Press review - page 333

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EURUSD moves back toward trend line and MA resistance (based on forexlive article)

'The EURUSD was able to move back above the 100 day MA at the 1.10379 level and we are now seeing a further move higher in the pair. Earlier today, the price extended to the 100 hour MA (blue line in the chart below) and a topside trend line (see blue circles) and held. The price is looking toward that same combination. This time it is a bit lower at the 1.1088.'


 

Deutsche Bank - What Risk Resilience Implies For Grexit & The EUR (based on efxnews article)

  1. "Opinion is divided between the following two trains of thought: i) that the market is still optimistic that a negotiated settlement can be reached and Grexit averted. Or, ii) Grexit is no longer seen as particularly disruptive for global markets, at least in the short-term. Importantly i) and ii) are deeply inter-connected."
  2. "The most important aspect of the latest risk resilience is that it has dramatically weakened Greece’s negotiating power. Market resilience adds to the prospects of either Grexit, or Greece agreeing to terms that are not that different from what was on offer prior to the referendum, which may not be credible as a long-term solution."
  3. "So where does this leave the EUR? The worst case scenario, we have been staring at, notably Grexit, has not hurt the EUR much for now, while the best case scenarios (a negotiated settlement) are not a great reason to buy the EUR either, not least because it will be tough to reach a deal that has long-term credibility," DB adds.
  4. "One implication is that there is definitely a case to be made to sell short-dated (1m or 2m) realized EUR/USD volatility, especially versus implied vols that will remain pumped up by uncertainty. We still like EUR/USD digital risk reversal trades, where selling 3m 1.14 strikes can finance a 3m 1.08 put at close to zero cost, and the timeline potentially covers a Grexit, or a September Fed tightening."
 

Trade Ideas For EUR/USD, AUD/USD, NZD/USD - UBS (based on efxnews article)

EUR/USD: "It looks like summer markets have kicked in, but the Greek uncertainty is keeping things alive. We still prefer shorts even though the range play will most likely continue. Sell at 1.1055 and add at 1.1090 with stops above 1.1125. Flows are mixed with no clear direction."

AUD/USD: "The RBA kept the target rate on hold, as expected. Stay short and add on rallies to 0.7550 with stops through 0.7625, targeting 0.7200."

NZD/USD: "price action remains very soft after the pair got capped above 0.6710 yesterday. We prefer to remain short and add on rallies toward 0.6750 with stops through 0.6850."

 

EURUSD has a squeeze higher and a rotation back lower (based on forexlive article)


'The EURUSD moved above the 100 bar MA on the intraday 5-minute chart and the 50% of the last leg down. That was enough to trigger some stops above 1.0958. The move back above the 50% of the move up from the March 2015 low at 1.1063 (not shown) also contributed to the rise and the price scooted to 1.09749.'

 

EURUSD can't do what it should do technically (based on forexlive article)


"We are midway through the trading week and the EURUSD has a trading range of 191 pips.  ON May 24, the range was 190 pips. ON Feb 8 and Feb 15 the range for the week was 173 and 172 pips.  If the EURUSD stayed inside the current range with 1.10945 as the high and 1.10915 as the low, it would be the 4th lowest range week this year (we are half way through).  Can it remain low (i.e., keep the same range)? Yes.  It it likely?  UMMM.... I like to think at some point a boundary will be broken."

 

JP Morgan about EUR/USD: Levels & Targets (based on efxnews article)

"EUR/USD overnight break above 1.0983/1.1002 (minor 38.2 %/pivot) eased some downside pressure, but only through clear moves above 1.1094 and 1.1108 (h.Ich.-lagging/h. trend) we’d reach neutral territory," says JP Morgan.


"On the downside, JPM sees the next T-zone between 1.0815 and 1.0783/72/44/04 (May low/c=a/d. Ich.-lagg./int. 76.4 %//daily trend)."

 

Trading news events - Bank of England (BoE) Interest Rate Decision (based on dailyfx article)

The Bank of England (BoE) interest rate decision may offer little relief to recent decline in GBP/USD as the central bank is widely expected to retain its current policy in July, and the committee may continue to endorse a wait-and-see approach amid the growing threat of a Greek exit.

