Sample Category Title

• EURCHF reversed from resistance level 0.9675
• Likely to fall to support level 0.9600

EURCHF currency pair recently reversed down from the key resistance level 0.9675 (former multi-month support May and June).

The downward reversal from the resistance level 0.9675 stopped the previous minor correction (ii) forming the daily Evening Star.

Given the prevailing downtrend, EURCHF can be expected to fall further toward the next support level 0.9600 (low of the previous minor impulse wave iii).

According to Japanese Finance Minister Shunichi Suzuki, there was "no discussion" about exchange rates during the recent meeting of Group of Seven (G7) finance ministers and central bank chiefs in India. This news comes as the yen weakened to around ¥145 per dollar last month, prompting concerns that the Japanese government may intervene in the currency market to support the yen. However, the yen has rebounded strongly this month to approximately ¥138 per dollar. A weak yen can benefit Japanese exporters and raise import costs for businesses and consumers. On another note, Suzuki reiterated Japan's strong support for Ukraine. Bank of Japan Governor Kazuo Ueda highlighted the uncertainty in the global economy, which is influencing the central bank's decision to maintain ultra-easy monetary policy despite inflation exceeding the target. The BOJ's loose monetary policy has been a key factor contributing to the yen's weakness compared to other major currencies. Keep an eye on these developments for potential impact on forex markets!

USDJPY - D1 Timeframe

USDJPY is currently resting on top of a double trendline situation within a strong pivot range. Looking also at how the moving averages are poised, there is a high likelihood that the price rebounds off the trendline in continuation of the original bullish movement.

Analyst’s Expectations:

• Direction: Bullish
• Target: 141.986
• Invalidation: 136.867

GBPJPY - D1 Timeframe

GBPJPY, as shown in the chart, is currently trading inside a rising channel pattern. The moving averages are also currently in a bullish array, which lends credibility to the likelihood of a bullish reaction from the support trendline.

Analyst’s Expectations:

• Direction: Bullish
• Target: 183.245
• Invalidation: 179.360

CADJPY - D1 Timeframe

CADJPY has, at this time, reached a strong demand zone. The demand zone has confluences from the trendline support, the 50-day moving average, and the bullish array of the moving averages. Based on the observed confluences, I will be watching for a continuation of the bullish trend.

Analyst’s Expectations:

• Direction: Bullish
• Target: 107.035
• Invalidation: 103.670

CONCLUSION

The trading of CFDs comes at a risk. Thus, to succeed, you have to manage risks properly. To avoid costly mistakes while you look to trade these opportunities, be sure to do your due diligence and manage your risk appropriately.

Gold price jumped to 1 ½ month high on Wednesday, mainly driven by weaker dollar on changing US rate outlook.

Although US retail sales missed expectations in June (data released on Tuesday) spending remains resilient despite strong rise in borrowing cost, adding to positive signals from easing inflation, which is likely to prompt Fed to end its tightening cycle in the near future.

Recent economic data showed that the US economy is in better shape than anticipated and analysts are optimistic in their expectations that the US will avoid recession.

Brightening rate outlook keeps the dollar under pressure and boosts demand for the yellow metal, but gains might be limited as the start of cutting rates is unlikely in the near future.

Fresh strength signals continuation of an uptrend from $1892 (June 29 low) after brief consolidation in past three days.

Bulls broke through important Fibo barrier at $1964 (38.2% retracement of $2080/$1892) and penetrated into falling daily cloud (cloud base lays at $1975) with close within the cloud needed to confirm fresh bullish signal.

Daily studies are in full bullish setup, but overbought conditions warn that bulls may start to lose traction.

Dip-buying for rally towards $1986 (Fibo 50%) and $2000 (psychological) in extension, to remain favored while the price stays above broken Fibo 38.2% barrier at $1964.

Res: 1986; 2000; 2006; 2008
Sup: 1975; 1964; 1956; 1945

BoJ Governor Kazuo Ueda, following a G20 finance leaders' meeting in India, has restated the central bank's stance on maintaining their ultra-loose monetary policy under yield curve control as sustainably and stably achieving 2% inflation target remains a distant objective.

He stated, "Based on this understanding, we have patiently continued our ultra-loose monetary policy under yield curve control."

Ueda highlighted BOJ's intent to thoroughly assess the pace of Japan's progress towards sustainably achieving its 2% target during every policy meeting.

