OUTLOOK: Price Signal Summary - Bull Cycle In USDJPY Still In Play

• In FX, EURUSD is holding on to the bulk of its recent gains. The breach of 1.1419, the May 26 high, confirmed a resumption of the trend and has opened 1.1573, the Apr 21 high and bull trigger. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. Support to watch lies at 1.1216, the 50-day EMA. A clear break of this average would undermine the bull theme. Initial support is at 1.1334, the 20-day EMA.
• Trend signals in GBPUSD are unchanged and remain bullish. Last week’s fresh cycle high, confirms a resumption of the uptrend and an extension of the price sequence of higher highs and higher lows. This opens 1.3681 next, the 1.500 projection of the Feb 28 - Apr 3 - 7 price swing. Initial support to watch lies at 1.3453, the 20-day EMA. A clear break of this average would suggest potential for a deeper correction and expose the 50-day EMA, at 1.3288.
• Recent gains in USDJPY are considered corrective and the trend condition remains bearish. Attention is on the next important support at 142.12, the May 27 low. A clear break of this level would confirm a resumption of the bear leg and open 139.89, the Apr 22 low. Moving average studies remain in a clear bear-mode position too, highlighting a dominant downtrend. Key short-term resistance has been defined at 146.28, the May 29 high.

The latest CFTC CoT report showed asset managers aggressively adding to existing net longs across the curve, with a net ~$31.5mln DV01 added across all contracts in cumulative terms. The largest DV01 equivalent net position add came in UXY futures ($11.3mln).

• This came after several weeks of net long reductions for the cohort.
• Leveraged fund positioning was a little more mixed, with a slight bias towards net short cover in curve wide DV01 equivalent net terms. Cover of existing shorts in TU, US & WN futures outweighed additions to net shorts in FV, TY & UXY futures. The cohort remains net short in all contracts.
• Broader non-commercial net positioning saw a mix of net short setting and cover (detailed in the table below). The cohort remains net short across the curve.
• The cut off date for this report was June 3, so positioning moves following the ISM services survey, ADP employment and NFP releases were not accounted for.

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

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