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Talking to Bloomberg TV, ECB Governing Council member Ignazio Visco said, "Since we have also been observing a substantial reduction in energy prices, we have to expect that this will be seen also in underlying inflation in the coming months, certainly by the end of the year."

Visco also suggested the possibility of a quicker pace than initially forecasted by ECB, saying, "The ECB projects that by the end of 2025 there will be 2% — my impression is that it might be faster."

Visco cautioned against the risks associated with making excessive adjustments, stating, "There is a risk of doing too much and I think that we have to be careful about that." However, he also noted the potential risk of doing too little, emphasizing the need for balance and judicious decision-making based on incoming information.

Meanwhile, another Governing Council member Klaas Knot expressed his perspective on potential policy adjustments beyond July. "For July I think it (rate hike) is a necessity, for anything beyond July it would at most be a possibility but by no means a certainty," Knot said. He urged careful monitoring of the data from July onwards, to assess the distribution of risks surrounding the baseline.

EURJPY opened the week with a doji candlestick slightly lower than the 20-day SMA at 156.30, following its rebound from the March support trendline.

The trendline bounce indicates the positive trend will persist, yet Monday's doji candlestick may bring doubt. In momentum indicators, the RSI is maintaining a negative trajectory despite climbing back above its 50 neutral mark. The MACD is within the positive zone and comfortably below its red signal line, while the stochastic oscillator is nearing its 80 overbought level.

Given the mixed signals, traders may stay on the sidelines unless the price closes above the 20-day SMA and the 156.30 bar or falls below the 154.70 -153.70 trendline area.

In the first case, the price could accelerate towards its 15-year highs and the 158.00 bar. A successful move above the ascending line from January 18 at 158.85 could lift the price towards the 160.00 psychological mark. If this proves an easy obstacle too, the price could chart a new higher high somewhere between 162.50 and 163.00. This is where the bulls faced rejection in August 2008.

In the bearish scenario, where the pair slides below 153.70, the spotlight will fall on the 50-day SMA at 152.60. Should the sell-off stretch below May’s peak of 151.60, the next pivot could take place around the 150.00 round level.

All in all, EURJPY is waiting for its next directional catalyst. A step above 156.30 is expected to strengthen buying forces, while a correction below 153.70 could display early signs of a bearish trend reversal. 

GBPUSD has been in a prolonged uptrend since October 2022 supported by its long-term ascending trendline. Last Friday, the pair stormed to a fresh 15-month high of 1.3141 before paring some gains, but it is still too early to call this a downside correction.

However, the momentum indicators are holding well within their overbought territories, hinting that the recent pullback could extend. Specifically, the stochastic oscillator is negatively charged within its 80-oversold territory, while the RSI remains directionless in overbought conditions.

If the bears manage to push the price lower, the crucial 1.3000 psychological mark could act as the first line of defense. Sliding beneath that floor, the pair may face the previous resistance zone of 1.2847. Should that barricade fail also, the congested region that includes the ascending trendline taken from October 2022 and the 50-day simple moving average (SMA) could cap the pair’s downside before the June support of 1.2590 gets tested.

On the flipside, if the long-term bullish structure extends, the 15-month peak of 1.3141 might be the first hurdle for buyers to clear. Jumping to a fresh higher high, the pair could ascend towards the March 2022 resistance of 1.3297. A violation of the latter may open the door for the February 2022 resistance of 1.3436.

Overall, GBPUSD appears to be ready to experience a healthy correction due to reaching overbought conditions. Nevertheless, it is likely that the pair extends its bullish long-term structure as long as it holds above the ascending trendline.

Daily Pivots: (S1) 1.6423; (P) 1.6473; (R1) 1.6538; More...

Immediate focus is now on 1.6552 resistance. As noted before, correction from 1.6785 should have completed with three waves down to 1.5846. On the upside, break of 1.6552 will target a retest on 1.6785 high next. This will remain the favored case as long as 1.6231 support holds, even in case of another dip.

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.

Daily Pivots: (S1) 0.8576; (P) 0.8587; (R1) 0.8607; More...

Intraday bias in EUR/GBP stays mildly on the upside at this point. Rebound from 0.8502 would target 0.8657 resistance. Considering bullish convergence condition in 4H and D MACD, firm break of 0.8657 will be a sign of bullish trend reversal. On the downside, break of 0.8502 will resume the whole decline from 0.8977 instead.

In the bigger picture, the down trend from 0.9267 (2022 high) is still in progress. It's seen as part of the long term range pattern from 0.9499 (2020 high). Deeper fall could be seen towards 0.8201 (2022 low). But strong support should be seen from there to bring reversal. This will now remain the favored case as long as 0.8657 resistance holds.