He added, "If our assumption (that sustained achievement of 2% inflation remains distant) is unchanged, our overall narrative on monetary policy remains unchanged," indicating that any alteration to YCC policy will depend on the evidence of significant progress towards the central bank's inflation target.

Markets

German Bunds vastly outperform US Treasuries today. Yields in the country drop 6.5-14.8 bps with the front end of the curve particularly in market’s focus. Comments from ECB’s Knot were responsible. The Dutch central bank governor is known as an outspoken hawk but in an interview with news agency Bloomberg today he struck an unusual neutral-to-dovish tone. Knot said that core inflation looks like it has plateaued. While labeling a July 27 rate hike as a given, he called any increases after that “at most a possibility”. It all comes down to the data between next week and September. Knot did call into question Italian governor Visco’s view of inflation hitting 2% sooner than the ECB’s official forecast of 2025. That suggests he still favours a high-for-longer strategy. European money markets stepped further away from a peak policy rate at 4%. Such a scenario gets attributed a 40% chance vs 60% yesterday. US rates eased 4-7 bps going into the publication of the June retail sales. Last month’s volumes sold were revised up by 0.1-0.2 ppts, downplaying the miss for the headline number which came in at 0.2% m/m vs 0.5% consensus. More importantly, a core gauge used to calculate GDP and which excludes food services, auto dealers, building materials and gasoline stations rose a firm 0.6%. At the very least it points at consumer resilience. Yields whipsawed in the immediate aftermath but eventually returned to levels seen prior to the release. UK gilts hold a road somewhere between Bunds and UST’s. British yields fall 6.5-8 bps as investors await tomorrow’s inflation data. Stocks fluctuated throughout the day, flipflopping between minor gains and losses. The EuroStoxx50 sheds 0.2% at the time of writing.

General volatility on FI markets is much higher compared to FX. EUR/USD went for a test of the 1.1274 resistance level but first Knot and later US data killed off the attack pretty soon. The pair is currently trading near intraday lows around 1.123. DXY sticks around below 100. EUR/GBP surpassed 0.86 for the first time since the beginning of this month but Knot’s comments killed off that adventure quickly. The combo is now changing hands in the 0.856 area. The Japanese yen is better bid following the drop in core bond yields. USD/JPY moves south to 138.21. EUR/JPY joins that downleg to 155.27. The Canadian dollar faces conflicting signals from the June CPI numbers (see below).
 
News & Views

According to the UK government agency insolvency services, the number of registered company insolvencies in June 2023 was 27% higher than in the same month in 2022. The agency also specified that this is higher than the levels seen when the government support measures were in place in response to the coronavirus (COVID-19) pandemic and also higher than pre-pandemic numbers. The data suggest that the combination of lower demand due to the cost of living crisis, higher interest rates and rising wage coast are taking their toll at least on part of UK enterprises. On a completely different topic, a YouGov poll published today showed that 57% of Britons indicated that the decision to leave the European in 2016 was wrong. 32% still consider it a correct decision. 55% of the respondents now indicated they would vote to stay in the European union while 31% said they still would opt to stay out in case a referendum was to be held now.

Economic data released in Canada today showed a mixed picture. Headline CPI in June decelerated faster than expected to 0.1% M/M bringing the Y/Y measure down from 4.0% to 2.8%. A decline to 3% was expected. So, at least headline inflation returned within the 1-3% Bank of Canada target band for the first time since March 2021. However, the decline in the core median (unchanged at 3.9% Y/Y) and core trim (3.7% from 3.8%) which are closely monitored by the Bank of Canada was slightly less than expected. Goods inflation slowed to 1.4% Y/Y. Services inflation printed at 4.2% down from 4.6% Y/Y. At the same time, housing starts unexpectedly jumped to an annualized rate of 281.4k from 200k in May. Last week, the BoC for the second consecutive meeting again rose its policy rate by 25 bps to 5.0%. The Bank paused its hiking cycle in March and April. In last week’s communiqué the BoC assessed that ‘with three-month rates of core inflation running around 3½-4% since last September, underlying price pressures appear to be more persistent than anticipated’. The Canadian 2-y yield eases 4.5 bps, but this is probably mainly due to overall market trends. The loonie is losing modest ground against the dollar with USD/CAD trading near 1.3220 from a close near 1.32 yesterday evening.

