eFXplus DATA

• Bias remains on downside, the 10 and 30-DMAs remain negatively aligned
• Growing risk for a fall to the 30-day lower bolli-band now at 107.81
• The upside remains weighed down by the key 108.93 Fibonacci level
• 108.93 Fibo is a 23.6% retrace of the 112.40 to 107.81 (April to June) fall
• We are looking to get short at 108.75, ahead of the 108.89 key Fibo
• EUR/JPY range has been 121.60-87 on Tues so far, according prices on the EBS

• GBP weighed by rising fears of a no deal Brexit
• EUR/GBP boosted towards 0.9000 (GBP/EUR 1.1100), last above in Jan
• Heavy option (defendable barriers) and corp selling is very likely
• No deal carries substantial risks for the euro and EZ too yet nothing priced
• Should GBP continue to slide, weight on euro should intensify
• 1.2500 GBP/USD barriers next trigger point. Only lower day Jan 3 flash crash

• May 31 hammer candle low put up little fight Monday
• Our tight 1.2545 long stop was hit, we now stand aside
• Early Tues modest rebound from 1.2512 leaving a long lower candle wick
• Again the price action teasing the market with tentative bull signals
• However, 14-day momentum remains negative and RSI back to neutral levels
• Will watch how a potential hammer plays out today and for Wed confirmation

• RBA Minutes say further easing "more likely than not" nRUAIHEF5U
• Minutes highlight downside global risks from trade war
• RBA worried about subdued inflation anchoring inflation expectations
• AUD/USD about 10 pips lower, as market was already pricing in more cuts
• AUD/USD technically vulnerable, but may not move too far ahead of FOMC

EUR/USD: 

24-HOUR VIEW EUR is likely to trade sideways, expected to be between 1.1200 and 1.1250. We highlighted yesterday that EUR “could dip below 1.1200 but the next support at 1.1170 is unlikely to come into the picture”. However, EUR only touched 1.1220 before staging a mild recovery. While downward pressure has waned, it is too soon to expect a sustained rebound. EUR is more likely to trade sideways at these lower levels, expected to be between 1.1200 and 1.1250.

1-3 WEEKS VIEW Bias for is for EUR to move lower and test 1.1150. There is not much to add to the update from yesterday (17 Jun, spot at 1.1215) as EUR traded in a quiet manner before ending the day a tad higher at 1.1217 (+0.08%). As indicated, the immediate bias for EUR has shifted to the downside but we do not expect any weakness to be sustained and we see low chance of EUR threatening the critical 1.1100 support. However, a test of 1.1150 would not be surprising. On the upside, only a move above 1.1290 would indicate that the current mild downward pressure has eased.

GBP/USD: 

24-HOUR VIEW GBP is likely to weaken but oversold conditions could limit decline to 1.2500. The sudden lurch lower in GBP that hit 1.2532 came as a surprise. While momentum has picked up considerably, the current weakness in GBP is still deep in oversold territory and any further decline is likely limited to a test of 1.2500 (next support is at 1.2470). On the upside, yesterday’s peak near 1.2605 is not expected to be challenged (1.2570 is already quite a strong level).

1-3 WEEKS VIEW GBP has moved into ‘negative phase’, could weaken to 1.2440. While the downward movement in GBP is line with our expectation, the pace of the decline was not expected. We indicated yesterday (17 Jun, spot at 1.2590) that GBP is expected to “trade with a downside bias” and added, “a break of 1.2500 is unlikely”. In that context, the sharp decline of 0.46% and the subsequent weak daily closing of 1.2533 in NY (just one pip above the overnight low of 1.2532) came as a surprise. The rapid improvement in momentum suggests GBP has move into a ‘negative phase’ and a break of 1.2500 could lead to further GBP weakness to 1.2440. The early January ‘flash crash’ low of 1.2410 could be just out of reach for the current ‘negative phase’. All in, GBP is expected to stay under pressure unless it can move above the 1.2640 ‘key resistance’.