Daily Pivots: (S1) 155.22; (P) 155.78; (R1) 156.46; More....

Further rise could still seen in EUR/JPY to retest 157.99 high. Firm break there will resume larger up trend. On the downside, break of 153.32 will extend the pull back from 157.99 to 55 D EMA (now at 152.73) and possibly below.

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) 180.58; (P) 181.36; (R1) 182.15; More...

Intraday bias in GBP/JPY is turned neutral as recovery from 179.45 lost momentum after hitting 55 4H EMA. On the downside, break of 179.45 will resume the correction from 183.90 to 55 D EMA (now at 177.16). 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) 0.9644; (P) 0.9667; (R1) 0.9690; More...

EUR/CHF is staying in consolidation above 0.9606 and intraday bias remains neutral. Also, outlook remains bearish with 0.9721 support turned resistance intact. On the downside, break of 0.9606 will resume larger decline from 1.0095 to 100% projection of 0.9995 to 0.9670 from 0.9840 at 0.9515.

In the bigger picture, medium term outlook is staying bearish as the pair is capped below falling 55 W EMA (now at 0.9913). Down trend form 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.

Market picture

Crypto market capitalisation fell 0.8% overnight to $1.20 trillion. Bitcoin loses 0.9%, Ethereum – 1.7%, while top altcoins performance varies from -5.8% (Solana) to -0.3% (BNB).

In contrast to the positive performance of stock indices, which updated multi-month highs, the first cryptocurrency rolled back below 30k on Monday. Early attempts to raise the price have been unsuccessful, leaving Bitcoin near the lower end of its four-week trading range. A failure of current support at $29.8K opens the door to a deeper correction at $28.6-28.8K, the 50-day moving average and 61.8% of the rally from the late June lows.

CoinShares said crypto fund investments rose by $137 million last week, the fourth consecutive week of inflows. Bitcoin investments increased by $140 million, while Ethereum investments fell by $2 million. Investments in funds that allow shorting of bitcoin decreased by $3 million.

Fund inflows over the past four weeks totalled $742 million, the largest inflow since the last quarter of 2021. Trading volume rose to $2.3 billion for the week, well above the annual average of $1.4 billion, CoinShares noted.

News background

Former Securities and Exchange Commission (SEC) official John Reed Stark said it was too early to celebrate Ripple’s victory in its legal battle with the US regulator.

He said the court’s decision was based on “shaky ground” and that SEC officials would successfully appeal.

Australian banking group National Australia Bank (NAB) has banned customers from making payments to cryptocurrency exchanges and platforms, describing the transactions as high-risk.

Binance, the largest exchange, has integrated Lightning Network’s Layer 2 Bitcoin network solution to reduce fees and increase the speed of initial cryptocurrency transactions. The Lightning Network integration could be an important step towards mass adoption of BTC.

The G20 Financial Stability Board (FSB) has recommended a global cryptocurrency regulatory framework. The FSB called for stricter rules to protect the assets of cryptocurrency customers. Large firms will be required to separate some of their activities and functions.

USD/CHF struggles for bids

The US dollar tries to stabilise after the market saw a low probability of further interest rate increases after July. The sell-off seems to be slowing down after the RSI repeatedly showed a deeply oversold greenback. An oversold RSI on the daily chart is another sign of exhaustion and could cause a snapback if sellers start to take some chips off the table. Trend followers are likely to be waiting to sell into strength and 0.8700 would be the first area to probe for resistance. 0.8550 is the closest level to see if the bleeding would stop.

EUR/GBP tests key resistance

The pound pulls lower as traders reposition ahead of the UK’s CPI on Wednesday. After a bit of hesitation below the previous swing high of 0.8580, a convincing bullish breakout indicates a strong enough pressure as the euro strives to cement its base above 0.8500 and to bottom out. The support-turned-resistance of 0.8600 is a key hurdle and its breach would help the bulls take over the short-term direction, exposing the recent top of 0.8655. 0.8570 at the start of the latest breakout is the first support in case of a retracement.

XAU/USD finds support

Gold consolidates gains as a lack of catalyst helps the post-CPI rally catch its breath. A bounce above the supply zone of 1937 and the 30-day SMA has prompted sellers to cover, easing the downward pressure. The direction is still skewed to the upside from the daily chart’s perspective and the current rebound could attract the bulls’ attention. 1966 is the next obstacle to clear, then June’s high of 1982 would be the bears’ last stronghold. On the downside, 1933 is a fresh support to maintain the current momentum.