Hanging On A Thread

GBPUSD – technical overview

Despite signs of the potential for a medium-term base, rallies continue to stall out ahead of 1.4800, keeping the overall pressure on the downside. This latest topside failure has opened a drop back below key support at 1.4333, exposing a more direct retest of critical psychological barriers at 1.4000 in the sessions ahead. Rallies should be very well capped ahead of 1.4500 with only a break above 1.4770 to force a shift in the outlook.

• R2 1.4333 – 16May low – Medium
• R1 1.4267 – 13Jun high – Medium
• S1 1.4158– 13Jun low – Medium
• S2 1.4091 – 14Apr low – Strong

GBPUSD – fundamental overview

Renewed downside pressure in the Pound, with the UK currency underperforming across the board after last week’s shocker poll result showing a 10 point lead for the leave camp. The leave camp had already been gaining momentum last week and the ORB poll put things over the top. Moreover, there has also been a broad resurgence in US Dollar demand, further adding to downside pressure on the Pound. Looking ahead, the economic calendar for Monday is empty. EU referendum headlines and broader macro themes will dictate flow.

USDJPY – technical overview

Overall, the pressure remains on the downside after the market recently stalled out ahead of the previous lower top at 111.89. A fresh lower top is now potentially in place at 111.45 ahead of the next major downside extension through 105.55 and towards 100.00. Ultimately, only back above 111.89 would negate and take the pressure off the downside. Look for any intraday rallies to be well capped ahead of 109.50.

• R2 107.39 – 8Jun high – Strong
• R1 106.86 – 13Jun high – Medium
• S1 105.55 – 3May/2016 low – Strong
• S2 105.00 – Psychological – Strong

USDJPY – fundamental overview

The major pair remains under pressure into the new week, with a fresh downturn in global sentiment driving the weakness. The mass shooting in the US has only added to the sour tone, with Brexit risk, China growth concerns and worry of exhausted monetary policy all opening the door for a retest of the 2016 lows and a potential assault on critical psychological barriers at 100.00 in the days ahead. The economic calendar for Monday is exceptionally thin, with broader macro themes to dictate flow.

EURCHF – technical overview

The market has come back under intense pressure in recent trade, with the cross gravitating towards critical medium-term support in the 1.0800 area. Previous dips into this area have been well supported and with setbacks starting to look extended on the daily chart, it’s quite possible the market will once again look to bounce around the 1.0800 area. A daily close below 1.0800 would however hint at a more significant bearish structural shift.

• R2 1.0986 – 8Jun high – Strong
• R1 1.0938 – 9Jun high – Medium
• S1 1.0840 – 13Jun low – Medium
• S2 1.0810 – 29Feb low – Strong

EURCHF – fundamental overview

Renewed downside pressure on this cross rate over the past few sessions, with the price action starting to turn heads. We are coming off the weakest week for the cross rate since the January 2015 collapse, and while this doesn’t even come close to comparing, it’s definitely worthy of attention. Ongoing Brexit risk and exhausted monetary policy have been sourced as primary drivers behind the Franc appreciation, which could soon force the SNB off the sidelines and into action to defend against unwanted appreciation in the local currency.

AUDUSD – technical overview

The market has entered a period of correction after recently breaking down to fresh multi-day lows at 0.7145. However, any additional upside should be well capped below 0.7500 on a daily close basis, with a lower top sought out ahead of the next major downside extension below 0.7145 and towards the 2016 base at 0.6827 further down. Last Thursday’s bearish outside formation strengthens the bearish outlook.

• R2 0.7570 – 61.8% Fib – Strong
• R1 0.7504 – 9Jun high – Medium
• S1 0.7359 – 13Jun low – Medium
• S2 0.7315 – 6June low – Strong

AUDUSD – fundamental overview

Australia is out for the Queen’s Birthday and this has resulted in a quiet weekly open for the currency. Still, setbacks from risk off flow have been somewhat supported by a mostly consensus round of China data in the form of retail sales and industrial production. Looking ahead, the economic calendar is empty for the remainder of the day and broader macro themes are expected to dictate flow.

USDCAD – technical overview

The market could finally be in the process of establishing a meaningful base following this latest impressive reversal out from multi-month lows below 1.2500. However, the current round of setbacks will need to hold above 1.2655 to keep this prospect alive. An eventual break back above 1.3189 will confirm the basing outlook and accelerate gains towards 1.3500 further up. Back under 1.2655 negates and opens a direct retest of the yearly low.

