Traders across the globe are scrambling to react to events in Greece, as a big week for Europe gets underway.

Pound and dollar
Source: Bloomberg

GBP/USD could target 200-day SMA

The currency pair has now come to rest on the 50-day simple moving average at $1.5518, although there seems no end to the current downtrend. Sterling bulls may hope that the rising trendline off the April lows will kick into play soon and allow cable to continue the uptrend it began almost three months ago.

A move through $1.55 would suggest more downside is on its way, with a target of the 200-day SMA at $1.5546; still-bearish stochastics on the daily chart would support this thesis. The sequence of lower lows continues, so until this reverses the outlook remains negative. We would need to see a close above $1.56 to even suggest that the downtrend has run its course.

EUR/USD drop towards May low

Today has so far been an eerie copy of last Monday – namely a big opening gap down before a steady recovery for the single currency. Last week’s big recovery off $1.10 for EUR/USD proves that this is the level to beat, either today or in coming sessions, if the bears are to succeed in maintaining the downtrend.

A move below $1.10 would head towards the May low in the direction of $1.08 – for the moment I would still be inclined to declare this a ‘sell the rally’ currency pair, with intraday bounces there to be sold. A move back through the 50-day SMA at $1.1157 is the event that is needed to confirm that the euro bulls are back in charge.

AUD/USD at six-year lows

Having crashed through $0.76 on Friday, AUD/USD now finds itself at six-year lows. The advantage clearly lies with the bears, although an oversold reading on the daily relative strength index means that sellers should be particularly assiduous in waiting for rallies, either on the hourly or four-hourly chart, before going all out.

Moves back toward the 50-hour SMA at $0.7570 should afford this opportunity, with a close back above $0.76 transforming the outlook.

USD/JPY could see further selling

The currency pair has bounced off the 50-day SMA (¥122.16) so far today, providing a bullish catalyst. There has been much movement but little in terms of real direction in the past month, but a move of the 20-hour EMA (¥122.63) above its 50-period counterpart (¥122.83) would be the signal for new longs.

A slump below the 50-day SMA would provoke further selling, which would accord with a currently bearish daily RSI and stochastics. 

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