29 June 2016 at 14:45 GMT
By John J Hardy
Key developments in FX Today
The USD and the JPY slid against most other currencies today, especially sterling, which bounced strongly again, pushing above yesterday's highs in GBPUSD amid the lack of clarity on where we are going next. While GBP still has considerable room to bounce around without technically reversing the impact of the Brexit vote, we're getting to important resistance levels quite soon in the commodity dollars versus the USD.
Other standout action on the day was seen in the surge in silver prices, though we need to see a hold into tomorrow's action, as gold has not beeen participating in the enthusiasm.
EURGBP has pushed sharply lower on the day on the bounce in sterling as it appears we're facing a long wait until we know what the next step in a Brexit looks like despite the EU summit of the last couple of days. This allows for some mean reversion in sterling pairs on the uncertainty after the shock of the initial reaction, and the next levels for EURGBP include the 0.8200 area and then the sub-0.8100 area where the 38.2% retracement comes in.
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AUDUSD is an example of a pair that moved in sympathy with the broad, risk-off reaction to the Brexit vote late last week - but as with the action in other markets, we've yet to see a follow through move lower. That move needs to come in the next day or we have to full shift from bearish to neutral and uncertain. Besides observing basic Fibonacci retracement levels (in particularly the 61.8% at 0.7517), it's important for the bears here that we continue to close below 0.7200 to keep the focus on lower levels to come..
An interesting sub-plot at the moment is the divergence among the Scandies as EURSEK has remained clear of recent resistance, while EURNOK has dipped back lower, perhaps on the bounce in oil prices. This has NOKSEK pushing on the highs for the cycle again - will hopes for a breakout be once again dashed or are we finally heading for a repricing of this pair?
– Edited by Clare MacCarthy
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