| By Joel Kruger, DailyFX Technical Strategist
Talking Points
- Risk correlated assets looking for short-term relief
- Global equities very well offered and in need of bounce
- No fundamental catalyst for risk reversal as of yet
- G8 Summit fails to inspire any renewed optimism
- Eurozone leadership will scramble to avoid Greek exit
Risk correlated currencies will certainly be looking for some relief this week after taking huge hits over the past several days to leave short-term technical studies well oversold. Global equities will also welcome some form of a bounce as they too are well stretched. However, at this point, there is no fundamental catalyst to speak of that could really justify such resurgence in risk appetite. The Euro has managed to find some suspicious bids in recent trade, after stalling ahead of the 2012 lows from January, while other currencies have also found similar bids into Monday.
The G8 Summit has come and gone and as was widely expected (at least from our end), the meeting proved to be a non-factor in terms of coming up with any material solutions on Greece and the Eurozone crisis. From here, there will be a lot of pressure on Eurozone leadership and the European Central Bank to take action to find a credible solution that will not compromise the current Eurozone structure. As we outlined in the previous week, while a Greek exit alone would not necessarily be the worst thing, the impact and symbolic message from such an exit would be far worse, as it would open the door for contagion and a potential exit from other peripheral Eurozone countries. ECONOMIC CALENDAR
TECHNICAL OUTLOOK
The market remains under intense pressure and the focus for now is squarely on a retest of the 2012 lows from January at 1.2625. While we would not rule out a possibility of a test of this level over the coming sessions, short-term technical studies are well oversold and are showing a need for some form of a corrective bounce from where a fresh lower top is sought out. Ultimately however, any rallies should now be very well capped by previous support turned resistance at 1.3000 in favor of additional weakness over the medium-term that projects deeper setbacks into the lower 1.2000's. GBP/USD:  The market remains under intense pressure since breaking back below 1.6000 and setbacks could now extend towards next key support in he 1.5600 area over the coming sessions. Still, daily studies are now stretched and we would prefer looking to sell into rallies towards 1.6000 where a fresh lower top is sought out. The market continues to consolidate around 80.00 and is in the process of looking for a medium-term higher low ahead of the next major upside extension back above the yearly highs at 84.20 and towards 90.00 further up. However, for the time being it remains in question whether the market will still head lower towards the 200-Day SMA by 78.50 before ultimately reversing higher. The key level to watch above comes in by 80.60, and a break and close above this level will officially alleviate downside pressures and suggest that a higher low has now been carved in the 79.00's. USD/CHF:  Overall the structure remains highly constructive and we continue to project additional upside over the coming months back above parity. For now, the latest break and close above 0.9335 is expected to accelerate gains for a retest of the yearly highs by 0.9600, while any intraday pullbacks should be very well supported ahead of 0.9200. Ultimately, only back under 0.9000 would negate outlook and give reason for pause. --- Written by Joel Kruger, DailyFX Technical Currency Strategist
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