Yen seen as only source of real volatility

TECHS

EUR/USD: The latest bounce out from 1.2585 is classed as corrective and the market looks to be in the process of seeking out the next lower top below 1.2925 ahead of a fresh drop below 1.2585 and towards 1.2480 further down. Any rallies should be very well capped ahead of 1.2900, while a close back below 1.2675 would also help to reaffirm bearish outlook. In the interim, we recommend that traders take to the sidelines and allow this latest consolidation to play out.

USD/JPY: While the market trades below the 20-Day SMAs on a close basis, the downtrend remains intact and deeper setbacks below 83.60 cannot be ruled out. A close above the 20-Day SMA will be required at a minimum to offer some form of relief to downside pressures. The market has not closed above the 20-Day SMA since mid-June when the pair was trading over ¥90.00.

GBP/USD: Although the inter-day structure looks quite bearish at present following the latest break below 1.5500, there is a shorter-term risk for additional upside to allow for recently oversold technical studies to unwind. However, we expect any rallies to be well capped ahead of 1.5700 in favor of the next downside extension towards the 100-Day SMA by 1.5100. Setbacks have been supported for now by the 50-Day SMA. Ultimately, only a break back above 1.5700 would negate outlook and give reason for pause. Back under 1.5370 accelerates declines.

USD/CHF: Has managed to break to yet another multi-week low below 1.0300 to open a fresh downside extension towards the yearly lows from January by 1.0130 over the coming sessions. However, any additional declines below 1.0130 are seen limited, with medium-term studies looking stretched. As such, we would be more inclined to be looking for opportunities to buy at current levels. For now, a break and close back above 1.0320 will be required to relieve immediate downside pressures.

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