Daily FX Wrap: GBP sees a calmer session as Parliament gives yesterday’s announcement the green light while ECB speakers prep up for next week.

GBP was once again in focus in the early stages of EU trade with GBP/USD having given up the 1.2900 handle seen during yesterday’s frantic surge in US hours after having met resistance at 1.2920. That said, today saw a more contained session for the pair with GBP/USD ranging from 1.2809-1.2860 with today’s session seeing confirmation (as expected) that UK Parliament has given the green-light for yesterday’s announcement by PM May to call a snap election. Elsewhere, EUR lost some modest ground against the USD with prices unfazed by the latest (in-line) EZ inflation data and instead focusing on recent rhetoric from ECB’s Coeure and Hansson who suggested that the ECB are willing to discuss the future path of ECB policy but it is currently too early to make any concrete decisions. This could be a key theme in the coming days ahead of next week’s ECB meeting with bank heads seemingly looking to prep the market ahead of the event.

Elsewhere, commodity currencies were a touch softer throughout the session with USD/CAD tripping above 1.34, while there has been no respite for the AUD as we are back testing 0.7500 against the USD, but the flow looks to be going through AUD/NZD, which is now just below the 1.0700 mark.

From a geopolitical perspective, headlines have slowed down from the recent media frenzy and as such the USD managed to regain some further ground against JPY. That said, market participants will no doubt be looking ahead to next week’s North Korean Military Day in case of further provocations from the North Korean premier. In terms of other things to look out for, data is relatively light for tomorrow’s session with traders ultimately beginning to prep for Sunday’s French Presidential election.

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Dollar Index Daily

Market is sideways. Price is bearish. Note we are moving into oversold levels. Price found support at the 200 EMA as forecast in yesterday's post and has gained on some recent losses in today's trade. Resistance is eyed at MPP with a bearish target of MM1. Note that according to price action we are currently moving within a wedge. When trading wedges keep an eye on the apex as this is where a breakout will occur.

Dollar Index H4

Market is bearish and price is bullish with the stoch having just turned up. The 200 EMA on the daily chart coincided with the weekly bearish target and as per the forecast in yesterday's post this is where we expected to see Dollar Bears take profit. Price still needs to get through resistance at WS1 and past the 21 EMA before we can consider this bullish. The target, based on pivot point theory, is WPP due to price coming off of the weekly target though keep in mind that price could still move down to WS2 which is the aggressive target for the week. Notice that MPP is just below WPP.

US10Y Daily

Market is sideways. Price is bullish though we are currently at overbought levels. Price moved up slightly after yesterday's post though we have not broken above MR2 or the 200 EMA. We have seen some profit taking though we still are not bearish yet. Price also has not tested the top of the previous range yet and that is the next level of support.

US10Y H4

Market is bullish. Price is bearish with the stoch having just rolled over. Price remains above the 21 at the time of writing this post and therefore is not bearish yet. We have also not printed a lower low or broken support at MM4 (the green zone directly below price.) We are now looking for an indication of reversal - either a double top or a break of MM4 followed by a lower low. Of course price could come back up to WR1 and range if market conditions have not changed and traders have no reason to get out of safe havens and back into riskier trades. Keep an eye on Gold and Yen for setups that indicate we are heading back into risk on conditions. We have been very patient waiting for this reversal it would be a shame not to take advantage of it when it arrives.

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