What’s Expected:


Why Is This Event Important:

Heightening uncertainties surrounding the Euro-Zone – the U.K.’s largest trading partner – may prompt the BoE to further delay its normalization cycle, and the British Pound may face additional headwinds in the second-half of the year should Governor Mark Carney highlight a more dovish outlook for monetary policy.

However, the BoE may largely retain its current policy throughout the remainder of the year as the geopolitical risks surrounding the U.K. dampens the outlook for growth and inflation, and the central bank may carry the record-low interest rate into 2016 in an effort to encourage a stronger recovery.

How To Trade This Event Risk

Bullish GBP Trade: BoE to Stay on Course to Remove Record-Low Interest Rate

  • Need green, five-minute candle following the decision to consider a long GBP/USD trade.
  • If market reaction favors buying Cable, go long GBP/USD with two separate position.
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit.
Bearish GBP Trade: MPC Highlights Dovish Outlook for Monetary Policy
  • Need red, five-minute candle to favor a short GBP/USD trade.
  • Implement same setup as the bullish sterling trade, just in opposite direction.
Potential Price Targets For The Release

GBP/USD Daily


  • Failure to preserve the bullish RSI momentum carried over from March raises the risk for a further decline in GBP/USD; break/close below 1.5330 (78.6% retracement) may spark a run at the June low (1.5169).
  • Interim Resistance: 1.5550 (50% retracement) to 1.5570 (38.2% retracement)
  • Interim Support: 1.5169 (June low) to 1.5180 (23.6% retracement)
 

Credit Agricole - Keep Selling Rallies In EUR & AUD (based on efxnews article)

"Although such an outcome would trigger EUR upside, we remain of the view that rallies should be sold. This is due to investors’ preference of using the single currency for funding investments in riskier assets such as equities and as the ECB is unlikely to turn less dovish anytime soon."

"In Australia June employment data was released above expectations. This in turn supports expectations of stabilizing price developments to the benefit of investors’ central bank rate expectations. This in combination with stabilizing China-related sentiment has been keeping the AUD in demand."

"In the short-term we do not expect further upside on the back of further improving risk sentiment. From a broader angle, however, rallies should still be sold as any tightening of monetary conditions on the back of a further appreciating currency is unlikely welcomed by the RBA."

 

BNP Paribas - How To Trade Greece's End-Game (based on efxnews article)

1. Sell EUR relief rallies against USD, GBP:

"This scenario produces a relief rally across most asset classes. European equities would rally and peripheral spreads would narrow. It is unlikely the EUR would appreciate broadly as it is difficult to argue that the single currency is trading at a discount to valuation. Outcome 1 would provide a catalyst for the re-establishment of EUR-funded carry trades," BNPP advises.

"Accordingly, the EUR should depreciate, especially against higher yielders such as the USD and GBP. A clear exception would be EURCHF, which is likely to rally in this scenario. The CHF has served as a safe-haven – as indicated by the net long exposure of +24.," BNPP projects.


2. Sell EUR/JPY:

"This is the scenario the market fears...We view that EURJPY shorts would perform even better in this scenario, as an anticipated delay to Fed tightening would weaken the USD," BNPP advises.

 

Morgan Stanley evaluated some long-term/short term scenarios concerning EUR in case of Greece (based on efxnews article)

Short-term evaluation:

  • "Should Greece sign a deal, a short-term EUR rebound should be followed by EUR weakness as investors are likely to move back into EUR-funded carry positions."
  • "Should Greece exit, the ECB may have to use its tool kit to keep sovereign spreads under control. Monetary easing should put the EUR under selling pressure. Ultimately, the ECB should be successful in controlling spreads, we believe."

Long-term evaluation:

  • "A Grexit represents a fundamental shift for EMU with the loss of ‘irrevocability’ potentially turning the union into a club of fixed exchanges rates with the possibility to leave. Peripheral assets will have to trade at a risk premium, unless EMU authorities deepen integration via further banking union and fiscal integration steps. The ECB controlling sovereign spreads successfully could turn into a long-term EUR negative factor as it may not provide the necessary ‘wake-up call’ to European politicians to make the necessary reforms to avoid future market tension."
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