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NZD/USD is trading in the green right now, but failed to reach the 0.7257 Friday's high. Has managed to come back above the red downtrend and above the minor uptrend line. Looks like that the price action is developing a Falling Wedge pattern, but this is far from being confirmed. The false breakdown below the downtrend and the uptrend has invalidated a potential Head and Shoulders for now.

Copper contract for September delivery hit new nearly three-year high at $3.0855, on fresh bullish acceleration on Monday, which extends broader uptrend after rally paused on Friday, when action was shaped in Doji candle.

Copper continues trend higher, as strongly bullish technicals continue to underpin, however, bullish fundamentals dominate in the whole picture. The metal was boosted by weaker dollar and 8.2% fall in copper stocks, report released last week showed. In addition, strong demand from China, metal's top consumer, continues to inflate copper price.

The price is riding on extended wave C from 2.6300 (10 July trough), which eyes immediate target at 3.0973 (FE261.8%), with next strong barrier at 3.1114 (Fibo 61.8% retracement of larger 3.8380/1.9360, Sep 09/Jan 16 descend), also coming in focus.

No signals of easing for now, as daily indicators continue to head north, deeply in overbought zone, but some corrective action should be anticipated in coming days.

Res: 3.0855; 3.0973; 3.1114; 3.1655
Sup: 3.0606; 3.0350; 3.0165; 3.0000

Daily Pivots: (S1) 1.1817; (P) 1.1879 (R1) 1.1981; More...

EUR/USD's rise is still in progress and intraday bias remains on the upside. Current rally from 1.0339 should target 61.8% projection of 1.1118 to 1.1908 from 1.1661 at 1.2149 first. Break there will target 100% projection at 1.2451 next. On the downside, below 1.1822 minor support will turn intraday bias neutral first. But retreat should be contained above 1.1661 support and bring rise resumption.

In the bigger picture, an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Sustained trading above 55 month EMA (now at 1.1768) will pave the way to key fibonacci level at 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. While rise from 1.0339 is strong, there is no confirmation that it's developing into a long term up trend yet. Hence, we'll be cautious on strong resistance from 1.2516 to limit upside. For now, medium term outlook will remain bullish as long as 1.1295 support holds, in case of pull back.

Daily Pivots: (S1) 0.9522; (P) 0.9591; (R1) 0.9632; More....

USD/CHF's decline is still in progress and intraday bias remains on the downside for retesting 0.9437 low. Note again that the pair is bounded in medium falling channel and limited below 38.2% retracement of 1.0342 to 0.9437 at 0.9783. Break of 0.9427 will extend the whole decline from 1.0342 and carries larger bearish implications. On the upside, above 0.9619 minor resistance will turn intraday bias neutral again.

In the bigger picture, we're slightly favoring the case that USD/CHF has successfully defended 0.9443 key support level. And long term range trading in 0.9443/1.0342 is extending with another rise. At this point, there is no sign of an up trend yet. Hence, while further rise is expected in USD/CHF, we'll start to be cautious on loss of momentum above 61.8% retracement of 1.0342 to 0.9437 at 0.9996. However, firm break of 0.9443 will carry larger bearish implication and would target next key support at 0.9072.

USD/CHF - 0.9547

Original strategy :

Sell at 0.9590, Target: 0.9490, Stop: 0.9625

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9590, Target: 0.9490, Stop: 0.9625

Position : -

Target :  -

Stop : -

Friday’s selloff together with the breach of previous support at 0.9583-86 confirm top has been formed at 0.9773 earlier and bearishness is seen for the erratic decline from there to extend weakness to 0.9520-25, then towards support at 0.9490, however, near term oversold condition should prevent sharp fall below latter level. Looking ahead, A drop below 0.9490 would signal early downtrend has resumed and extend far to 0.9455-60 but recent low at 0.9438 should hold from here.

In view of this, we are looking to sell dollar on recovery as previous support at 0.9583-86 should turn into resistance and limit dollar’s upside, bring another decline. Above another previous support at 0.9620 would defer and suggest a temporary low is possibly formed, bring rebound to 0.9650 but still reckon resistance at 0.9663 would hold from here.

GBP/USD - 1.2912

Original strategy :

Buy at 1.2850, Target: 1.2950, Stop: 1.2815

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.2850, Target: 1.2950, Stop: 1.2815

Position : -

Target :  -

Stop : -

Although cable retreated after intra-day initial brief rise to 1.2939, as last week’s rebound from 1.2774 suggests a temporary low has possibly been formed there, reckon downside would be limited to 1.2850 and bring another rebound later, above said resistance at 1.2939 would add credence to this view and extend the rise from 1.2774 low for retracement of recent decline to 1.2970-80, then towards 1.3000 but price should falter below previous resistance at 1.3032.

In view of this, we are looking to buy sterling on pullback as 1.2850 should limit downside. Below previous resistance at 1.2837 would defer and risk test of 1.2810-15 but only break there would abort and signal the rebound from 1.2774 (last week’s low) has ended instead, risk weakness to 1.2775-80 first.

Daily Pivots: (S1) 109.01; (P) 109.42; (R1) 109.74; More...

USD/JPY is staying in consolidation above 108.59 temporary and intraday bias remains neutral at this moment. Upside of recovery should be limited below 110.94 resistance and bring fall resumption. Break of 108.59 will target a test on 108.12 low. Whole corrective decline from 118.65 is possibly resuming and break of 108.12 will target 61.8% retracement of 98.97 to 118.65 at 106.48. Nonetheless, firm break of 110.94 will indicate short term bottoming and turn bias back to the upside.

