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Daily Pivots: (S1) 110.70; (P) 111.01; (R1) 111.39; More...

A temporary low is in place at 110.61 in USD/JPY and intraday bias is turned neutral first. Upside of recovery should be limited by 112.41 resistance to bring another decline. Below 110.61 will turn bias back to the downside for 108.81 support. Whole correction from 118.65 is possibly resuming. Break of 108.81 will confirm and target 61.8% retracement of 98.97 to 118.65 at 106.48. Nonetheless, break of 112.41 will dampen this bearish view and turn focus back to 114.49 resistance instead.

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, down side should be contained by 61.8% retracement of 98.97 to 118.65 at 106.48 and bring rebound.

Daily Pivots: (S1) 0.7894; (P) 0.7930; (R1) 0.7960; More...

Intraday bias in AUD/USD remains neutral for consolidation below 0.7988 temporary top. Near term outlook remains bullish as long as 0.7785 support holds and another rise is expected. Break of 0.7988 will target 100% projection of 0.6826 to 0.7833 from 0.7328 at 0.8335 next. However, break of 0.7785 will argue that deeper pull back in under way and could target 55 day EMA (now at 0.7649).

In the bigger picture, current development suggests that rebound from 0.6826 is developing into a medium term rise. There is no confirmation of trend reversal yet and we'll continue to treat such rebound as a corrective pattern. But in any case, further rise is now expected to 55 month EMA (now at 0.8100) or even further to 38.2% retracement of 1.1079 to 0.6826 at 0.8451. Break of 0.7328 support is needed to confirm completion of the rebound. Otherwise, further rise is now expected.

Currency pair EUR/USD

The EUR/USD is building a minor correction within the larger uptrend (blue line). A bullish continuation is likely to see price test the 1.1750 round resistance level. The momentum is part of a wave 3 (orange) which is part of larger wave 5 (purple) of wave 3 (green).

The EUR/USD broke the support trend line (dotted blue) of the rising wedge chart pattern mentioned in yesterday's analysis. Price retraced back to the 38.2% Fibonacci level of wave 4 (purple) and bounced at the support level. The bullish breakout above the correction and resistance trend line (dotted red) could price move towards the Fibonacci targets of wave 5 vs 1+3.

Currency pair USD/JPY

The USD/JPY has bounced the 200% Fibonacci target of wave 3 vs 1 (orange) but the retracement could stop at the resistance trend lines (red and orange).

The USD/JPY completed a wave 3 (green) and made a retracement to the 50% Fibonacci level of wave 4 vs 3. Price turned at the resistance and broke below the support trend line (dotted blue) which could indicate a bearish breakout towards the Fibonacci targets of wave 5 vs 1+3.

Currency pair GBP/USD

The GBP/USD could be building a correction via a WXY (purple) wave pattern. A break below the small channel (blue) would indicate the potential for price to retrace lower towards the 61.8% Fibonacci target of wave Y vs W.

The GBP/USD is completing an ABC (grey) correction within wave X (purple) unless price manages to break above the channel, which could see price test the previous top and Fibonacci levels.

Global Markets:

• Asian stock markets: Nikkei down 0.10 %, Shanghai Composite lost 0.15 %, Hang Seng rose 0.05 %, ASX 200 rallied 0.90 %
• Commodities: Gold at $1255 (+0.10 %), Silver at $16.45 (+0.05 %), WTI Oil at $46.60 (+0.60 %), Brent Oil at $48.90 (+0.55 %)
• Rates: US 10-year yield at 2.25, UK 10-year yield at 1.19, German 10-year yield at 0.51

News & Data:

• Dollar recovers from 13-month low on strong PMI readings, Asia stocks tread water – RTRS

Markets Update:

The US Dollar recovered slightly yesterday, following stronger than expected US economic data. However, the currency quickly lost momentum and came again under pressure in Asia.

EUR/USD bounced off 1.1620 support and is heading again towards 1.17. The Euro remained well bid despite the disappointing PMI numbers out of the Euro Zone countries, which shows that demand is still high.

GBP/USD rose from 1.3015 to 1.3035 in Asia. The Pound is likely to struggle in the near-term amid uncertainty around Brexit and a reluctant Bank of England. Heavy resistance is seen in the area between 1.31 and 1.3120.

USD/JPY is testing 111 support again, and the outlook is negative. A test of 110 should follow soon, and downside momentum will increase should the pair break below that level.

AUD demand remains strong. AUD/USD bounced ahead of 0.79 and reached a high of 0.7945 in Asia. The pair should test 0.80 soon, and a break above that level would then signal an extension of the rally to 0.82. The main risk for the AUD rally are the inflation numbers which will be released on Wednesday. Disappointing figures could put the Australian Dollar under some pressure, although losses are likely to be limited to 0.7840.

Upcoming Events:

• 09:00 BST – German IFO Business Climate
• 14:00 BST – US House Price Index
• 15:00 BST – US CB Consumer Confidence

For the 24 hours to 23:00 GMT, the AUD rose 0.13% against the USD and closed at 0.7925.

Yesterday, the IMF slightly upgraded China's growth forecast to 6.7% for 2017, up from 6.6% estimated earlier.

LME Copper prices declined 0.02% or $1.5/MT to $6000.0/MT. Aluminium prices declined 0.6% or $11.0/MT to $1890.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7933, with the AUD trading 0.1% higher against the USD from yesterday's close.

The pair is expected to find support at 0.7901, and a fall through could take it to the next support level of 0.7870. The pair is expected to find its first resistance at 0.7966, and a rise through could take it to the next resistance level of 0.8000.

