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Cable maintains negative tone and attacks 1.20 support in early Thursday following short-lived recovery attempts.

Pound came under fresh pressure after higher than expected July inflation (10.1% vs 9.8% f/c; the highest since 1982) that suggests the BOE is likely to opt for another 0.5% rate hike to fight soaring prices. Continued strong policy tightening would negatively impact Britain’s economic growth that would prompt further selling of pound.

Daily technical studies show rising negative momentum and moving averages in bearish setup, with near-term action being pressured and capped by the base of falling and thickening daily Ichimoku cloud, although headwinds from key 1.20 support zone (Fibo 38.2% of 1.1760/1.2293/daily Kijun-sen at 1.2026 and psychological 1.20 support) persist and may keep the action in extended consolidation before bears resume.

Upticks should be capped by the cloud base (1.2097) to keep bears intact and offer better selling opportunities, while only sustained break above daily Tenkan-sen (1.2135) would put bears on hold.

Eventual clear break of 1.20 pivot would signal bearish continuation on completion of failure swing pattern on daily chart and expose targets at 1.1963 (Fibo 61.8%) and 1.1916/1.1890 (July 22/21 spike lows).

Res: 1.2059; 1.2097; 1.2135; 1.2167.
Sup: 1.2000; 1.1963; 1.1916; 1.1890.

The current structure of the AUDUSD pair indicates that the market is forming a zigzag a- b-c, which currently includes a complex bearish correction b. Wave b consists of primary sub-waves.

The last section of the chart shows the structure of the final primary wave. It seems that it will be an intermediate triple zigzag (W)-(X)-(Y)-(X)-(Z), which is currently completed in 4/5 parts. To complete this pattern, the final actionary wave (Z) is needed, which seems to take the form of a minor double zigzag W-X-Y and may end near 0.645.

At that level, cycle correction b will be at 61.8% along the Fibonacci lines of cycle impulse wave a.

According to an alternative scenario, the bearish wave of the primary degree, which is part of the cycle correction b, may be fully completed.

Thus, in the last section of the chart, we can observe the formation of the initial part of the cycle wave c, which can take the form of an impulse ①-②-③-④-⑤. The structure of the potential impulse is schematically shown by trend lines.

It is assumed that the primary impulse ① and the correction ② to this impulse have already been built, so in the near future the currency pair may move in an upward direction, forming a primary third wave above the maximum of 0.728 in the direction of the price mark of 0.765.

At the level of 0.765, impulse wave ③ will be at 161.8% of wave ①.

EUR/USD

Today's trading session for the single European currency got off to a shaky start as the euro continued to trade just below the resistance at 1.0188. A successful breach of this level would be an opportunity for the bears to go forward with an attack on the local resistance at 1.0220, where a confirmed breach of this critical level would pave the way for the pair towards the next critical one lying at 1.0276. In case the resistance at 1.0188 withholds the bulls’ pressure, then we may expect a wave of sell-offs heading the price towards the support at 1.0120. This week started with low volatility, which may suggest that the pair may remain locked in the range of 1.0120 – 1.0180 before investors can enter the market and define the future path of the pair. Today, increased volatility can be expected around the release of the initial jobless claims data for the U.S. at 12:30 GMT. A worse-than-expected data may trigger an impulsive move and a test of the resistance at 1.0276. However, the most likely scenario for today's trading session is for the bulls to lead the pair towards the local resistance at 1.0220. On the other hand, the long-term negative sentiment for a new EUR/USD parity is still intact and any new highs here may be considered as a good opportunity to enter the market through short positions.

USD/JPY

The critical resistance at 135.38 managed to resist the bulls’ attack and the pair is currently headed towards a test of the support at 134.33 ­– a retracement that may be considered as a corrective move – before the upward movement is to potentially resume its course. A breach of the resistance at 135.38 could definitely be considered as a confirmation of the positive sentiment and would most probably lead the pair towards the next zone at 137.28. However, a potential deepening of the sell-offs and a violation of the mentioned support may lock the pair in the range of 133.29 – 132.56.

GBP/USD

The support at 1.2020 appeared to be a strong obstacle for the bears to overcome. However, the forecast for today’s trading session is for a slight upward movement towards 1.2070, where the bears would most probably try to take control over the market and make another attempt to violate the mentioned support. A successful breach of this support level would easily head the pair toward the one at 1.1935, as the market sentiment remains strongly based on the appreciation of the greenback. On the other hand, if the bulls gain enough momentum to overcome the resistance at 1.2063, then their next target would be the resistance at 1.2134.

EUGERMANY40

During yesterday’s trading session, the index underwent a massive sell-off, thus decreasing its value by approximately 2.5%, and at the time writing, the bears are trying to breach the support at 13623. A confirmation of the breach could continue the sell-off and easily head the bears for an attack on the psychological level at 13500. A violation of this zone could lead to new losses and could strengthen the negative expectations for the future path of the index. The first resistance for the bulls is now the level of 13785, followed by the upper zone at 13884. Keeping in mind the extreme drop from yesterday, however, a corrective movement towards the mentioned resistances is still quite likely.

