Will Hope Spring From Eurogroup Meeting?

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 in the 1.5550 area. A daily close below 1.5550 will open the door for a more pronounced bearish reversal towards 1.5000, while inability to do so will keep the immediate pressure on the topside for an eventual retest and break above 1.6000.

• R2 1.5733 – 1Jul high – Strong
• R1 1.5645 – 3Jul high – Medium
• S1 1.5530 – 6Jul low  – Strong
• S2 1.5422 – 11Jun low  – Medium

GBPUSD – fundamental overview

UK markets have been held hostage to all things Greek, with the Pound’s direction contingent on sentiment to this theme. The uncertainty surrounding the outlook for Greece has been a net negative for the Pound, despite some expectations for Sterling safe haven flows. A quiet economic calendar has added to the lack of attention on the domestic front, though things pick up on Tuesday with the release of UK industrial and manufacturing production, and the NIESR GDP estimate. Meanwhile in the US, we get trade data and consumer credit.

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 and consolidation 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 123.72 – 2Jul high – Strong
• R1 123.19 –3Jul high – Medium
• S1 121.85 – 6Jul low – Medium
• S2 121.00 – Figure – Strong

USDJPY – fundamental overview

The short Yen play has been a favourite for currency traders over the past few years, with the monetary policy divergence theme driving an intense bout of Yen weakness to multi-year lows. However, while there continues to be solid medium-term interest for the Yen short, the trade has lost some appeal in recent weeks as uncertainty intensifies with Greece unraveling and China falling apart. Many had thought traditional safe haven correlations had been lost on the Yen, and yet, the fear in the market is inviting a resurgence in Yen demand. Yen longs are at their highest levels in quite some time. Tuesday’s focus will continue to be on Greece and China, with the market also taking in some US data in the form of trade and consumer credit. Monday’s slightly softer US ISM non-manufacuring has also given Yen bulls added fuel. Still, overall, the short Yen trade remains the favoured play and participants will continue to look to be buying USDJPY on dips.

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 1.0525 – 2Jul high – Medium
• S1 1.0355 – 6Jul low – Medium
• S2 1.0315 – 29Jun low – Strong

EURCHF – fundamental overview

Reassurances from the SNB that it will continue to support dips in this market have been well received by investors, happy to ride on the central bank’s back whenever we see downside pressure. The major cross rate has been impressively well supported yet again, following the Monday gap open lower, despite ongoing uncertainty surrounding Greece post the NO vote, and the still very real possibility for a Grexit. Still, the SNB would probably be better served if a deal were reached, as any additional intensification on this front, could prove too difficult for the central bank to fight. Dealers cite stops below 1.0300 and above 1.0600. On the data front, Swiss unemployment will be digested on Tuesday but isn’t likely to factor into trade.

AUDUSD – technical overview

A multi-day bearish consolidation has finally been broken to the downside, with the market taking out the yearly/multi-year low at 0.7533 to open the door for the next major downside extension towards 0.7000 further down. Daily studies are however a little stretched leaving the door open for some corrective upside before bearish resumption. However, any rallies should be well capped below 0.7819.

• R2 0.7657 – 2Jul high – Strong
• R1 0.7587 – 29Jun low – Medium
• S1 0.7463 – 6Jul/2015 low – Strong
• S2 0.7400 – Figure – Medium

AUDUSD – fundamental overview

As was widely expected, the RBA left rates on hold at a record low level of 2.00%. However, in a bit of a twist, the central bank disappointed doves after maintaining its stance on policy, failing to upgrade to a more accommodative stance. The central bank statement held with the view that policy was appropriate and that it would continue to monitor data going forward. The RBA also managed to downplay external risks from Greece and China. The bar for additional rate cuts appears to be quite high, though it seems the RBA will continue to leave rates at current levels for an extended period of time.

USDCAD – technical overview

Last week’s push through 1.2563 confirms a fresh higher low at 1.2128 and opens the door for the next major upside extension and retest of the 1.2835, 2015 high in the days ahead. At this point, look for any setbacks to be very well supported ahead of 1.2300, while only a drop below 1.2128 delays the highly constructive outlook for the pair.

