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The euro is having a quiet week, and has inched higher in the Thursday session. Currently, EUR/USD is trading at 1.1160. On the release front, there are no major events in the eurozone. The US will release unemployment claims, which is expected to rise to 241 thousand. On Friday, Germany and the eurozone release manufacturing PMIs, and the US will publish Home Sales.

Germany's economy, the largest in the euro-area has been thriving. Growing global demand for German products has boosted the export and manufacturing sectors. There were jitters in political and business circles when Donald Trump was elected, as Trump campaigned on a protectionist, “America first' agenda. However, these concerns have diminished, as the economy has performed well and Trump has been in damage control mode, as he focuses on domestic scandals. Earlier this week, the well-respected German BDI Federation of Industry added its voice to the chorus of accolades for the German economy. The BDI said that Germany's economic output would increase by 1.5% this year. However, the BDI counseled caution, noting that the economy had been buoyed by a weaker euro, lower oil prices and the ECB's accommodative monetary policy. All three are ‘external factors', in the sense that Germany has limited influence on them, and a significant change in any one factor could weigh on economic growth.

At last week's policy meeting, the Federal Reserve said it would reduce its balance sheet in the near future. The balance sheet has ballooned to $4.5 trillion, which accumulated after the 2008 financial crisis, when the Fed went on a bond-buying spree to stimulate the economy. The reduction will be gradual, but still marks an important change in direction for the central bank. It's not clear when the Fed will start to trim, but FOMC member Patrick Harker said on Wednesday that no decision had been made. Harker said that he was in favor of the reduction commencing in September. The Fed has hinted at one more rate hike in the second half of 2017, and the markets have circled December as the most likely date for a rate move. The CME Group has pegged the odds of a September hike at just 13%, compared to 18% a week ago. However, the odds for a December increase are at 49%, and this could increase if Fed policymakers continue to wax positive about the economy.

The British pound rebounded yesterday, after BoE's chief economist Andy Haldane said that he favors a partial withdrawal of the stimulus the BoE introduced in August 2016. He added that if data come in broadly as expected in the period ahead, policy tightening is likely to be needed well ahead of current market expectations. The key message we got was that he could support a rate hike at one of the upcoming policy meetings.

These comments come in contrast with Governor Carney's remarks on Tuesday that now is not the time to raise rates. This highlights the difference in views among the MPC and suggests that the Committee may be somewhat divided. What we would like to focus on though, is the common ground between these two officials. Both noted that anemic wage growth is the biggest argument against raising rates. As such, we think that moving forward, the main determinant of whether we will see a BoE rate hike may be wage and inflation data. We believe that a material pickup in domestic inflationary pressures, particularly wages, is needed before the Bank decides to act.

EUR/GBP traded lower on Haldane's hawkish remarks. The pair hit resistance at 0.8840 (R1) and slid to find support at 0.8775 (S1), before rebounding again. The rate continues to trade above the short-term uptrend line taken from the low of the 10th of May and thus, we consider the near-term outlook of the pair to still be positive. We expect the bulls to aim for another test near 0.8840 (R1) soon, where a break could aim for the next resistance of 0.8870 (R2). A decisive move above the latter hurdle would confirm a forthcoming higher high and perhaps open the way for the 0.8945 (R3) territory.

RBNZ stands pat, disappoints Kiwi shorts

Overnight, the RBNZ kept its policy unchanged, as was widely expected. The tone of the meeting statement was relatively optimistic on the economy, dismissing soft GDP growth in Q1 as being transitory and indicating that the growth outlook remains positive. With regards to the Kiwi dollar, the Bank noted that it has gained around 3% in trade weighted terms since May, and that a lower NZD would help rebalance the growth outlook.

What we found most striking, was how soft the Bank's language on the currency's strength was, given that the last time NZD was trading at similar levels, officials noted that “a decline in the exchange rate is needed”. We think market participants may have been looking for much stronger hints that the RBNZ wants a weaker Kiwi. In the absence of such signals, NZD gained on the decision. Looking ahead, we think that the outlook of the currency is neutral overall, with the next major indicator that could cause it to assume a direction being CPI data for Q2, due out in mid-July. That said, we also believe that further upside in NZD may be relatively limited, as a sustained rally could cause the RBNZ to become once again more vocal about wanting a weaker currency.

NZD/USD traded higher on the less-concerned-than-expected RBNZ. The pair rebounded after it hit support at the lower bound of the short-term triangle it has been trading within since the 6th of June. Nevertheless, the advance was stopped by the upper bound of the formation. Therefore, we would maintain our flat stance for now. That said, we still see the likelihood for the pair to turn down at some point in the not-too-distant future. We base our view on the fact that the pair has turned sideways after it hit resistance at the downside resistance line drawn from the peak of the 8th of November, while our daily momentum indicators have topped near extreme positive levels.