AUD/USD: 

24-HOUR VIEW AUD could continue to move lower but 0.6810 is unlikely to come into the picture for today. Despite being severely oversold, the weakness in AUD extended to 0.6849. Downward momentum appears to be struggling and while AUD could continue to move lower, the next support at 0.6810 is unlikely to come into the picture for today (minor support at 0.6830). Resistance is at 0.6875 followed by 0.6900. The latter level is acting as a strong resistance now.

1-3 WEEKS VIEW AUD has moved into a negative phase, could move below 0.6810 in the days ahead. Yesterday (17 Jun, spot at 0.6875), we highlighted the improvement in downward momentum and were of the view that “if AUD were to register a NY close below 0.6865, it would indicate the start of a move to 0.6810”. AUD subsequently dropped to 0.6849 before ending the day on a weak note at 0.6853 (-0.27%). The price action indicates that AUD has moved into a ‘negative phase’ and in view of the further increase in downward momentum, AUD could dip below the 0.6810 (next support is at 0.6770). Overall, AUD is expected to stay under pressure in the coming days unless it can move above the 0.6935 ‘key resistance’. On a shorter-term note, 0.6900 is already a strong level.

USD/JPY: 

24-HOUR VIEW USD is expected to trade sideways, likely between 108.35 and 108.75. Yesterday, we expected USD to “test 108.80 first before easing off”. However, USD only touched 108.72 before retreating. Upward pressure has dissipated and USD has likely moved into a consolidation phase. In other words, USD is expected to trade sideways, likely between 108.35 and 108.75.

1-3 WEEKS VIEW Diminished odds for further USD weakness. There is not much to add as USD spent another day going nowhere and ended the day unchanged at 108.55. Our narrative remains unchanged wherein USD is in a ‘negative phase’ but the odds for further weakness have diminished. However, only a break of the 109.05 ‘key resistance’ would indicate that USD has moved into a ‘sideway-trading phase’. To put it another way, there is still a slim chance that USD could move to the 107.50/105.70 support zone from here.

• Up 0.1% after opening flat, supported by large EUR/GBP demand in NY
• EUR/GBP +0.1% - closed +0.5%, as a no deal Brexit increases nL8N23O1GJ
• 1.1200-10 1.3BLN, 1.1225 350M, 1.1240 1BLN are today's close strikes
• Charts show negative momentum studies, 5, 10 & 21 DMAs conflict
• Neutral setup, close below 1.1198, 61.8% March/May fall would be bearish
• Europe's 1.1204 low and NY 1.1247 high is initial support/resistance

• +0.1%, early bargain hunting into yesterday's 0.5% fall and fresh 1.2532 low
• Boris as PM and the rising chances of a no deal Brexit weigh nL8N23O175
• Contenders for PM say UK must leave on Oct 31, deal or no deal nL8N23O1GJ
• Momentum studies head lower, daily and weekly 5, 10 & 21 DMAs fall
• Bearish setup now targets the 1.2409 flash crash and 2019 low
• Psychological 1.2500 and NY 1.2606 high initial support/resistance

• USD/JPY continues its sideways consolidation, marks time ahead of Fed & BOJ
• Rallies stunted as Fed seen laying groundwork for rate cut later this year
• Rising U.S.-Iran tensions nL8N23O4N0, acrimonious U.S-China ties cap
• Down side limited, Fed easing hopes negated by BOJ ultra-loose policy
• BOJ's 2% inflation target remains elusive, more easing by Sept? nL4N23N169
• Support 108.35, 108.15-20; resistance 108.60, 108.70-80

• AUD/USD eased 0.28% Monday and close below support at 0.6860/70
• Sentiment bearish due to dovish RBA expectations and global growth concerns
• US-China trade war uncertainty feeding concerns regarding growth and demand
• RBA Minutes today sill provide detail on reason for cut earlier this month
• Minutes unlikely to shift dovish RBA expectations with an Aug cut priced in
• AUD/USD bids around 0.6850, but little support ahead of 0.6715 low in Jan
• Resistance at Monday's 0.6884 high as break would end 6 days of lower highs

ANZ discusses its expectations for this week's FOMC June policy meeting.