• R2 1.2835 – 18Mar/2015 high – Strong
• R1 1.2700 – Figure – Medium
• S1 1.2563 – 6Jul low – Medium
• S2 1.2475 – 1Jul low – Strong

USDCAD – fundamental overview

The last week or so hasn’t been a friend to the Canadian Dollar, which continues to get hit hard across many fronts. Though we have seen some softer data out of the US, this has been more than offset with disheartening data out of Canada as reflected through last week’s GDP and this week’s drop off in Ivey PMIs, business outlook and the Bank of Canada loan officer survey. Adding insult to injury, the commodity currency, heavily correlated to OIL flows, is taking an added hit with OIL prices pulling back sharply over the past few sessions. Finally, with risk markets sensitive to Greece and China, this has taken away from incentive to be long the Loonie.

NZDUSD – technical overview

The market continues to extend declines to fresh yearly and multi-year lows, with the pair closing in on a measured move downside objective in the 0.6500 area. However, with daily studies now tracking in oversold territory, there is risk for a short-term corrective bounce in the sessions ahead. But any rallies should be well capped ahead of 0.7000.

• R2 0.6810 – 1Jul high– Strong
• R1 0.6736 – 2Jul high– Medium
• S1 0.6647 – 2Jul/2015 low – Strong
• S2 0.6600 – Figure – Medium

NZDUSD – fundamental overview

There has been an aggressive upgrade of RBNZ rate cut expectations, with the market pricing additional easings in the months ahead. Declining dairy prices have been a major drag on the economy, while this latest NZIER Q2 business survey won’t do anything to inspire confidence, with sentiment crumbling to its lowest levels in three years. Moreover, Kiwi is still the highest yielding currency of the developed economies and as such, is deeply exposed in risk off settings. The uncertainty from the latest Greece NO vote and a rapidly cooling China have been additional thorns at the side of Kiwi, which now closes in on PM Key’s 0.6500 target.

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 bearish reversal below 2100 to strengthen the outlook and open a break below critical support at 2040, which guards against 2000 further down. Rallies should now be well capped below 2100 on a daily close basis.

• R2 2100.00 – Psychological – Strong
• R1 2088.00 – 2Jul high – Medium
• S1 2040.00 – 11Mar low – Strong
• S2 2000.00 – Psychological – Strong

US SPX 500 – fundamental overview

The equity market has done a relatively good job absorbing the wave of uncertainty surrounding Greece and China, with stocks recovering nicely in Monday trade. Volumes have been unimpressive in the early week, suggesting larger funds are not as concerned with Greece risk, perhaps on the expectation the crisis will be contained. We have also been hearing talk of the initiation of defensive hedging strategies from many players in anticipation of any additional shocks. Still, if there is no headway on Greece today and if China markets continue to unravel, the market may get jittery and look to head for the exits. On another front, also supportive over the past couple of sessions is softer US economic data, with a disappointing employment report and Monday’s below forecast US ISM non-manufacturing sending a message to the Fed that it may want to err on the side of accommodation.

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 upside in the sessions ahead, in an attempt to carve out a more meaningful longer-term base. The most recent bounce back above 1170 helps to confirm the basing outlook, while only below last week’s low at 1157 would negate and open the door for a retest of the 2014 low at 2031 further down.

• R2 1206.00 – 18Jun high – Strong
• R1 1188.00 – 29Jun high – Medium
• S1 1157.00 – 2Jul low – Medium
• S2 1143.00 – 17Mar low – Strong

GOLD (SPOT) – fundamental overview

Quite surprisingly, the GOLD market has been unable to catch a significant bid in recent trade, despite a major cloud of uncertainty hanging over Greece and its future in the Eurozone. The weekend NO vote in the Greece referendum has propped the yellow metal modestly, though nowhere near as much as many would expect with the prospect for Grexit now a base case. On top of everything going on in Greece at the moment, GOLD has even failed to find bids on the collapse in China’s financial markets. Medium-term players continue to step in but are starting to lose patience with the lack of follow through in the face of events that should be traditionally supportive of the commodity.

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 12.5000 – Psychologica – Medium
• S1 12.0540 – 25Jun low – Medium
• S2 11.6945 – 6Apr low – Strong

Feature – fundamental overview

The South African economy is already not in the best shape, and when you throw in Grexit risk and ongoing China stimulus measures to support collapsing Chinese financial markets, this opens the door for more significant downside pressure in the risk correlated emerging market currency. Still, risk correlated markets have done a relatively good job absorbing the early week safe haven flows, though this could change quickly if we don’t get progress in Greece or stability out of China over the coming sessions. Overall, even without Greece and China in the mix, the softer South Africa fundamentals and expectation for a divergence between SARB and Fed policy, should continue to weigh on the Rand over the medium-term.