Daily Pivots: (S1) 138.01; (P) 138.71; (R1) 139.41; More...

USD/JPY is extending the consolidation from 137.22 and intraday bias stays neutral. Upside of recovery should be limited by 55 4H EMA (now at 140.06) and bring another decline. Break of 137.22 and sustained trading below 137.90 resistance turned support will confirm the larger bearish case, and target 127.20 and below.

In the bigger picture, fall from 145.06 is seen as the third leg of the corrective pattern from 151.93 (2022 high). Sustained break of 137.90 resistance turned support should confirm this case and target 127.20 (2023 low) and below. For now, this will remain the favored case as long as 145.06 resistance holds, even in case of strong rebound.

Daily Pivots: (S1) 0.8578; (P) 0.8604; (R1) 0.8629; More...

USD/CHF's decline is resuming and deeper fall could be seen. But based on loss of downside momentum, some support could be seen from 100% projection of 0.9439 to 0.8818 from 0.9146 at 0.8525 to bring rebound. Break of 0.8629 minor resistance will turn bias to the downside for 55 4H EMA (now at 0.8723).

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) 1.3075; (P) 1.3108; (R1) 1.3127; More...

GBP/USD's consolidation from 1.3141 is in progress. Intraday bias remains neutral and deeper retreat could be seen. But downside should be contained above 1.2847 resistance turned support to bring rise resumption. On the upside, break of 1.3141 will resume larger up trend and target 161.8% projection of 1.2306 to 1.2847 from 1.2589 at 1.3464 next.

In the bigger picture, rise from 1.0351 medium term bottom (2022 low) is in progress. Next target is 100% projection of 1.0351 to 1.2445 from 1.1801 at 1.3895. Break there will target 1.4248 key long term resistance (2021 high) next. This will now remain the favored case as long as 1.2678 resistance turned support holds.

Stock markets are marginally negative on Tuesday, with US retail sales data weighing slightly after initial volatility passed.

The numbers were much weaker than expected for June but then the May figures were revised up so it wasn't all bad. I'm not convinced today's data really changes things as far as the consumer or economy is concerned, all things considered, nor has it really changed anything on interest rate expectations, with markets almost fully pricing in a hike next week and probably no more after that.

RBA undecided on future rate hikes

It's safe to say there's quite a balanced debate taking place at the Reserve Bank of Australia right now, with policymakers torn on whether conditions have become restrictive enough and if a little more will do more harm or good.

While markets appear confident that the RBA will hike once more this year, when that will come is far less clear. And as we've seen so much this year, expectations have a knack of changing quite considerably over a matter of weeks, let alone months. In other words, investors are no more certain than the policymakers themselves.

Oil turns higher again despite difficult start to the week

Oil prices are edging higher after falling in the last couple of sessions. There may have been an element of profit-taking to the move having rallied by more than 13% in a little over two weeks prior to Friday. But the data from China yesterday won't have helped either, and neither will reports from Libya of outages being restored.

What is interesting is where the price ran into support and whether that will continue to hold. Since early May, $77-$78 was a major barrier of resistance for Brent and the breaking of that was therefore very significant. Should that now become a barrier to the downside instead, it could reinforce the bullish narrative.

Gold choppy after retail sales but holding key support

Gold is drifting higher again after briefly paring gains over the last couple of sessions. The price pulled back from $1,960 where it was running into resistance but fell just short of testing $1,940 as a new area of support. The yellow metal has been buoyed by lower yields and a softer dollar, both of which we're seeing again today.

Today's moves have pushed gold above $1,960 to hit a near-six-week high. Yields and the dollar have been volatile in the aftermath of the retail sales data which has been reflected in gold but we haven't seen it commit one way or another yet. A hold above $1,960, where it is currently close to testing, could be viewed as a bullish confirmation signal, with $1,980 potentially being the next test above.

A psychological blow for Bitcoin

Bitcoin has slipped back below $30,000 after coming under pressure at the start of the week. It's been a very uncertain period for cryptos, with regulatory issues front and center of that, although the ETF filings did counter that at one stage. Broadly speaking, price action is choppy but still broadly within the range it's traded within since 22 June. The moves over the last 24 hours could be a psychological blow but it's not clear whether it's anything more than that at this stage.