Sample Category Title

Price plunged in the yesterday's session and now is expected to hit the confluence area formed at the intersection between the median line (ml) of the minor descending pitchfork with the fourth warning line (wl4). The retreat could be temporary if the US data will come in better today, only some good numbers will save the greenback from the downside. A rebound is favored from the mentioned levels if the economic figures will impress.

Price remains bullish until more sellers appear. The 1.1712 major static support remains intact, so it could climb higher on the short term. Technically was expected to drop towards the median line (ml) of the minor ascending pitchfork. Could still reach this downside target if will move in range above the 1.1712 level. I've said in the previous weeks that we may have a minor consolidation above it, which will signal a further increase on the Daily chart.

Only a valid breakdown below the horizontal support will signal a larger corrective phase, this scenario could take shape only if the US data will impress in the afternoon.

The Euro needs a bullish spark to be able to drive the pair towards new highs in the upcoming hours, the Euro-zone Trade Balance could increase from 19.7B to 20.4B, the Final CPI by 1.3%, same like in the former reading period, while Final Core CPI may increase by 1.2%.

Price posted little gains after the yesterday's rebound, but remains under some selling pressure after the failure to retest the upper median line (uml) of the ascending pitchfork. Technically was somehow expected to drop towards the median line (ML) of the major ascending pitchfork after the failure to react at least the 150% Fibonacci line (ascending dotted line).

A larger increase will be confirmed after will close above the 1.1909 previous high, but is hard to believe that will jump so high until will retest the median line (ml).

USDJPY (109.90): The USDJPY declined after failing to break past the resistance level of 110.80. Declines are likely to push USDJPY to test the lower support at 109.70 where support is currently being tested. A rebound off this level, which coincides with the trend line support would suggest some upside in prices. The USDJPY is also likely to form an inverse head and shoulders pattern on a successful rebound off 109.70. If the currency pair manages to break past the resistance level of 110.80, then the next target is towards 111.77 resistance level.

GBPUSD (1.2904): The British pound managed to post a modest rebound yesterday. Slightly better than expected labor market data helped to improve the sentiment in the cable which weakened earlier in the week on account of inflation data. The rebound off 1.2835 is likely to see some upside in prices. Near-term resistance is seen at 1.2980 - 1.3000 which could be tested. If resistance is formed here, then GBPUSD could be forming the final right shoulder in the head and shoulders pattern that is evolving on the daily charts. This would suggest further downside in prices on a break below 1.2835.

EURUSD (1.1777): The EURUSD managed to recover the losses from Wednesday following the FOMC meeting minutes which turned out to be dovish than expected. Still, the current retracement is likely to be a minor pullback with the overall bias shifting to the downside. The key risk is the fact that EURUSD once again managed to rally back above the support of 1.1730. Near-term bullish momentum could send EURUSD back to the resistance level of 1.1800. After that, the sideways range is likely to be formed. A break down below 1.1730 would suggest a move to 1.1635. To the upside, above the resistance of 1.1800, expect EURUSD to continue pushing towards the next main resistance level of 1.1835.

GBP/USD - 1.2886

Most recent candlesticks pattern   : N/A

Trend                                 : Near term down

Tenkan-Sen level                 : 1.2868

Kijun-Sen level                    : 1.2910

Ichimoku cloud top              : 1.2986

Ichimoku cloud bottom        : 1.2984

Original strategy :

Sell at 1.2920, Target: 1.2820, Stop: 1.2955

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.2920, Target: 1.2820, Stop: 1.2955

Position : -

Target :  -

Stop : -

As cable has remained under pressure after yesterday’s selloff, adding credence to our bearish view that the decline from 1.3269 top is still in progress for retracement of early upmove, hence downside bias remains for further weakness to 1.2825-30 (61.8% projection of 1.3269-1.2940 measuring from 1.3032), having said that, near term oversold condition should limit downside to 1.2800 and reckon 1.2770 would hold from here, bring rebound later.

In view of this, would not chase this fall here and would be prudent to sell sterling on recovery as said previous support at 1.2933 should turn into resistance and cap cable’s upside, bring another decline. Above 1.2950 would defer and risk a stronger rebound to 1.2990-00 before another decline.

The US dollar gave up some of the gains on Wednesday following the release of the FOMC meeting minutes. The minutes showed that Fed officials were divided on the course of interest rates. They also raised concerns about the underlying inflation with some members expecting inflation to remain below the Fed's 2% target rate. On the other side, some hawkish members argued that there would be risks from the tightening conditions in the US labor markets.

On the economic front, data yesterday saw the UK's unemployment rate falling to historic lows. Beating estimates, the unemployment rate in the UK slipped to 4.4%. However, wages continued to lag behind inflation. The British pound managed to post a modest recovery as a result. In New Zealand, the producer prices data showed a 1.4% increase in input prices, while output prices rose 1.3%, both beating the median estimates.

