FOREX: Asia FX Wrap - The USD Probing Pivotal Resistance Going Into NFP

The BBDXY has had a range of 1188.23 - 1190.00 in the Asia-Pac session, it is currently trading around 1189. The USD has traded sideways today after initially trying lower. The larger picture remains one of USD weakness, short-term though price is beginning to look a little stretched and we could see more profit-taking heading into NFP. In the current environment rallies should continue to be met with supply, first resistance is back towards the 1205/1215 area.

• EUR/USD -  Asian range 1.1788 - 1.1810, Asia is currently trading 1.1800. While the USD remains on the back foot the EUR will continue to be supported, short-term it is starting to look stretched the first support is back towards 1.1500/1.1600. The medium term targets will now be towards 1.2000 and beyond.
• GBP/USD - Asian range 1.3732 - 1.3753, Asia is currently dealing around 1.3745.This move higher now looks to have broken convincingly higher and with the USD looking like it is set for another leg lower Cable could potentially now target levels back towards 1.4200. Short-term momentum seems to be stalling first support is back towards 1.3500/1.3600.
• USD/CNH - Asian range 7.1598 - 7.1662, the USD/CNY fix printed 7.1546 Asia is currently dealing around 7.1650. Sellers should be around on bounces while price holds below the 7.2500 area and the PBOC manages the fix lower.
• Cross asset : SPX +0.27%, Gold $3340, US 10-Year 4.25%, BBDXY 1189, Crude oil $65.50
• Data/Events : Italy Unemployment, France Budget Balance, EZ Unemployment, Spain Unemployment

Fig 1: EUR/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P

• RES 4: 132.42 2.000 proj of the May 14 - 20 - 22 price swing
• RES 3: 132.00 Round number resistance    
• RES 2: 131.95 High Jun 13 and the bull trigger 
• RES 1: 130.73/131.33 High Jul 1 / High Jun 20
• PRICE: 130.41 @ 05:35 BST Jul 2
• SUP 1: 130.00 Low Jun 30              
• SUP 2: 129.67 76.4% retracement of the May 14 - Jun 13 bull leg  
• SUP 3: 129.30 Low May 22   
• SUP 4: 128.97 Low May 14 and a reversal trigger  

Recent weakness in Bund futures resulted in a print below key short-term support at 130.12, the Jun 5 low. A clear break of this price point would highlight a bearish threat, undermine the recent bullish theme, and signal scope for an extension towards 129.30, the May 22 low. The contract has recovered from Monday's low. Key resistance has been defined at 131.95, the Jun 13 high. Clearance of this level would reinstate a bullish theme.

The NZD/USD had a range of 0.6090 - 0.6106 in the Asia-Pac session, going into the London open trading around 0.6100, +0.05%. A tight range in a relatively quiet Asian session, US Equity futures have also drifted higher in Asia, ESU5 +0.30%, NQU5 +0.38%. The pair is breaking through its recent highs and attempting to build momentum for a potential look back towards the 0.6400/0.6500 area. The relentless pressure on the USD is providing a tailwind and dips towards 0.6000 should continue to see demand. The market will be eyeing NFP on Thursday so there is a good chance we will consolidate until we see if that gives the USD a further nudge lower. 

• (Bloomberg) -- “Donald Trump said he’s not considering delaying his July 9 deadline for higher tariffs to resume. He sees a Japan deal as unlikely, saying it should be forced to pay a rate of “whatever the number is that we determine.”
• Whole Milk Prices Nearly 12% Off May Highs : Overnight the whole milk price auction saw a sharp fall. We fell to $3859 from $4084 prior, which was a 5.1% drop between the two auctions. The whole milk price is off close to 12% from its highs at the start of May.
• A huge bounce from sub 0.5900 and the NZD has now established a foothold above 0.6000, with the USD breaking lower the NZD/USD looks to be building for a potential break higher of its own.  A clear break of 0.6100 could provide the momentum to begin a larger move higher, initially targeting the 0.6400/0.6500 area.
• CFTC Data shows Asset Managers have cut their shorts and are now beginning to build a long in NZD +12195, the Leveraged community maintained their short that had just been added to -11981.
• Options : Closest significant option expiries for NY cut, based on DTCC data: 0.5800(649m). Upcoming Close Strikes : none.
• AUD/NZD range for the session has been 1.0777 - 1.0796, currently trading 1.0780. The cross is struggling to get any momentum for now. It looks to be in a 1.0750 - 1.0850 range for now as it awaits a catalyst to provide some clearer direction.

Fig 1: NZD/USD Spot Daily Chart

Source: MNI - Market News/Bloomberg Finance L.P