"The Federal Open Market Committee (FOMC) meets this week. Given recent dovish comments from Fed officials, we expect a shift to an easing bias. At a minimum, we anticipate a flattening in the dot plot. Chair Powell is likely to reiterate that the FOMC stands ready to support the expansion. We don’t expect a pre-commitment to easing, but acknowledge there are risks to our view," ANZ projects. 

"We look for the FOMC to end quantitative tightening now.  Our call is for the FOMC to start cutting rates later this year as we anticipate ongoing trade uncertainty to linger and weigh on growth and markets. Easier policy will also provide a needed boost to cyclical inflation," ANZ adds. 

• Pair unable to hold below daily cloud base, 21- & 55-DMAs, lift in early NY
• Downbeat data hints at slower US growth, US$ & UST rates slip
• 1.1250 neared but weak EZ inflation expectations temper bulls EUIL5YF5Y=R
• Consolidation above key short-term technicals likely until Fed risk passes
• EUR/USD upside risks could emerge after the Fed meeting

AUD/USD as bears appear in total control ahead of Wednesday's Fed announcement after downbeat U.S. economic data, which forced the greenback and U.S. Treasury yields slightly lower, failed to rally the aussie.
AUD/USD hit a new 5-month low after it broke beneath May's low.
Despite elevated net-short aussie positions 0.6850 traded and broke any option barriers sitting there.
AUD/USD bears have RBA expectations and technicals bolstering their confidence.
Australian short-term rates markets price in a 50% chance of a cut on July 2 but have over 100% chances of a cut on August 6.
Rates markets have near 50 bps of cuts priced in for the remainder of 2019, which helps weigh down AUD/USD.
Technicals Highlight the downside risks as RSIs are biased down with no divergence.
The long upper wick on the June candle as well as today's candle suggest that bears are in charge.
AUD/USD longs will need help from the Fed and its Statement on Economic Projections.
Bulls will need a dovish stance from the Fed and a downbeat SEP to counteract RBA and technical influences.
Should the Fed suggest aggressive cuts are coming, AUD/USD's slide will likely reverse.
Resistance in the 0.7025/30 and 0.7065/70 will then be targeted.

Bank of America Merrill Lynch Research discusses EUR/USD outlook and highlights a bullish bias from the technical and quant perspective.

"Cumulative EUR/USD price action had reset to flat, offsetting depreciation of the last 3 months. The broader USD trend has faltered and rolled over, with the MAA breadth reverting to just +2 after briefly capping at +9 in April, consistent with USD selling we saw in our proprietary flows. "The short-dated SDR flows in EUR/USD leaned more toward calls last week on the back of a robust pickup in volumes. Our positioning model is showing a rare fledgling EUR uptrend forming with rising MAA, supported by bullish Up/Down vol and Residual Skew," BofAML notes. 

"A wedge bottom pattern is confirmed and targets 1.1461, 1.1545, 1.1660 and possibly 1.1830. We favor being long or buying a dip into the mid-1.12s and, while 1.11 holds, looking for a rally to aforementioned targets. A base near 1.11 and breakouts above the 50d SMA, trend line, prior peaks, 100d SMA and April high suggest an uptrend is underway," BofAML adds. 

Don't mistake dollar weakness for GBP/USD strength.
Though cable has managed to rise off session lows, this has more to do with weak NY Fed Mfg data and expectations of a dovish Fed hold after Wednesday's FOMC meeting.
Short-term U.S. rate futures are signaling a 20% chance of a Fed cut on Wednesday, with -25bps price in for July FEDWATCH.
Today's GBP/USD gains are likely to be short-lived as sterling-specific factors keep downward pressure on GBP/USD.
With hard-core Brexiteer Boris Johnson the front-runner for Tory leadership risk of a no-deal British exit from the EU grows, which in addition to adding to UK low growth sentiment, should keep the BoE from hiking rates .
Other PM contenders have not proffered anything new, clinging to hopes for a renegotiated deal with Brussels nL9N21U01Q despite the EU's position to the contrary nB5N22W00C.
Expect any gains from outside stimuli, like a dovish Fed lean on Wednesday to be taken as an opportunity to add to GBP/USD shorts.
GBP/USD finds resistance by 1.2670, the 10/21-DMA area, and 1.2746, the falling 30-DMA.
A break below 1.2560 the May 31's recent trend low, would put the lower 30-day Bolli at 1.2477 and 1.2409, Jan 3's 1019 low, in sharper focus.

