USD/JPY closes in on last week's lows on weaker yields

USD/JPY slips to a session low of 108.22

USD/JPY H1 18-06

This comes as Treasury yields continue to make new lows for the day with 10-year yields down by 2.4 bps to 2.07% currently. The softer mood in the bond market is feeding into gains for the yen on the session, with USD/JPY testing last week's swing lows around 108.17-22.

Looking at the hourly chart above, the near-term bias in the pair has shifted from being more bullish to more bearish now as price broke below both key hourly moving averages in Asia Pacific trading today.

However, the price range remains largely contained around 108.20-60 since last week as traders are forced to wait on fresh developments from the US-China trade dispute and the FOMC meeting this week.

As such, the pair should continue to maintain its current levels ahead of the Fed tomorrow with further support seen closer to the 107.85-00 levels where notable bids are also lined up around the figure handle.

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EUR/USD caught between large expiries today; traders still waiting on Fed

EUR/USD price action remains trapped between 1.1200-50

EUR/USD H1 18-06

The price range today remains somewhat narrow (21 pips) as traders continue to wait on the FOMC meeting tomorrow for more market direction. The pair had a pop higher overnight following poor US data but quickly resumed its lull into the new day.

For today, price action should remain largely muted as traders keep their focus on the Fed with large expiries resting on either side of current levels at 1.1200 and 1.1240-50. The 100-hour MA (red line) @ 1.1260 will also help to limit any upside potential ahead of the key risk event in US trading tomorrow.

Meanwhile, to the downside there is also support from the 61.8 retracement level @ 1.1205 so that should continue to put a floor on any run lower alongside bids at the 1.1200 handle.

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Wilbur Ross: Deal with China can be done but won't come during G20

US commerce secretary, Wilbur Ross, comments

  • Negotiations are complex, will be uncertain until the finish line

  • Should judge US government by its results in trade negotiations

  • US wants true free trade in autos market (this one is for EU politicians)

Well, the rhetoric has quickly shifted since the end of last week as Trump suggested that there isn't much need to meet with China president Xi at the G20 summit. His suggestion is that China will eventually want to do a deal so they will come back to the negotiating table instead. Whether or not that will play out accordingly, only time can tell.

For now, China isn't backing down and they've continuously made clear that their stance will be to defend their current position on the trade deal and retaliate in due kind.

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EUR/USD sellers maintain near-term bearish bias; US retail sales data eyed

EUR/USD is challenging the 200-hour MA but so far sellers are winning out

EUR/USD H1 14-06

The pair briefly hit a session high of 1.1289 but sellers are continuing to hold a defense of the 200-hour MA (blue line) @ 1.1287, thus maintaining near-term control in the pair. Despite the slight extension higher earlier, price action remains rather muted today with the range only a mere 19 pips.

Markets are a little quieter on the session as traders continue to wait on the release of US retail sales data for more clues about the US economy and the Fed rate outlook. That will only come at 1230 GMT later today.

For EUR/USD, of note there are also large expiries lurking at 1.1300 (€4.4 billion) so that may play a part in limiting price action before they roll off later today. The 100-hour MA (red line) is another key near-term level to watch out for later ahead of the US retail sales data. That currently sits at 1.1305.

As for downside levels, there is some minor support from yesterday's low near 1.1270 and light bids lurking around 1.1245-50. It'll all depend on how markets react to the data later so be mindful of these near-term levels as a break could help to see a larger trend develop.

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USD/JPY inches towards week's lows as risk mood softens slightly

USD/JPY hits a low of 108.16 on the day

USD/JPY H1 14-06

US equity futures have moved lower alongside Treasury yields with the former down by 0.2% on the day at the lows, while 10-year yields are weaker by 2.6 bps to 2.068% currently. Economic data from China certainly didn't help with that as we saw China's industrial activity expanded by its weakest on an annual basis since February 2002.

That has pushed USD/JPY lower as sellers remain in near-term control having defended a test of the 200-hour MA (blue line) earlier today. Right now, there is some support from yesterday's low @ 108.17 but beyond that further support is seen around 107.80-00 next.

As markets exhibit signs of caution, be wary ahead of the US retail sales release later. A relatively poor reading there could set off a strong flight to safety move later today.

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GBPUSD recovers to MA area after UK vote results, but backs off again.

Boris Johnson does better than expected

The GBPUSD has recovered after the votes for UK Tory leadership shows Boris Johnson with a commanding lead (hope he unites and leads to a deal?).  The price has now moved through the 200 hour MA and up to the 100 hour MA (blue and green lines at 1.26949 and 1.27056 respectively).  The price has backed down and trades back below the lower 200 hour MA.  

Boris Johnson does better than expected

What next?

Well there is a little something technically for the bulls and the bears.

For the bears:

  • The high yesterday could not get above the June 7 high

  • Fell below the 1.2727 level

  • Fell below the 100 hour MA at 1.27056, and successfully tested that level today

  • Below the 200 hour MA (traded above and below that MA level.