As for the rest of today's highlights:

During the European day, the Norges Bank will announce its rate decision and the forecast is for no change in policy. At its latest gathering, the Bank essentially noted that the outlook had not changed much since its March assessment, when it indicated there is a slightly higher probability of a rate cut rather than a rate hike. Ever since, developments have been slightly optimistic, on balance. On the bright side, GDP and the unemployment rate were better than the NB's own forecasts. On the downside, the core CPI rate declined by more than the Bank anticipated. Having said that though, the recent decline in NOK argues in favor of higher inflation, so the NB could incorporate into its forecasts a higher inflation path. In this case, we could get a more optimistic tone, considering that the slowdown in inflation is the only dark spot in Norway's economic picture at the moment. Such a tone could support NOK.

As for the economic indicators, we get Eurozone's preliminary consumer confidence index for June, and Canada's retail sales for April. In the US, initial jobless claims for the week that ended June 16th are due out.

We have only one speaker on the agenda: Fed Board Governor Jerome Powell will testify before the Senate Banking Committee. Given that the FOMC appears to be divided in two camps too (optimistic and cautious), it will be interesting to see where Powell stands.

EUR/GBP

Support: 0.8775 (S1), 0.8715 (S2), 0.8640 (S3)

Resistance: 0.8840 (R1), 0.8870 (R2), 0.8945 (R3)

NZD/USD

Support: 0.7215 (S1), 0.7180 (S2), 0.7150 (S3)

Resistance: 0.7270 (R1), 0.7300 (R2), 0.7320 (R3)

EURAUD has posted gains in the previous two days after the significant decline it recorded since the beginning of June that threw the pair from the one-year high of 1.5226 to as low as 1.4626. In today’s trading the pair touched a one-week high of 1.4803 and currently trades close to the day’s open.

The RSI is currently hinting to a neutral short-term picture. The indicator recorded a rise in recent days but is flat at the moment and close to the 50 neutral-perceived level at 47.

The 23.6% Fibonacci retracement level (February 22 – June 1 upleg) at 1.4848 might constitute an important resistance mark. This level held significance in the recent past as well. Above this, the 1.49 handle could act a psychological barrier to upside movements in price.

If the price moves down, the 50-day moving average (MA) at 1.4743 could provide intra-day support. It should be noted that this point was briefly violated today. Further down, the 38.2% Fibonacci mark at 1.4613 might offer additional support.

Turning to the medium-term outlook, it remains bullish, albeit the fall since the start of June has been tilting it towards neutrality. The pair also recorded a bullish (golden) cross in mid-May when the 50-day MA moved above the 200-day MA. The price currently exceeds both MAs.

The EUR/GBP has recently made a u-turn after the V shaped reversal formed and pushed the price from the D L4 support. At this point the POC zone is 0.8790-0.8805 (D L3, EMA89, ATR pivot, 50.0, W H3, historical buyers) and if the price gets into the zone again, we might see another push to the upside targeting 0.8833. If the price manages to stay above the inner trend line at 0.8820, I expect D H3 retest -0.8833 and hourly close above D H3 should give another positive impulse to the pair that with targets at 0.8853 and 0.8885.

GOLD Medium-term bullish.

Gold's medium-term momentum is positive. Hourly support is located at 1240 (yesterday low). Stronger support is given at 1214 (09/05/2017 low). Expected to show short-term upside pressures.

In the long-term, the technical structure suggests that there is a growing upside momentum. A break of 1392 (17/03/2014) is necessary ton confirm it, A major support can be found at 1045 (05/02/2010 low).

SILVER Selling pressures continues.

Silver declines. Closest support is given at 16.44 (18/05/2017 low). Strong support is given at 16.06 (09/05/2017 low). Key resistance is given at a distance at 19.00 (09/11/2017 high). The road seems wide open for further decline.

In the long-term, the death cross indicates that further downsides are very likely. Resistance is located at 25.11 (28/08/2013 high). Strong support can be found at 11.75 (20/04/2009).

CRUDE OIL Strong bearish pressures.

Crude oil is finally continuing its decline since the recent collapse from $52. Support given at a 42.20 (14/11/2017 low) has been broken. Expected to show further decline.

In the long-term, crude oil has recovered after its sharp decline last year. However, we consider that further weakness are very likely. Strong support lies at 24.82 (13/11/2002) while resistance can now be found at 55.24 (03/01/2017 high).

EUR/JPY Sideways price action.

EUR/JPY has bounced back after breaking hourly support given at 122.56 (18/05/2017 low) has been broken. Hourly resistance can be found at 125.82 (16/05/2017 high). Major support is given at 114.90 (18/04/2017 low).