MUFG Research discusses the USD outlook around this week's FOMC meeting and notes that Fed sensitivity to downside risks is key for Fed rate cut expectations.

"The Fed is expected to provide a dovish policy update this week at the latest FOMC meeting. Anything less than a clear signal that the Fed is open to cutting rates soon in response to building downside risks to the US economic outlook could leave financial markets disappointed.

The US rate market is well priced for at least a 25bps rate cut to be delivered by July. The need for a more immediate rate cut rests mainly on the Fed’s sensitivity to downside risks to their economic outlook including the ongoing trade tensions between the US and China," MUFG argues. 

"For the US dollar rebound to extend much further in the week ahead, the Fed will have to disappoint expectations for imminent easing," MUFG adds. 

EUR/USD: 

24-HOUR VIEW EUR could dip below 1.1200 but the next support at 1.1170 is unlikely to come into the picture. Last Friday, we expected EUR to “test the 1.1250 support first” before “a recovery can be expected”. However, stronger than expected US retail sales data sent EUR plunging below this level as it hit 1.1200 before ending the day on a weak note at 1.1207. The sharp and rapid drop appears to be running too fast, too soon. From here, while a dip below 1.1200 seems likely, the next support at 1.1170 is unlikely to come into the picture. On the upside, EUR has to reclaim 1.1260 in order to indicate that the current weakness has stabilized (minor resistance is at 1.1240).

1-3 WEEKS VIEW Bias for is for EUR to move lower and test 1.1150. While we indicated since last Thursday (13 Jun, spot at 1.1295) that EUR “has to move and stay above 1.1335 within these 1 to 2 days or a break of the 1.1250 ‘key support’ would not be surprising”, the ease of which it sliced through 1.1250 and the subsequent plunge to 1.1200 was not expected (the subsequent 1-day decline of 0.60% is the largest in 7 weeks). The ‘positive phase’ that started on 04 Jun (spot at 1.1245) has clearly ended. The immediate bias has shifted to the downside but we do not expect the current weakness to be sustained and for the next couple of weeks, we see low chance of EUR threatening the critical 1.1100 support. That said, the current soft patch has room to test 1.1150. Only a move above 1.1290 would indicate that the current mild downward pressure has eased.

GBP/USD: 

24-HOUR VIEW GBP is likely to consolidate its loss and trade sideways, expected to be within a 1.2560/1.2630 range. Expectation for GBP to move higher last Friday was incorrect as it broke several strong support levels with ease and plummet to 1.2580. While further weakness is not ruled out in the coming days, the current decline has moved deep into oversold territory and GBP is unlikely to weaken much from an intraday point of view. From here, GBP is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today, 1.2560/1.2630.

1-3 WEEKS VIEW GBP is expected to trade with a downside bias but break of 1.2500 is unlikely. After trading sideways and in relatively quiet manner for more than a week, GBP lurched lower and touched 1.2580 last Friday. The low is just above the bottom of our expected 1.2570/1.2770 sideway-trading range that we first indicated on (04 Jun, spot at 1.2665). From here, the ‘sideway-trading phase’ appears to have ended but despite the sharp drop of 0.64% last Friday, downward momentum has not improved by much. However, the underlying tone has clearly weakened and GBP is expected to trade with a downside bias. For now, we do not expect a break of the strong 1.2500 support. Only a move above 1.2680 would indicate that the current mild downward pressure has eased.