In the bigger picture, the corrective structure of the fall from 118.65 suggests that rise from 98.97 is not completed yet. Break of 118.65 will target a test on 125.85 high. At this point, it's uncertain whether rise from 98.97 is resuming the long term up trend from 75.56, or it's a leg in the consolidation from 125.85. Hence, we'll be cautious on topping as it approaches 125.85. If fall from 118.65 extends lower, downside should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 1.2816; (P) 1.2852; (R1) 1.2911; More...

GBP/USD's recovery from 1.2773 continues today but it's staying well below 1.3030 resistance so far. Intraday bias remains neutral with mildly bearish near term outlook. We're favoring the case that correction from 1.1946 is completed at 1.3267. Below 1.2773 will target 1.2588 key near term support first. Decisive break of 1.2588 will confirm our view and target a test on 1.1946 low. Though, break of 1.3030 will dampen this bearish view and turn bias back to the upside for retesting 1.3267.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. While further rise cannot be ruled out, larger outlook remains bearish as long as 1.3444 key resistance holds. Down trend from 1.7190 (2014 high) is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

EUR/USD - 1.1933

Original strategy  :

Buy at 1.1870, Target: 1.1970, Stop: 1.1835

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.1870, Target: 1.1970, Stop: 1.1835

Position : -

Target :  -

Stop : -

The single currency finally rallied on Friday and upmove gathered momentum after breaking indicated resistance at 1.1828 (now support) and euro eventually surged above recent high at 1.1910, adding credence to our bullish view for a resumption of recent upmove, hence upside bias remains for further gain to 1.1970-80, however, near term overbought condition should limit upside to 1.1200-10 and reckon 1.1250-60 would hold from here. 

In view of this, would not chase this rise here and would be prudent to reinstate long on pullback as the Kijun-Sen (now at 1.1873) should limit downside and bring another upmove. Only below previous resistance at 1.1828 (now support) would abort and suggest a temporary top is possibly formed, risk test of 1.1800 but break of support at 1.1773 (Friday’s low) is needed to confirm.

Sterling recovers broadly today as markets are looking at the third round of Brexit negotiation between UK and EU in Brussels.. There are talks that selloff of the Pound is overdone, in particular against Euro. Technically that's a valid view as the cross, currently at 0.9240, is reasonably close enough to key resistance level at 0.9304 (2016 high). But the recovery in the Pound is so far rather weak and it's staying near term bearish against Euro, Dollar and Yen. There are still a lot of uncertainties over the outcome of Brexit and we believed that the worst is not priced in yet. There might be renewed selling in Sterling should there be no positive news coming our from the Brexit negotiators.

Davis called for flexibility and imagination

UK's Brexit secretary David Davis called for "flexibility and imagination" in the talks. And he emphasized that UK wants a Brexit deal "that works in the best interests of both". EU chief Brexit negotiator Michel Barnier warned in an article that UK will have "very practical consequences including on defence and security" after Brexit. Barnier noted that "the British defence minister will no longer be able to sit at the council of defence ministers, London will leave the European Defence Agency and Europol". Neither party touched on one of the biggest deadlock in the negotiation, the divorce bill. It's reported that EU officials have requested Davis to provide details on their side of the calculation on the bill but so far nothing is provided.

BCC and DIHK urge focus on practical business concerns

The British Chambers of Commerce (BCC) and the Association of German Chambers of Commerce (DIHK) issued a joint statement urging UK and EU to focus on shared economic interests in Brexit negotiations. BCC director general Adam Marshall said that "as Brexit talks continue, it's clear that companies in the UK and on the continent all want economic issues to rise to the top of the negotiations agenda. There is real business appetite from both sides for a focus on practical, day-to-day business concerns, and a desire for clarity on future trading arrangements." DIHK head Martin Wansleben said that "the terms of exit are still completely unclear. Many of our members are reporting that they are already shifting investments away from the UK in anticipation of these barriers."

BoJ Kuroda: Less need to purchase JGBs ahead

BoJ Governor Haruhiko Kuroda said in a television interview that 4% growth cannot be sustained and "around 2% growth is likely" for the country. He hailed the yield curve control frame work as "well managed" and noted that "despite the wide fluctuation of long-term interest rates in Europe and the United States, Japanese 10-year JGB interest rate has been very flat, around 0 percent." He also noted that the JGB markets are "functioning quite well" in spite of the central bank's massive asset purchase program. Meanwhile, he pointed out that "since JGBs remaining in the market is going to decline, that means that with one unit of JGB purchase, the impact on the interest rate could be bigger." Hence, "in coming months there will be less and less need to purchase JGBs in order to maintain the yield curve."

On the data front

US trade deficit widened slightly to USD -65.1b in July. Wholesale inventories rose 0.4% in July. Eurozone M3 rose 4.5% yoy in July.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2816; (P) 1.2852; (R1) 1.2911; More...

GBP/USD's recovery from 1.2773 continues today but it's staying well below 1.3030 resistance so far. Intraday bias remains neutral with mildly bearish near term outlook. We're favoring the case that correction from 1.1946 is completed at 1.3267. Below 1.2773 will target 1.2588 key near term support first. Decisive break of 1.2588 will confirm our view and target a test on 1.1946 low. Though, break of 1.3030 will dampen this bearish view and turn bias back to the upside for retesting 1.3267.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern. While further rise cannot be ruled out, larger outlook remains bearish as long as 1.3444 key resistance holds. Down trend from 1.7190 (2014 high) is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Economic Indicators Update