Sample Category Title

Daily Pivots: (S1) 1.1034; (P) 1.1091; (R1) 1.1121; More...

Intraday bias in EUR/USD stays mildly on the downside. Fall from 1.1274 is in progress. But still, outlook will remain bullish as long as 1.1011 resistance turned support holds. Above 1.1146 minor resistance will turn bias back to the upside for retesting 1.1274 high first. However, firm break of 1.1011 will argue that larger correction is underway.

In the bigger picture, rise from 0.9534 is still expected to continue as long as 1.1011 resistance turned support holds. Decisive break of 61.8% retracement of 1.2348 (2021 high) to 0.9534 at 1.1273 will solidify the case of bullish trend reversal and target 1.2348 resistance next. However, firm break of 1.1011 will bring deeper fall back to 1.0634 support next.

Daily Pivots: (S1) 1.2787; (P) 1.2835; (R1) 1.2873; More...

Intraday bias in GBP/USD is turned neutral first, with 4H MACD crossed above signal line. Below 1.2796 will resume the fall form 1.3141 to 55 D EMA (now at 1.2703) next. On the upside, break of 1.2963 minor resistance will turn bias back to the upside retest 1.3141 high instead.

In the bigger picture, as long as 1.2678 resistance turned support holds, rise form 1.0351 (2022 low) is expected to continue. Next target is 100% projection of 1.0351 to 1.2445 from 1.1801 at 1.3895. However, sustained break of 1.2678 will argue that it's at least correcting this rally, with risk of bearish reversal.

Daily Pivots: (S1) 0.8656; (P) 0.8678; (R1) 0.8719; More...

Intraday bias in USD/CHF stays on mildly on the upside as rebound from 0.8553 short term bottom is in progress. Further rise would be seen towards 0.8818 support turned resistance. Rejection by 0.8818 will retain near term bearishness for another decline through 0.8553. Meanwhile for now, risk will stay mildly on the upside as long as 0.8553 holds, in case of retreat.

In the bigger picture, the break of 0.8756 (2021 low) indicates break out from the long term range pattern. For now, medium term outlook will stay bearish as long as 0.9146 resistance holds. Further fall would be seen to 61.8% retracement of 0.7065 (2011 low) to 1.0342 (2016 high) at 0.8317 next.

Daily Pivots: (S1) 140.88; (P) 141.35 (R1) 141.94; More...

Intraday bias in USD/JPY stays neutral and further rally is mildly in favor. On the upside, above 141.93 will resume the rebound from 137.22 to 145.06 first. Firm break there will target 61.8% projection of 129.62 to 127.22 from 145.06 at 146.76 next. On the downside, below 139.74 minor support will bring retest of 137.22 instead.

In the bigger picture, overall price actions from 151.93 (2022 high) are views as a corrective pattern. Current development suggests that the second leg (the rise from 127.20) might not be over yet. But even in case of extended rise, strong resistance should be seen from 151.93 to limit upside. Meanwhile, break of 137.22 support should confirm the start of the third leg to 127.20 (2023 low) and below.

Daily Pivots: (S1) 0.9591; (P) 0.9619; (R1) 0.9650; More...

Intraday bias in EUR/CHF is back on the downside with break of 0.9601 support. Larger decline from 1.0095 is in progress for 100% projection of 0.9995 to 0.9670 from 0.9840 at 0.9515. On the upside, however, break of 0.9684 will indicate short term bottoming, and bring stronger rebound.

In the bigger picture, medium term outlook is staying bearish as the pair is capped well below falling 55 W EMA (now at 0.9889). Down trend from 1.2004 (2018 high) is in favor to extend through 0.9407 at a later stage. Nevertheless, decisive break of 38.2% retracement of 1.1149 to 0.9407 will raise the chance of bullish trend reversal.

Daily Pivots: (S1) 180.68; (P) 181.52; (R1) 182.26; More...

Range trading continues in GBP/JPY and intraday bias stays neutral. On the downside, break of 179.45 will resume the correction from 183.90 to 55 D EMA (now at 177.85) and possibly below. On the upside, firm break of 183.99 high will resume larger up trend to 187.36 projection level.

In the bigger picture, as long as 172.11 resistance turned support holds, up trend from 123.94 (2020 low) is expected to continue. On resumption, next target is 138.2% projection of 148.93 to 172.11 from 155.33 at 187.36, and then 195.86 (2015 high). Nevertheless, firm break of 172.11 will argue that larger correction is already underway.

Daily Pivots: (S1) 155.92; (P) 156.85; (R1) 157.46; More....

Intraday bias in EUR/JPY remains neutral and outlook is unchanged. On the upside, sustained break of 157.99 will confirm resumption of larger up trend, and target 162.82 projection level next. Nevertheless, break of 155.57 minor support will bring deeper decline to extend the corrective pattern from 157.99.

In the bigger picture, as long as 151.60 resistance turned support holds, rise from 114.42 (2020 low) is in progress. On resumption, next target is 100% projection of 124.37 to 148.38 from 138.81 at 162.82. Nevertheless, sustained break of 151.60 will argue that larger correction is already underway.

Daily Pivots: (S1) 0.8612; (P) 0.8636; (R1) 0.8653; More...