• R2 1.2915 – 3Jun low – Medium
• R1 1.2840 – 7Jun high – Strong
• S1 1.2700 – Figure – Medium
• S2 1.2655 – 8Jun low – Strong

USDCAD – fundamental overview

Friday’s impressive round of Canada employment data has been shrugged off, with the market clearly focused on this latest downturn in global sentiment and pullback in the price of OIL. The weekend mass shooting in the US has only added to strain already in play from Brexit risk and a potential systemic risk to the global economy. Fear of exhausted monetary policy had already been a major concern to investors and all of this continues to fuel bids for the safe haven US Dollar. Looking ahead, the economic calendar is empty and broader macro themes and flows will dictate trade.

NZDUSD – technical overview

The latest break to fresh 2016 highs beyond 0.7055 suggests the market could be in the process of a more significant structural shift. Still the market will need to establish above critical previous support around 0.7175 to strengthen the bullish prospect, while inability to do so could invite another topside failure. Daily studies have recently traded into overbought territory, though a break back below 0.7000 would be required to take the immediate pressure off the topside.

• R2 0.7148 – 9Jun/2016 high – Strong
• R1 0.7100 – Figure – Medium
• S1 0.7000 – Psychological– Strong
• S2 0.6945 – 8Jun low – Medium

NZDUSD – fundamental overview

Those expecting a cut from the RBNZ last Thursday were let down, with the central bank leaving rates on hold and policy unchanged. There was no real upgrade to the easing bias and this inspired a fresh round of bids, with Kiwi surging to 2016 highs and standing out as an outperformer on the week. But we have since seen the emergence of fresh offers from medium-term accounts, with the downturn in global sentiment on the back of Brexit risk, exhausted monetary policy and the weekend mass shootings in the US, weighing on the risk correlated currency. Looking ahead, the economic calendar is empty and broader macro themes will continue to dictate flow.

US SPX 500 – technical overview

The market continues to show signs of exhaustion on rallies above 2100, with the most recent attempt once again stalling out ahead of the 2133, 2015 record high. Look for a daily close below 2085 to take the immediate pressure off the topside and open the door for deeper setbacks ahead. But ultimately, a break below 2020 would be required to officially force a shift in the structure.

• R2 2133.00 – 20Jul 2015/Record – Very Strong
• R1 2121.00 – 8Jun/2016 high – Strong
• S1 2085.00 –1Jun low – Medium
• S2 2076.00 – 25May low– Strong

US SPX 500 – fundamental overview

The stock market is once again looking vulnerable at lofty heights, with 2016 rallies continuing to feel like they have very little behind them. The fact that monetary policy is exhausted on a global scale is not something that should be a comfort to investors, especially after dovish implications from the June US employment report have done little to bolster sentiment. The upside follow through has been unimpressive and it doesn’t look like the market will be able to push much higher on this lower for longer monetary policy fuel. The systemic risk associated with Brexit and the weekend mass shooting in the US are only adding to a further deterioration in risk appetite.

GOLD (SPOT) – technical overview

The market has done a formidable job recovering out from an intense round of setbacks into the 1200 area. Overall, while the price holds above critical previous medium term resistance at 1191, the structure remains constructive, with scope for the formation of the next medium term base ahead of a resumption of gains back through 1300 and towards 1400 further up.

• R2 1303.90 – 2May/2016 high – Strong
• R1 1278.50 – 13Jun high – Medium
• S1 1234.95 – 7Jun low – Medium
• S2 1199.90 – 30May low – Strong

GOLD (SPOT) – fundamental overview

GOLD has been very well supported in 2016, with the yellow metal finding solid demand from medium-term players on the back of fears over the limitations of exhausted monetary policy, a downturn in risk sentiment and extended global equities. All of this will almost certainly continue to keep the commodity supported ahead of of an eventual push beyond the 2015 peak at 1307 and towards 1400 further up.

Feature – technical overview

USDTRY remains exceptionally well supported on dips, with the latest round of setbacks propped around 2.8800. From here, look for a higher low in favour of the next major upside extension through 3.0120 and back towards a retest of the 2016 high from January at 3.0610. Ultimately, only a daily close below 2.8800 would delay the constructive outlook.

• R2 3.0120 – 24May high – Strong
• R1 2.9685 – 30May high – Medium
• S1 2.8795 –8Jun low – Strong
• S2 2.8435 – 4May low – Medium

Feature – fundamental overview

Last week’s better than expected Turkish GDP figures and narrowing in the deficit have done little to inspire additional bids in the Lira, with the emerging market currency moving in the opposite direction and tracking lower into the new week as broader macro flows dictate trade. Brexit risk, exhausted monetary policy, worry over the China outlook and this latest mass shooting in the US are some of the major drivers behind this latest exodus from emerging market FX.