Looking ahead, the economic calendar today will include the UK retail sales which are expected to rise just 0.2%. In the eurozone, final inflation figures for July will be released. Consumer prices are expected to rise 1.3% on the headline and 1.2% on the core.

Market movers today

In the euro area, the ECB minutes from the July meeting are set to be released today. Focus will remain on discussions related to extension of the QE programme. At the meeting, the Governing Council was unanimous in setting no precise date for when to discuss changes to the QE programme and additionally, Draghi said the ECB had not tasked its staff to look into QE options after December. In light of this, it will be interesting to see how the discussion within the Governing Council has evolved around extending QE (see ECB review: QE path not defined yet but slower purchases are coming, 20 July 2017 ).

The UK retail sales figures for July are out today, which markets tend to pay at tention to, although they can be misleading with regard to the overall condition of private consumption. However, due to declining consumer confidence and negative real wage growth, we believe that the figures will reflect only modest growth in private consumption.

In the US, today's data releases include the initial jobless claims and industrial production numbers for July as well as the Philly Fed business conditions index. Additionally, Dallas Fed President Kaplan (voter, dovish) speaks this evening.

Selected market news

Risk appetite took a small hit yesterday as news broke that Trump's CEO Business Council was breaking up. The decision came after a conference callon Wednesday among the members on which 10 more members voted to leave the council. Trump's reversal at his press briefing on Tuesday about the events in Charlot tesville last week seemed to be the trigger for most members. At the press briefing on Tuesday Trump stated once again that ‘both sides' were responsible for the events. The latest development has also spurred further speculation that some top officials may leave the administ ration. US bond yields fell back in response to the news and stocks gave up early gains to finish broadly unchanged.

FOMC minutes yesterday revealed a discussion heavily focused on inflation with differing views with some expressing concern over the low inflation while others highlighted a risk of an overshoot later if the labour market continued to tighten. Most members still believe in the Phillips curve framework, although recent developments have raised uncertainty. On the reduction of t he balance sheet " participants generally agreed that , in light of their current assessment of economic conditions and the out look, it was appropriate to signal that implement ation of the program likely would begin relatively soon".

According to a Reuters report yesterday, ECB president Mario Draghi will not deliver a new policy message at the Jackson Hole symposium next week. According to the report , two sources said that Draghi was keen to hold off on the policy discussion until the autumn, as agreed at the last ECB rate-setting meeting in July.

On the North Korean crisis South Korean President Moon Jae-in said Donald Trump had agreed to ask for consent before taking any action such as a military strike. This reduces further the risk of a war on the Korean Peninsula.

EUR/USD - 1.1763

Most recent candlesticks pattern   : N/A

Trend                      : Sideways

Tenkan-Sen level              : 1.1771

Kijun-Sen level                  : 1.1736

Ichimoku cloud top             : 1.1763

Ichimoku cloud bottom      : 1.1738

Original strategy  :

Sold at 1.1755, stopped at break-even

Position : - Short at 1.1755

Target :  -

Stop : - 1.1755

New strategy  :

Stand aside

Position : -

Target :  -

Stop : -

Although the single currency extend marginal weakness to 1.1681 yesterday, the subsequent rebound on dollar’s broad-based retreat after FOMC suggests a temporary low has been formed there and upside risk is seen for gain to 1.1795-00 (50% Fibonacci retracement of 1.1910-1.1681) and possibly 1.1820-25 (61.8% Fibonacci retracement), however, resistance at 1.1847 should hold.

On the downside, whilst pullback to 1.1730-35 cannot be ruled out, reckon downside would be limited and said support at 1.1681 should remain intact. Only a break below this support would revive bearishness and extend the fall from 1.1910 to 1.1640-50 (50% Fibonacci retracement of 1.1370-1.1910 and previous support). As near term outlook is mixed, would be prudent to stand aside for now. 

USD/JPY - 110.05

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 109.90

Kijun-Sen level                  : 110.31

Ichimoku cloud top             : 110.59

Ichimoku cloud bottom      : 110.10

Original strategy  :

Bought at 110.00, Target: 111.00, Stop: 109.65

Position :  - Long at 110.00

Target :  - 111.00

Stop : - 109.65

New strategy  :

Exit long entered at 110.00

Position :  - Long at 110.00

Target :  -

Stop : -

Despite yesterday’s marginal rise to 110.95, the subsequent selloff on dollar’s broad-based weakness, dampening our bullishness and suggesting the rebound from 108.73 has ended at 110.95, hence downside risk is seen for weakness to 109.60, then test of support at 109.42, however, as broad outlook remains consolidative, reckon downside would be limited to 109.00-05 and said support at 108.73 should remain intact.

In view of this, would be prudent to exit long entered at 110.00 and stand aside for now. Above the Kijun-Sen (now at 110.31) would bring recovery to the upper Kumo (now at 110.60), however, price should falter below said resistance at 110.95, bring another retreat later.