For buyers:

  • Held the 50% retracement and bounced

  • Above the 38.2% retracement at 1.26844

I guess the sellers have a little more of the advantage for traders today being below the MAs. It will take a move back above the 100 hour MA to make the buyers more comfortable.

A move below the 50% at 1.26603, would give sellers more confidence and increase the anxiety for the longs/bulls. 

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EUR/USD still caught searching for near-term direction in early trades

EUR/USD continues to sit in between both key hourly moving averages

EUR/USD H1 13-06

The near-term bias in the pair is more neutral now as price holds below the 100-hour MA (red line) @ 1.1313 but above the 200-hour MA (blue line) @ 1.1278. There is also support from the near-term trendline that is helping to limit losses on the session so far, but overall I'd pay more attention to the 200-hour MA for clearer near-term direction.

Price action remains limited as the pair sits in just a 17 pips range as markets continue to digest global trade tensions, the odds of Fed rate cuts in the coming months, and also falling inflation expectations in the euro area.

In my view, the technical and positioning pictures are favouring the euro slightly if you look at where the single currency was trading in the weeks before against the dollar. However, price needs to clear resistance and offers around 1.1350 but more importantly the 200-day MA @ 1.1362 in order to establish more upside momentum.

However, fundamentals for the euro may still come back to haunt the currency with political risks in Italy constantly being highlighted and the fact that the market confidence towards the ECB is at an all-time low isn't helping.

Right now, market pricing still suggests that the Fed will be the "more dovish" of the two central banks in the sense that they will move to cut rate first. Fed fund futures have a ~85% probability of a cut in July for now but if the ECB begins to step up their dovish game, I reckon there's scope for EUR/USD to weaken slightly.

This is because markets are already almost close to fully pricing in a dovish Fed while a more dovish ECB is not quite on the agenda just yet. That said, there's a lot that could still get in the way and mess up all the pricing here with global trade tensions and economic data the two major things to keep an eye on.

As such, the next key risk event this week will be tomorrow's US retail sales report so let's see what that has to offer then.

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EURUSD trades in a channel/near highs for the day

Sluggish CPI data send the pair's price back higher

Looking at the EURUSD, the pair has moved higher after the CPI data. The YoY data was a bit weaker than expected. 

Sluggish CPI data send the EURUSD's price back higher

Technically, the price of the pair has moved toward the high for the day at 1.13428. The high just reached 1.14340. The pair moved from being down to being up on the day now (closed at 1.1325 yesterday).   

The pair remains in a channel defined by a topside trend line at 1.1347 (that is the high from last week too).  Move above is increases the pairs bullish bias. Above, the key 200 day MA looms at 1.13633 currently. The last time the price of the EURUSD traded above its 200 day MA?  You have to go back to May 2, 2018. That is a long time ago.  KEY LEVEL folks. 

The lower trend line comes in at 1.1312 (and moving higher).The lagging 100 hour MA is not far away from that lower trend line at the 1.13058. Apart from a quick dip below on the ECB day last week, the price has not been below the 100 hour MA since May 31.  That remains a key barometer on the downside. 

Also of note today, is a large expire of options in the 1.1300 to 1.1350 area (been trading between those extremes today.  The estimates are: 

  • 1.1300 - 800M

  • 1.1325 - 750M

  • 1.1350 - 1.2B

That may help to keep the pair contained in the range (between the trend lines) at least until 10 AM ET.

The EURUSD 200 day MA has not been broken since May 2018

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USD/JPY inches lower as risk mood softens

USD/JPY falls back under both key hourly moving averages

USD/JPY H1 12-06

The pair just hit a session low of 108.28 as sellers managed to seize near-term control by driving price below both the 100-hour MA (red line) and the 200-hour MA (blue line).

There is now mild support around 108.31 but a further break lower will see price start moving back towards a retest of the 108.00 handle again. The move to the downside comes amid a shift in the risk mood to being slightly softer on the session.

US equity futures are down by 0.3% to session lows now while Treasury yields are also weighed down with 10-year yields down by nearly 2 bps to 2.125%. There's no clear cut cause for the drop in sentiment but global trade tensions and the situation in Hong Kong - driving the Hang Seng down by nearly 2% - isn't helping to say the least.

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USDJPY moves to new session highs. Tests topside trendline

Topside trend line at 108.81

The USDJPY has moved to a new session high and 108.796. That is getting close to a topside trendline which comes in at 108.81. The price has backed off a bit ahead of the level and trades at 108.72 currently. 

Topside trend line at 108.81

The pair today based near its 100 hour moving average  (blue line at 108.388 currently).  Buyer against that level today (and yesterday as well) were rewarded with decent gains today.

The pair spiked above its 200 hour moving average (green line) and the underside of a broken trendline (that trendline helped stalled the rally yesterday).  All moves are more bullish. 

The topside trendline at 108.81 is the next hurdle along with the 50% retracement at 108.864.  A break above these overhead levels, would open the pair for further gain with 109.00 (natural resistance) and 109.11-14 as next targets (61.8% and swing lows from May 29th).

On the downside, look for the 108.61 level as close support (38.2% and near the underside of the broken trend line). 

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