AUD/USD: 

24-HOUR VIEW AUD is expected to trade sideways, likely between 0.6860 and 0.6900. We expected AUD to weaken last Friday but held the view that “the next support at 0.6865 is unlikely to come into the picture”. Against our expectation, AUD dropped to 0.6862 before recovering slightly. In view of the oversold conditions, further sustained decline is not expected for today. AUD is more likely to consolidate and trade sideways, expected to be between 0.6860 and 0.6900.

1-3 WEEKS VIEW A NY closing below 0.6865 would indicate that a move to 0.6810 has started. While we shifted our narrative for AUD from to “trade with an upside bias” to “trade sideways” last Thursday (13 Jun, spot at 0.6930), the pace of which the bottom of the expected 0.6865/0.6990 sideway trading range was tested came a surprise (AUD touched 0.6862 during NY hours last Friday). Downward momentum has clearly improved and from here, if AUD were to register a NY close below 0.6865, it would indicate the start of a move to 0.6810. The prospect for such a move is quite high unless AUD can reclaim 0.6935 within these few days.

NZD/USD: 

24-HOUR VIEW NZD could dip below the year-to-date low of 0.6482 but the next support at 0.6455 is not expected. Instead of “drifting lower”, NZD lurched lower as it lost a whopping 1.10% (closed at 0.6493). From here, NZD could dip below last month (and year-to-date) low of 0.6482. For today, the next support at 0.6455 is not expected to come into the picture. On the upside, 0.6540 is expected to be strong enough to cap any intraday NZD strength (minor resistance is at 0.6515).

1-3 WEEKS VIEW NZD has moved into a ‘negative phase’ but 2018 low of 0.6424 could be out of reach. While we expected NZD to ‘trade sideways’ since last Wednesday (12 Jun, spot at 0.6585), we held the view the soft underlying tone could “lead to a probe of the bottom of sideway trading range of 0.6530/0.6630”. Instead of ‘probing’ 0.6530, NZD crashed through this strong support during last Friday NY session and plunged to 0.6488 (the subsequent outsized 1-day decline of 1.08% is the largest since late March). In view of the vastly improved downward momentum, a break of year the year-to-date low of 0.6482 would not be surprising. However, last year’s low of 0.6424 could be out of reach for the current ‘negative phase’. On the upside, the 0.6570 ‘key resistance’ is expected to cap any NZD recovery, at least for the next one week or so.

• AUD/USD is trading in close proximity to 0.6862 ahead of the NY open
• 0.6862 = Friday's 23-week low after strong US retail sales data
• Stops may be sheltering sub-0.6860/50: 0.6852 = 76.4% Fibo of 0.6715-0.7295
• Mooted offers at 0.69 are an appreciation obstacle beyond 0.6884 (Asia high)
• This week's key event risk is the Fed monetary policy announcement Wednesday
• See: . Next RBA meeting July 2: rate cut now seen as 50/50 bet

• Slow progress and lack of positive momentum does not bode well for bulls
• Friday rebound failed to batter recent highs
• A real danger price settles back in its 107.81-108.80 June range
• Daily RSI neutral and short-term averages flattening out
• Wkly action hints at a bear continuation: must overcome 107.57 30WMA Bolli
• Weekly momentum remains negative and RSI falling

• EUR/USD drops back below mid-point current 1.1100-1.1400 range
• Option barriers define support @ 1.1100, 200-DMA 1.1400 barriers resistance
• EUR 2.2 bln pared off net short position since mid-May IMM/FX
• USD 6bln trimmed from total net dollar longs in same period
• Eurozone inflation expectations plunge to all-time lows
• ECB adds stimulus. Vols sink. Risk appetite resilient. Fuels EUR sales

• EUR/USD traded to 1.1205 early Asia before striking a bid tone
• Small EUR/JPY buying helped to underpin EUR/USD through the morning
• EUR/USD traded to 1.1224 and was around 1.l1220 into the afternoon
• Talk of option strikes around 1.1200 is discouraging attempts lower
• Support now at 1.1200/05 with break targeting lows between 1.1105/20
• Resistance is found around 1.1270 where the 100-day & 10-day MAs converge
• EUR/USD likely to range trade ahead of FOMC event on Wednesday