US30

The US30 ended the session almost unchanged, holding its value just above the critical support at 33892. In case the bears manage to overcome this level, then it is highly likely to witness a rally towards the psychological level at 33500, and even lower towards around 33300. However, the mentioned support is quite strong, thus the forecast for today’s trading session is for the trading activity to remain above this level and for the price to consolidate in the range of 33892 – 34279.

Daily Pivots: (S1) 162.14; (P) 162.86; (R1) 163.53; More...

GBP/JPY is still staying in the corrective pattern from 168.67. Intraday bias is mildly on the upside for 163.91 resistance. Break there will target 166.31 resistance next. On the downside, below 160.07 will turn bias to the downside for 159.42 and below.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will remain the favored case as long as 155.57 support holds, even in case of deep pull back.

Daily Pivots: (S1) 136.55; (P) 137.21; (R1) 138.16; More....

Intraday bias in EUR/JPY remains neutral for the moment. Overall, it's staying in the corrective pattern from 144.26. On the upside, above 138.38 will resume the rebound from 138.38. On the downside, below 134.93 will turn bias back to the downside for 133.38 support.

In the bigger picture, up trend from 114.42 (2020 low) is seen as the third leg of the pattern from 109.30 (2016 low). Further rally is in favor as long as 134.11 resistance turned support holds, even in case of deep pull back. Next target is 149.76 (2015 high). However, sustained break of 134.11 will be a sign of medium term bearish reversal and turn focus to 124.37 support for confirmation.

Daily Pivots: (S1) 0.8405; (P) 0.8428; (R1) 0.8467; More...

Intraday bias in EUR/GBP is turned neutral first with current recovery. On the upside, break of 0.8491 resistance will resume the rebound from 0.8338. That would also argue that choppy decline from 0.8720 has completed. Bias will be back to the upside for 0.8585 resistance. On the downside, below 0.8386 should resume the fall from 0.8720 through 0.8338.

In the bigger picture, current development suggests rejection by 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Medium term bearishness is maintained. Break of 0.8201 will resume larger down trend from 0.9499 (2020 high). Nevertheless, sustained break of 0.8697 will affirm the case that rise from 0.8201 is a medium term up trend itself.

Daily Pivots: (S1) 1.4528; (P) 1.4617; (R1) 1.4764; More...

Intraday bias in EUR/AUD is neutral first. Another fall is in favor with 1.4804 resistance intact. Firm break of 1.4318 low will will resume larger down trend to medium term projection level at 1.3623. However, break of 1.4804 will delay the bearish case and turn bias to the upside for stronger rebound first.

In the bigger picture, down trend from 1.9799 is still in progress. Break of 1.4318 low will target 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). This will remain the favored case now as long as 1.5396 resistance holds.

Daily Pivots: (S1) 0.9658; (P) 0.9679; (R1) 0.9707; More....

Intraday bias in EUR/CHF remains neutral for consolidation above 0.9602 temporary low. Upside of recovery should be limited well below 0.9948 resistance to bring another fall. Break of 0.9602 will resume larger down trend to 100% projection of 1.1149 to 0.9970 from 1.0513 at 0.9334.

In the bigger picture, long term down trend from 1.2004 (2018 high) is still in progress. Next target is 138.2% projection of 1.2004 to 1.0505 to 1.1149 at 0.9033. On the upside, break of 0.9970 support turned resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.

Daily Pivots: (S1) 1.0149; (P) 1.0176; (R1) 1.0206; More...

Intraday bias in EUR/USD is turned neutral first, but risk stays on the downside as long as 1.0368 resistance holds. Rebound from 0.9951 should have completed at 1.0368 after rejection by 55 day EMA, as well as falling channel resistance. Break of 1.0121 minor support will target a retest on 0.9951 low. Firm break there will resume larger down trend.

In the bigger picture, down trend from 1.6039 (2008 high) is still in progress. Next target is 100% projection of 1.3993 to 1.0339 from 1.2348 at 0.8694. In any case, outlook will stay bearish as long as 1.0773 resistance holds, in case of strong rebound.

Daily Pivots: (S1) 1.2008; (P) 1.2075; (R1) 1.2123; More...

GBP/USD's break of 1.2002 support argues that rebound from 1.1759 has completed at 1.2292, after rejection by 55 day EMA. Intraday bias is back on the downside, and deeper fall should be seen to retest 1.1759 low. Break there will resume larger down trend. On the upside, above 1.2142 minor resistance will mix up the outlook and turn intraday bias neutral first.

In the bigger picture, fall from 1.4248 (2018 high) could be a leg inside the pattern from 1.1409 (2020 low), or resuming the longer term down trend. Deeper decline is expected as long as 1.2666 resistance holds. Next target is 1.1409 low. However, firm break of 1.2666 will bring stronger rise back to 55 week EMA (now at 1.2897).