Markets ignored Fed Minutes and the focus shifts to Friday’s US nonfarm payrolls.

Friday’s June nonfarm payrolls is key to Fed guidance and the focus will be on average hourly earnings. Resent oil decline and higher geopolitical risks have weakened the positive mood of the beginning of the week and triggered a kind of risk-off mode

EURUSD

Eurozone June services PMI declines to 54.7 from 55.4 but Composite index at 56.3 is still above the estimate of 55.7 and only slightly below April and May’s 6Yr high of 56.8.

A flat euro zone PMI together with ECB official statement  declaring “the ECB governing council has not discussed policy changes” sends EURUSD lower overnight and suggests the pair looks for a deeper correction.

Technically the current picture also calls for a correction as EURUSD trades near the top of its 3 year range at a time when leveraged positioning is outright long euro for the first time in several years.

Eur/Usd currently managed to stay above support level of Eur 1.1320, and there are slight longs observed, which led the pair to the area of ​​1.1370. In the case of drop lower 1.1320, the pair will slow down its decline near the level of 1.1280.

USDJPY

With USD stronger, it seems the lack of positioning in JPY now appears to be manifesting in technical breaks and should USD strength persist, 114.40 is now seen as initial target followed by 115.50 with solid support seen around 112.80-90.

Technically, there is a way to talk about double bottom figure forming in USDJPY that potentially targets 120 and higher but for now there are risks for local correction as market met some resistance around 113.70. However, markets prepare for JPY114.40 area being tested.

Crude Oil

Market was disappointed on the OPEC production cut deal and oil dropped to year low in June. Yesterday WTI futures dropped 4.1 percent to end the session at $45.13 per barrel, while the Brent contracts plunged by 3.57 percent to $47.84 a barrel in late hours. Both WTI and Brent short positions were at all-time high, while long positions were at their low level.  However, fundamental factors and elevating higher risk may send oil prices higher next week. However, we suggest to keep a watch on the market and remain flat.

This trading analysis is for informational purposes only and is not intended to be a strict recommendation for action or an offer for the purchase or sale of any currency, future or stock. Publishing the information we do not try or to attract any funds or deposits. We share our analytical view of current market situation and we don’t have any open position in instruments discussed and no plans to open any positions. Any person considering this research should carefully consider the risks associated with this and the level of trading experience.

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