FX Weekly Snapshot: July 06 - 10

[B]EUR/USD under pressure following the historic ‘NO’[/B]
The single currency started early Monday trading lower after the Greeks voted (61%) to refuse further austerity measures. Greece failed to repay €1.6 billion to the IMF on June 30 and is also due to pay €3.5 billion on July 20 in a maturing bond that is currently held by the ECB. Greek have been closed since Monday, and they will remain close, leaving people dependent on a €60 cash daily limit. [B]EUR/USD[/B] continues to trade heavily (opened with a gap) below both the 50-period SMA and the 200-period SMA on the 4-hour chart, as well as below the key resistance level of 1.1150. Having in mind the above, the psychological level of 1.1000 zone is a very important support and an eventual break here could lead to a further downward pressure, opening the way towards the critical 1.0800 – 1.0900 zone, which is a key zone for the bull sin the medium-term.

[B]GBP/USD finds support from the 200-SMA[/B]
The pound declined over the last several days by 400 pips, in what is considered a technical correction of the trend, as it was expected! (Financial Market Research | Technical and Fundamental Analyses) ‘However, I would expect the pair to test the 1.5540 – 1.5550 area before it resumes upwards towards the 1.5660 – 1.5570 zone’. As it stands, I would expect a battle to take place between both market forces, the bulls and the bears, around the 1.5500 – 1.5530 zone, where the 200-period SMA as well as the ascending trend line which started back in mid-April, combined to provide a significant support to the price action. Following the correction below the 1.5750 and 1.5660 level, I would expect the [B]GBP/USD[/B] pair to test the 1.5660 level in the next couple of days. If it fails to achieve such a break, it could prompt a more aggressive move towards the key support level at 1.5500, with the next support level coming around 1.5440.

[B]USD/JPY fails several attempts to break higher[/B]
The correction between the US dollar and the [B]Japanese yen[/B] is continuing this morning as the price moved lower after testing the upper boundary of the sloping channel and the 123.75 level. The medium term and the long term bias certainly appears to remain bullish, however I expect the price to move further down for more correction in the near term before the rally continues. A decisive violation below the 122.00 barrier, which coincides with the lower boundary of the sloping channel, will confirm the validation of the correction, targeting the next support at 121.50, an important technical level. Alternatively, only a break above the 125.80 will confirm the continuation of the uptrend and negate any bearish scenarios. However, for now we could see the pair testing some significant resistance levels including the 123.75 and 124.35, before testing the 125.80 level.

[B]Commodity currencies under selling pressure[/B]
The Australian and Canadian dollars extended their losses versus the US dollar today. Few days ago, Australia’s trade deficit narrowed but not as much as economists had anticipated. The [B]AUD/USD[/B] pair came under heavy selling pressure and fell below the psychological level of 0.7600, recording a fresh 7-year low of 0.7460 level. I would expect the selling pressure to continue and if the bears manage to maintain the price below the 0.7600 level they could prompt a more aggressive move towards the psychological level of 0.7300.

A similar picture prevails in [B]USD/CAD[/B]. The pair bounced back from its lows of 1.2130 and now trades above the key support level of 1.2300, which includes both the 50- and 200-period SMAs. The pair is also trading above the psychological level of 1.2500 and I would expect the buyers to prompt a more aggressive rally above the previous high of 1.2630.

[B]WEEK AHEAD: The most important news that will affect the market[/B]
The Market opened with gaps today, after the Greek Referendum where the Greek Voters refused to accept more austerity measures and rejected the terms of an international bailout. The [B]majority, 61.3% voted in favor of “NO”[/B], against 38.7% who voted “YES”. The German Chancellor Angela Merkel and French President Francois Hollande President called for an emergency leaders’ summit on Tuesday after they will meet today at the afternoon in Paris to discuss the next move for the Europe. However, the next move of Greece and from where they will receive funds to cover their needs and its repayments remain unknown.

[B]Today[/B], the Swiss Federal Statistical Office will release June’s Inflation Rate. A while later the Sentix Investor Confidence in Eurozone for July will be out. In US, the Markit Services PMI will complete the calculations for the Composite PMI. Moreover, the ISM Non-Manufacturing PMI and the Labor Market Conditions Index for June are expected. Overnight, the [B]Reserve Bank of Australia[/B] will release its [B]Rate Statement[/B].

Early on [B]Tuesday [/B]morning, the German Industrial Production will be published in May. The equivalent indicator in the UK, along with the Manufacturing Production also for May are scheduled for release. The [B]NIESR GDP Estimate[/B] for the [B]UK [/B]for the last three months will attract considerable attention, as the BoE officials will monitor closely the GDP for their decision to raise interest rates. In the US, the JOLTS Job Openings for May and the Economic Optimism are scheduled. The spotlight of the day is the [B]European Leaders Special Summit[/B] on the afternoon which will give a first signal what the European Leaders and the Greek government plan for the Greek future.

On [B]Wednesday[/B], the key economic event of the day is the [B]FOMC minutes[/B] will be released on the afternoon. During the night, in Japan the Machinery Orders are expected. In [B]Australia[/B], the [B]Consumer Inflation Expectations [/B]for July will be out before the Labor data for June. Australia’s Unemployment rate, Participation Rate and Employment Change are coming out.

On [B]Thursday [/B]morning, Germany will release its Trade Balance along with its Exports and Imports for May. Sweden will post its Unemployment rate for June. The [B]Bank of England[/B] will announce its [B]Interest Rate Decision[/B] and the [B]Asset Purchase Facility[/B]. In the US, the weekly jobless claims are scheduled as usual.

On [B]Friday [/B]morning, after the German Wholesale Price Index, the Norwegian Inflation Rate for June will be eyed. In [B]Canada[/B], the [B]Unemployment Rate[/B] and the [B]Employment Change[/B] will attract traders’ attention, as usually these indicators are released with NFP report and lose their glory. In the US, the Wholesale Inventories for May and Monthly Budget Statement for June will be posted. A while later, the [B]Chair of Fed Board Governors Janet Yellen[/B] will give a [B]speech[/B].

good stuff! good site

Thanks Jose12! If you have any questions (technical or fundamental) please do not hesitate to contact us.

Regards

Barbara Nikodemou
Market Analyst
JFD Brokers