Moving ahead, Australia's consumer price index for 2Q, slated to release in the early hours' tomorrow, will be on investors' radar.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the EUR declined 0.26% against the USD and closed at 1.1640, after data indicated that manufacturing sector growth across the Euro-zone moderated at the start of the third quarter.

The Euro-zone's preliminary Markit manufacturing PMI dropped more-than-expected to a level of 56.8 in July, hitting its lowest level in three months and compared to a reading of 57.4 in the prior month. Markets were anticipating the PMI to fall to a level of 57.2. Meanwhile, the region's flash Markit services PMI remained steady at a level of 55.4 in July, in line with market expectations.

Separately, Germany's manufacturing sector expanded at its weakest pace in three months in July, after it dropped more-than-anticipated to a level of 58.3, compared to a reading of 59.6 registered in the prior month, while investors had envisaged the PMI to drop to a level of 59.2. Moreover, activity in the nation's services sector unexpectedly slowed to a six-month low level of 53.5 in July, defying market consensus for an advance to a level of 54.3. In the prior month, the PMI had registered a reading of 54.0.

Separately, the International Monetary Fund (IMF), in an updated World Economic Outlook, upgraded the Euro-zone's economic growth projection for 2017 to 1.9%, up from 1.7% estimated earlier in April, citing solid growth momentum in the single currency region. Meanwhile, the Fund kept its growth forecasts for the world economy unchanged for this year and next.

In the US, data revealed that the flash Markit manufacturing PMI advanced to a four-month high level of 53.2 in July, surpassing market expectations for a rise to a level of 52.3 and compared to a reading of 52.0 in the prior month. Further, the nation's preliminary Markit services PMI remained steady at a level of 54.2 in July, meeting market expectations.

On the other hand, existing home sales in the US unexpectedly eased 1.8% on a monthly basis, to a level of 5.52 million in June, declining to its lowest level since February 2017. Existing home sales registered a reading of 5.62 million in the prior month, while markets were expecting it to remain unchanged at 5.57 million.

Meanwhile, the IMF revised down US economic growth forecast to 2.1% for this year and next, citing the US President, Donald Trump's struggle to deliver on policy and stimulus.

In the Asian session, at GMT0300, the pair is trading at 1.1653, with the EUR trading 0.11% higher against the USD from yesterday's close.

The pair is expected to find support at 1.1628, and a fall through could take it to the next support level of 1.1602. The pair is expected to find its first resistance at 1.1677, and a rise through could take it to the next resistance level of 1.1700.

Moving ahead, investors will focus on Germany's Ifo business climate and expectations indices for July, slated to release in a few hours. Moreover, the US consumer confidence index for July, due to release later in the day, will pique significant amount of investor attention.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 0.11% against the USD and closed at 1.3023.

Yesterday, the IMF slashed Britain's growth forecast for 2017 by 0.3% to 1.7%, factoring in a weaker-than-expected first quarter economic growth.

In the Asian session, at GMT0300, the pair is trading at 1.3027, with the GBP trading slightly higher against the USD from yesterday's close.

The pair is expected to find support at 1.2991, and a fall through could take it to the next support level of 1.2956. The pair is expected to find its first resistance at 1.3060, and a rise through could take it to the next resistance level of 1.3094.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.22% against the JPY and closed at 111.17.

Yesterday, the IMF stated that it expects Japanese economy to expand by 1.3% this year, buoyed by stronger private consumption, investment and exports. The organisation had projected a growth of 1.2% in April.

On the data front, Japan's final leading economic index rose to a level of 104.6 in May, compared to a reading of 104.2 in the prior month, while the preliminary figures had indicated an advance to a level of 104.7. On the other hand, the nation's final coincident index fell less than initially estimated to a level of 115.8 in May, compared to a reading of 117.1 in the prior month. The index had registered a drop to a level of 115.5 in the flash estimate.

In the Asian session, at GMT0300, the pair is trading at 111.07, with the USD trading 0.09% lower against the JPY from yesterday's close.

Earlier today, minutes of the Bank of Japan (BoJ) showed that board members were divided on how much information they should disclose to the public about a possible exit from ultra-loose monetary policy.

The pair is expected to find support at 110.68, and a fall through could take it to the next support level of 110.29. The pair is expected to find its first resistance at 111.4, and a rise through could take it to the next resistance level of 111.73.

The currency pair is trading above its 20 Hr moving average and showing convergence with its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD rose 0.11% against the CHF and closed at 0.9472.

In economic news, Switzerland's total sight deposits rose to a level of CHF579.1 billion in the week ended 21 July, compared to a level of CHF578.9 billion in the previous week.

In the Asian session, at GMT0300, the pair is trading at 0.9466, with the USD trading 0.06% lower against the CHF from yesterday's close.

The pair is expected to find support at 0.9448, and a fall through could take it to the next support level of 0.9431. The pair is expected to find its first resistance at 0.9481, and a rise through could take it to the next resistance level of 0.9497.

Amid a lack of any macroeconomic releases in Switzerland today, trading trend in the CHF is expected to be determined by global macroeconomic factors.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.3% against the CAD and closed at 1.2510.

Yesterday, the IMF raised its growth outlook for Canadian economy, now expecting it to grow by 2.5% in 2017, up from its April projection of 1.9%.

On the macro front, Canada's wholesale sales climbed 0.9% MoM in May, higher than market expectations for an advance of 0.5%. Wholesale sales had recorded a revised rise of 0.8% in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.2505, with the USD trading a tad lower against the CAD from yesterday's close.

The pair is expected to find support at 1.2475, and a fall through could take it to the next support level of 1.2446. The pair is expected to find its first resistance at 1.2543, and a rise through could take it to the next resistance level of 1.2582.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.