Intraday bias in EUR/GBP stays neutral with focus on 0.8619 minor support. Strong rebound from there and decisive break of 0.8717 support turned resistance will solidify that fall from 0.8977 has completed a five-wave decline. Further rally should then be seen to 0.8977 resistance next. On the downside, though, below 0.8619 minor support will mix up the outlook and turn bias back to the downside for retesting 0.8502 low.

In the bigger picture, the down trend from 0.9267 (2022 high) is seen as part of the long term range pattern from 0.9499 (2020 high). Firm break of 0.8717 support turned resistance will argue that it has completed with three waves down to 0.8502. Further break of 0.8977 will bring retest of 0.9267 high. Nevertheless, break of 0.8502 will resume the decline towards 0.8201 (2022 low).

Markets

Disappointing EMU July PMI’s set the tone for global trading yesterday morning. The composite measure dropped further into contraction territory (48.9 from 49.9) as activity in the manufacturing sector slumped further (42.7 from 43.4). Growth in the services sector remains positive (51.1 from 52.0) but is eroding too. Orders are declining both in manufacturing and services, causing companies to work through still existing backlogs. Employment in manufacturing is being reduced while growth in the services sector slows markedly. The disinflation process in the manufacturing sector continues. Higher wages still support higher costs and output prices in the services sector, but also here the pace of growth slows. The later remains an important factor in the ECB deliberation process on monetary policy. Even so, the negative EMU growth outlook still pushed EMU yields substantially lower. German yields initially dropped up to 7 bps +, but the bond rally eased during the US trading session. At the end of the day German yields dropped between 4.8 bps (2 & 5-y yield) and 1.2 bps (30-y). Momentum in US Treasuries gradually decoupled from what happened in Europe. The decline in US PMI’s was much more modest (composite 52.0 from 53.2) with a positive surprise from the manufacturing sector (49.0 from 46.3). Investors apparently also were a bit cautious to aggressively bid for the US 2-y auction going into Wednesday’s Fed decision. US yields finally gained between 8.2 bps (2-y) and 2.5 bps (30-y). US equities (S&P 500 +0.4%) outperformed Europe (EuroStoxx 50 -0.19%). Divergence in the outlook for activity and in yields propelled the dollar, especially against the euro. EUR/USD decisively dropped below the 1.1095 support to close at 1.1064. The UK PMI’s basically showed a similar picture compared to Europe (composite from 52.8 to 50.7). Still sterling slightly outperformed the single currency. EUR/GBP closed at 0.8627.

Today, Asian markets (except Japan) mostly trade in positive territory as investors see growing sings of Chinese authorities preparing additional measure to support activity, in particular the property sector. The yuan strengthens substantially (USD/CNY 7.149). The Aussie dollar profits too (AUD/USD 0.677). US yields are taking a breather after yesterday’s uptick an so does the dollar (DXY 101.3, EUR/USD 1.1076). Later today, The German IFO survey is expected to confirm yesterday’s poor PMI reading. Going into the ECB meeting, we also keep a close eye at the ECB lending survey. In the US, consumer confidence (Conference Board) is expected to improve from 109.7 to 112. Recent US consumer related data showed quite resilient. Investors probably will remain cautious to place big bets going into the Fed and the ECB meeting. Even so, the downside in US yields probably is better protect compared to Europe. In this context, there is also little reason to expect EUR/USD to easily regain the 1.1095 previous top ahead of the Fed/ECB meetings. The EUR/USD technical picture shows some cracks.

News and views

Germany is readying a €20bn subsidy package to support its semiconductor manufacturing industry. The move comes as the country seeks less international reliance for supplies of critical components, a strategy of which the flaws were laid bare after Covid and geopolitical tensions wrecked overseas supply chains. It can also be seen as a response to the US Inflation Reduction Act to attract investment. The money will be distributed to companies by 2027 and will be drawn from the Climate and Transformation Fund. The latter is an off-budget pot, originally designed for financing Germany’s decarbonization. But its scope is being increasingly expanded as the government vows to return to fiscal constraint after years of Covid and energy crisis spending.

International wheat prices over the course of a couple of days rose to the highest level in five months. The surge started when Russia withdrew from the UN-brokered deal to allow for Ukrainian grain export via the Black Sea last week. Adding to the upward pressures is yesterday’s Russian drone attack on a grain storage silo in Ukraine, resulting in a 2.6% wheat price increase, before paring gains to about 1%. After hitting the lowest level since December 2020, wheat currently trades about 33% higher at around $768/bu this morning. It comes amid other sharp price rises in the likes of rice (highest in more than two years) as crops are being threatened by the El Niño weather pattern. It is also bad news for central banks. Global food inflation was finally easing but that disinflation process may be thwarted by the current developments.

Daily Pivots: (S1) 1.6359; (P) 1.6460; (R1) 1.6516; More...

EUR/AUD's pull back from 1.6601 extends lower today but stays well above 1.6231 support. Intraday bias remains neutral first and outlook stays cautiously bullish. On the upside, break of 1.6601 will resume the rebound from 1.5846 and target 1.6785 high next. However, firm break of 1.6231 will bring deeper fall to extend the corrective pattern from 1.6785.

In the bigger picture, with 38.2% retracement of 1.4281 to 1.6785 at 1.5828 intact, rally from 1.4281 is still in progress. Firm break of 1.6785 will confirm rise resumption. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. On the other hand, rejection by 1.6785 will extend the corrective pattern with another fall leg. But outlook will stay bullish as long as 1.5828 holds.