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IronFX Essential Intraday Comment | 23/06/2015

• The dollar traded mixed against its G10 counterparts during the European morning Tuesday. It was higher against CHF and EUR, in that order, while it was lower vs against AUD and GBP. The greenback was virtually unchanged vs NZD, NOK, JPY, CAD and SEK.

• EUR started strengthening ahead of the French preliminary PMIs for June and gained a bit on the news that the French manufacturing PMI rose above 50 for the first time since April 2014, adding to recent signs that the country is gathering steam. However it fell after the German and Eurozone figures were announced, even though those figures too showed that business conditions had improved despite the Greek crisis. The bloc’s manufacturing PMI has remained in expansionary territory for the last 2 years and activity could expand even further if an agreement is finally reached between Athens and its lenders this week.

• EUR/USD traded above the 1.1200 support zone, reflecting the restrained mood of investors ahead of the EU leaders’ summit on Thursday and the end of the 48 hours deadline given to Greece. A break below that level is needed to push the rate even lower, perhaps towards 1.1145.

• EUR/JPY moved lower on Tuesday, breaking below the support (now turned into resistance) line of 139.50 (R1). If the decline continues, I would expect the bears to push the rate even lower, perhaps towards our next support of 138.60 (S2). A break of that zone could aim for another test of the black uptrend line taken from the lows of the 14th of April. Further decline is also supported by our momentum studies. The RSI moved back below its 50 line, while the MACD, already below its trigger line, dipped below zero. However, although we may see the continuation of the decline, the rate is still trading above the aforementioned uptrend line. Therefore, I would wait for a decisive break of that line to get confident for further declines. On the daily chart, the pair is trading above the 50- and 200-day moving averages, which keeps the medium-term trend positive in my view. Nevertheless, a daily close above 140.70/141.00 (R2) area is needed to confirm a forthcoming higher high on the daily chart and signal the trend continuation.

• Support: 138.60 (S1), 138.00 (S2), 136.80 (S3)

• Resistance: 139.50 (R1), 140.70 (R2), 141.40 (R3)

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