to fresh multi-year highs, the market has entered a period of healthy correction after stalling ahead of 126.00. Medium-term stretched studies are unwinding from overbought, with room for further weakness below 122.00. But any setbacks below 122.00 should be very well supported ahead of 120.00 in favour of a bullish resumption.

• R2 124.45 – 17Jun high – Strong
• R1 123.19 –29Jun high – Medium
• S1 122.10 – 29Jun low – Medium
• S2 122.00 – Previous Resistance – Strong

USDJPY – fundamental overview

All of the monetary policy divergence between the Fed and BOJ is taking a major backseat in the early week, with the Greece saga dominating headlines. It has become quite clear that counter to what many had thought, traditional risk correlations with the Yen are still very much alive, with the currency benefitting a great deal from flight to safety flows on the Greek uncertainty and potential for Grexit. The market has so far stalled just shy of critical barriers at 122.00, though dealers cite major sell-stops on a break below the psychological barrier. Still, even with the safe haven Yen flows, macro players will be looking to take advantage of any overextended Yen appreciation and will try and add to existing Yen shorts if USDJPY drops into the 121.00s. Some conciliatory comments from various EU officials expressing some optimism for a still positive outcome have helped to prop a bit, though USDJPY remains well offered into rallies for the time being.

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 a recovery back towards 1.0815 in the days ahead, with any setbacks expected to be very well supported above 1.0300 on a daily close basis. Look for a push back above 1.0575 to strengthen the constructive outlook and accelerate gains. Ultimately, only a daily close below 1.0300 would compromise the recovery outlook and give reason for pause.

• R2 1.0575 – 4Jun high – Strong
• R1 1.0497 – 26Jun high – Medium
• S1 1.0280 – 29May low – Medium
• S2 1.0235 – 20Apr low – Strong

EURCHF – fundamental overview

The SNB has been forced to take action in the early week, with the weekend fallout from the Greece turmoil opening a massive flight to safety flow into the Franc. SNB Jordan backed up recent comments and was on the wires on Monday confirming the central bank had stepped in with some form of an intervention to support the sharp declines in the EURCHF rate. It is speculated the latest intervention was probably more of a smoothing out as opposed to anything intense from the Swiss central bank.

AUDUSD – technical overview

Overall, the broader downtrend remains intact, with the market consolidating below psychological barriers at 0.8000. 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. For now, any corrective rallies should be well capped ahead of the recent peak at 0.7819, while ultimately, only a break back above 0.8163 will ultimately delay the bearish structure.

• R2 0.7771 – 24Jun high – Strong
• R1 0.7712 – 29Jun high – Medium
• S1 0.7587 – 29Jun low – Medium
• S2 0.7533 – 2Apr/2015 low – Strong

AUDUSD – fundamental overview

The Australian Dollar has held up relatively well in the face of a massive sell off in risk assets on the back of the escalated Greek crisis. While the threat of Grexit is an Aussie negative theme, it seems the weekend move by the PBOC to cut rates has done a good job of offsetting the negative flows, despite concerns over a China bubble. On the data front, Aussie private sector credit growth came in well above the previous print and in line with consensus estimates, while new home sales disappointed. Looking ahead, RBA Stevens is slated to speak in London, though  Greece headlines will continue to command most of the attention.

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 1.2563 – 5Jun high – Strong
• R1 1.2442 – 9Jun 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. 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 an influential role this week. Should the situation in Greece deteriorate further, look for additional depreciation in the Canadian Dollar. Looking at the economic calendar for Tuesday, Canada GDP and US consumer confidence are the key standouts. Meanwhile, OIL prices should also be watched closely, with the commodity coming back under a bit of pressure and potentially also weighing on the Loonie.

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 0.6924 – 25Jun high– Strong
• R1 0.6882 – 29Jun high– Medium
• S1 0.6785 – 29Jun/2015 low – Strong
• S2 0.6700 – Figure – Medium

NZDUSD – fundamental overview

The New Zealand Dollar managed to extend declines to fresh 2015 and multi-year lows in Monday trade, with the massive wave of safe haven flows weighing on the risk correlated Kiwi. The escalation in the Greece crisis is yet another reason to be selling a currency already highly exposed to a dramatic shift in RBNZ policy over the past several months. Softer GDP, falling commodities, weak dairy prices, and concerning export levels have all contributed to the RBNZ policy 180, and with officials talking down the currency, it looks like we are headed in the direction of 0.6500. For now, the Greek impasse and its impact on risk sentiment will continue to play a major part in this market’s direction. Still, a much weaker than expected Kiwi business confidence showing has done nothing to help the commodity currency’s cause into Tuesday.

US SPX 500 – technical overview

The market has stalled out after posting record highs in May, with the lack of bullish momentum suggestive of exhaustion and warning of deeper setbacks ahead. Look for the latest topside failure and sharp bearish reversal below 2100 to strengthen the outlook and expose critical support at 2040. Rallies should now be well capped below 2100 on a daily close basis.

• R2 2137.00 – 19May/Record – Strong
• R1 2100.00 – Psychological – Medium
• S1 2055.00 – 29Jun 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. The escalation in the Greek crisis has opened a fresh round of setbacks in the early week, though a wave of solid first-tier US economic data over the past few weeks has already 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.

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, with global equities looking vulnerable at record highs, and with the Greece crisis in escalation mode, there is no better place for capital allocation than GOLD. Dealers cite plenty of interest around $1170, with decent buy stops above $1235.

Feature – technical overview

USDZAR is locked within a well defined uptrend, with the market consolidating off recently established 2015 highs. A medium-term higher low is in place just over 11.6900, with any setbacks expected to be very well supported above the level ahead of the next major upside extension back above 12.6365. Ultimately, only a break and close below 11.6900 would negate.

• R2 12.6375 – 8Jun/2015 high – Strong
• R1 12.3900 – 29Jun high – Medium
• S1 12.0540 – 25Jun low – Medium
• S2 11.6945 – 6Apr low – Strong

Feature – fundamental overview

Emerging market FX is feeling the pressure of the escalation in the Greece crisis, with the potential spillover fueling a more intensified exodus from risk correlated investments. The Rand had been decently bid in the previous week, with elevated inflation forecasts stoking expectations for rate hikes from the SARB. But with the IMF cautioning against the South African central bank being in a hurry to raise rates and with risk markets showing signs of capitulation, scope exists for more Rand weakness over the medium term. Moreover, South Africa trade data is due in Tuesday trade and with the deficit expected to widen out further, more pressure can be expected on the Rand.