In the longer term, the technical structure validates a medium-term succession of lower highs and lower lows. As a result, the resistance at 149.78 (08/12/2014 high) has likely marked the end of the rise that started in July 2012. Strong support at 94.12 (24/07/2012 low) looks nonetheless far away.

EUR/GBP Buying pressures continue to increase.

EUR/GBP is pushing higher towards resistance given at 0.8866 (12/06/2017 high). Other support can be found at 0.8652 (08/06/2017 low). Expected to show continued strength.

In the long-term, the pair has largely recovered from recent lows in 2015. The technical structure suggests a growing upside momentum. The pair is trading above from its 200 DMA. Strong resistance can be found at 0.9500 psychological level.

EUR/CHF Heading lower.

EUR/CHF's bearish pressures are definitely on. Yet, we believe that the medium-term pattern suggests us to see continued bearish pressures towards hourly support that can be found at 1.0792 (03/05/2017 low).

In the longer term, the technical structure is mixed. Resistance can be found at 1.1200 (04/02/2015 high). Yet,the ECB's QE programme is likely to cause persistent selling pressures on the euro, which should weigh on EUR/CHF. Supports can be found at 1.0184 (28/01/2015 low) and 1.0082 (27/01/2015 low).

USD/CHF Short-term bearish pressures.

USD/CHF is pushing lower. Hourly resistance can be found at given at 0.9771 (09/06/2017 high). Strong resistance is given at 1.0107 (10/04/2017 high). Expected to show continued short-term bullish pressures.

In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/CAD Short-squeeze.

USD/CAD is now consolidating after the strong decline. Hourly support lies at 1.3165 (14/06/2017 high). Expected to show renewed weakness towards support given at 1.3010 (16/02/2017 low)

In the longer term, the pair lies in a bullish channel since a year. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Testing support area around 0.7500.

AUD/USD is consolidating lower after the continued increase since the start of May. The technical structure is clearly negative and the pair should show continued bearish pressures towards support given at 0.7520 (09/06/2017 low)

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Sideways price action.

EUR/USD is trading lower. The pair is still trading below strong resistance given at 1.1300 (09/11/2017 high). Hourly support can be found at 1.1076 (18/05/2017 low). Stronger support lies at 1.0842 (11/05/2017 low). Expected to show further weakness.

In the longer term, the momentum is clearly negative. We favour a continued bearish bias towards parity. Key resistance holds at 1.1714 (24/08/2015 high) while strong support lies at 1.0341 (03/01/2017 low).

GBP/USD No real buying pressures.

GBP/USD has bounced back above broken hourly support given at 1.2636 (09/06/2017 low). Hourly resistance lies at 1.2818 (14/06/2017 high). The road is wide-open for further decline.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Bearish consolidation before testing again resistance at 112.13.

USD/JPY has failed to monitor resistance given at 112.13 (24/05/2017 high). Hourly support can be found at 108.89 (14/06/2017 high). Stronger support is located at 108.13 (17/04/2017 low).

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

Strong two-day recovery from 1.3190 was capped by 200SMA at 1.3340 zone on Wednesday and the pair eased to 1.3300 on Thursday after repeated rejection at 200 SMA barrier.

Limited correction of 1.3538/1.3164 bear-leg, which is part of broader downtrend from 1.3792 (05 May peak) is expected as technical studies remain in bearish setup on daily chart.

In addition, slow stochastic is approaching overbought territory and daily Tenkan-sen resumed steep descend after being in sideways mode in past few days.

Strong bearish pressure is maintained by 10/200SMA death cross and multiple bear-crosses that formed above.

Close below falling 10SMA (1.3287) is needed to signal reversal and lower top at 1.3340, with extension below 1.3250 (Fibo 61.8% of 1.3190/1.3340 recovery leg) to confirm.

Initial target lies at 1.3190 (19 June trough) ahead of 1.3164 (14 June low), break of which would expose psychological 1.3000 support and 1.2968 (2017 low).

Res: 1.3340, 1.3351, 1.3383, 1.3395
Sup: 1.3287, 1.3250, 1.3200, 1.3190

The Aussie pressures strong support at 0.7539 (daily cloud top) following three days in red after repeated upside rejections above 0.7600.

Strong bearish signals have been generated on close below 10/100SMA's that keeps negative near-term outlook.

Dips should be ideally contained above strong support zone between 0.7539 and 0.7527 (daily cloud base / Fibo 38.2% of 0.7369/0.7635 upleg / 200SMA) to keep in play broader bulls which are underpinned by 20/55 and 30/55SMA bull-crosses.

Conversely, bearish extension below 0.7539 /27 pivots would confirm reversal from 0.7630 zone tops and risk further retracement of 0.7369/0.7635 rally.

Res: 0.7555, 0.7574, 0.7600, 0.7630
Sup: 0.7539, 0.7527, 0.7516, 0.7492