G10 FX

Research evidence excerpt

G10 FX

urhuf at a reasonable level here and still room to add again on more pain but feels a little

calmer this morning at least.

The euro flow yesterday continued to be dominated by the corporate sector, with discretionary

getting excited on the break of that highlighted fibo level but with little staying power on the

close back above and therefore on net not that exciting from a signalling point of view.

I maintain current stance, given we resided forever at 1.16 this move feels enough in the short

term with some factors which should provide some support (oil down here, ECB hawkishness

less urgent, US yields moved enough into July data). Whether we can bounce much is more up

for debate as the market will have to consider a Fed hike conversation in July if the numbers

corroborate the hawkish dot plot so trading strategy for me is to look to sell into any mini

positioning squeeze back above 1.14 if we see it (having reduced my post Fed shorts a bit

prematurely in front of that level last week whilst maintaining dollar length elsewhere).

GBP Not much has changed since I last typed – the excitement for the USD is palpable into month/

quarter/half end and it is hard not to envisage a fair bit of movement given the more recent

rebalancing periods and the fact that there are more stretched technical signals than you can

shake a stick at as we have come from a period of such rangebound low volatility. Still sticking

with reduced USD longs but my bias is to reduce over the next week with NFP the next big

catalyst for me (PCE kind of old news with oil $50 off the highs). We saw a strong amount of

DHF sterling buying yesterday (1.75z, 4 streak) which was mostly against the EUR as we

challenged the significant 0.8600/10 support level which held like a rock unfortunately.