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Daily Pivots: (S1) 0.8518; (P) 0.8528; (R1) 0.8543; More...

EUR/GBP is extending consolidation below 0.8573 and intraday bias stays neutral. Further rise remains mildly in favor with 0.8492 support intact. Above 0.8573 will target 61.8% retracement of 0.8737 to 0.8354 at 0.8591. Firm break there will pave the way to 0.8373 resistance. However, firm break of 0.8492 will argue that rebound from 0.8354 has completed, and turn bias back to the downside.

In the bigger picture, price actions from 0.8221 medium term bottom are merely forming a corrective pattern to the down trend from 0.9267 (2022 high). Nevertheless, there is no clear momentum to break through 0.8201 key support (2022 low) yet. Hence, range trading is expected between 0.8221/8737 for now.

Daily Pivots: (S1) 1.7854; (P) 1.7884; (R1) 1.7931; More...

Intraday bias in EUR/AUD remains neutral for the moment, and more consolidations could be seen below 1.7989. Further rise is expected as long as 1.7626 support holds. Above 1.7989 will target 61.8% retracement of 1.8554 to 1.7245 at 1.8054. Firm break there will pave the way to 1.8554.

In the bigger picture, price actions from 1.8554 medium term are currently seen as a corrective pattern. While deeper pullback might be seen, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Up trend from 1.4281 is expected to resume at a later stage.

Daily Pivots: (S1) 0.9349; (P) 0.9368; (R1) 0.9402; More....

No change in EUR/CHF's outlook as range trading continues. Intraday bias remains neutral. On the upside, break of 0.9428/45 resistance zone will resume the rebound from 0.9218. However, break of 0.9306 will turn bias back to the downside for retesting 0.9218 low instead.

In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9511) retains medium term bearishness. That is, down trend from 1.2004 (2018 high) is still in progress. Firm break of 0.9204 (2024 low) will confirm resumption. This will remain the favored case as long as 0.9660 resistance holds.

Daily Pivots: (S1) 1.3700; (P) 1.3727; (R1) 1.3754; More...

No change in USD/CAD's outlook and intraday bias stays neutral. On the upside, above 1.3797 will resume the rebound from 1.3538 short term bottom, as a correction to fall from 1.4791. But upside should be limited by 1.4014 cluster resistance (38.2% retracement of 1.4791 to 1.3538 at 1.4017), at least on first attempt. On the downside, below 1.3633 will bring retest of 1.3538 low.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.

Daily Pivots: (S1) 0.6494; (P) 0.6505; (R1) 0.6524; More...

AUD/USD's rebound extended higher today but upside is still capped below 0.6551 resistance. Intraday bias remains neutral first. Consolidations could extend with another falling leg. But near term outlook will stay bullish as long as 38.2% retracement of 0.5913 to 0.6551 at 0.6307 holds. Firm break of 0.6551 will resume the rally from 0.5913.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).

Daily Pivots: (S1) 144.59; (P) 145.27; (R1) 145.93; More...

No change in USD/JPY's outlook as range trading continues. Intraday bias remains neutral. Further rise will be mildly in favor as long as 142.10 support holds. On the upside. firm break of 148.64 will resume the rise from 139.87 to 61.8% retracement of 158.86 to 139.87 at 151.22.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low), with fall from 158.86 as the third leg. Strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 0.8032; (P) 0.8056; (R1) 0.8073; More….

Intraday bias in USD/CHF remains on the downside. Current down trend should target 61.8% projection of 0.9200 to 0.8038 from 0.8475 at 0.7757 next. On the upside, above 0.8079 minor resistance will turn intraday bias neutral and bring consolidations. But recovery should be limited below 0.8214 resistance to bring another fall.

In the bigger picture, long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8475 resistance holds.

Daily Pivots: (S1) 1.1612; (P) 1.1638; (R1) 1.1687; More...

EUR/USD's rally continues today and intraday bias stays on the upside for 61.8% projection of 1.0176 to 1.1572 from 1.1064 at 1.1927. Below 1.1589 minor support will turn intraday bias neutral and bring consolidations. But downside should be contained above 1.1452 support to bring another rally.

In the bigger picture, rise from 0.9534 long term bottom could be correcting the multi-decade downtrend or the start of a long term up trend. In either case, further rise should be seen to 100% projection of 0.9534 to 1.1274 from 1.0176 at 1.1916. This will now remain the favored case as long as 1.1604 support holds.

Markets

Trends from Tuesday continued yesterday. The German yield curve further bear steepened after the approval of the German budget, rubberstamping €500 bln additional debt issuance through 2029. German yields changed between -0.8 bps (2-y) and + 2.6 bps (30-y). US Treasuries outperformed even as Fed Chair Powell in the second part of his semi-annual testimony before the Senate held to a cautious wait-and-see approach, pondering the expected inflationary impact of tariffs. Even so, markets feel that softer US labour market data and/or a milder than expected inflationary compared to the Fed’s base-line scenario still might result in faster easing than what is guided in the (median) dot plot. US yields in a bull steepening move eased between -4.4 bps (2-y) and 0.25 bps (30-y). A September 25 bps Fed cut is now (slightly more) than fully discounted. Interest rate differentials this time did matter and further pressured the dollar. EUR/USD jumped beyond the 1.1631 ST top (close 1.166). DXY just didn’t touch the 97.60 YTD low. However, the WSJ overnight elaborationg on previous rumours that Trump is considering to nominate a successor for Fed Chair Powel sooner than is usually the case (in September or October, or maybe even sooner) pushed the dollar beyond these technical barriers. Even as Powell will serve its term until May next year, market expectations on a more growth supportive approach from the new Chair might at least do part of the job with respect to money market positioning, further reducing USD interest rate support. Brent oil closed little changed near $ 68p/b. The Nasdaq (+0.31%) is only a whisker away from its all-time record.

Today’s eco calendar in EMU is thin. In the US, the May trade balance, durable goods orders and jobless claims are scheduled for release. They are not the most important ones, but high/higher than expected jobless claims still might further fuel the debate on frontloading Fed easing. Later the US Treasury will sell $44 bln of 7-y notes with markets keeping an eye at the Senate processing the big beautiful budget bill. In Europe, EU leaders join for a summit in Brussels. The war in Ukraine and sanctions against Russia probably will dominate the headlines. From an eco/market point of point, we look out for potential comments on a bigger international role for the euro. While this wouldn’t yield a big surprise/’new news’, it at least would be perfectly in line with current market momentum as markets are considering alternatives for the US dollar. At 1.168, EUR/USD is testing 76% retracement of the 2021/2022 decline, the final resistance opening up the way for a full retracement to 1.2349 early 2021 top.

News & Views

The Czech National Bank kept its policy rate unchanged at 3.5% yesterday with CNB governor Michl indicating that Czech rates may stay unchanged “for some time”. A relatively tight policy is still needed given pro-inflationary risks around the outlook. Headline inflation will be above the 2% central bank target for the rest of the year and core inflation will remain elevated over the entire forecast horizon. Domestic inflation risks include inertia in services inflation (including imputed rent) and food inflation, a further stronger recovery in lending activity (especially property), additional growth in public sector spending and continued rapid wage growth related to the tight labour market. The longer term impact of increasing barriers to international trade are unclear. Short term, they might weigh on growth (and inflation). The downside risks of a weakening German economy is countered by the planned fiscal stimulus of the new government. The Czech koruna strengthened further after the CNB hinted at the end of the normalization cycle with EUR/CZK testing the YtD low at 24.72. Czech swap rates rose by 2.8 bps to 4.7 bps with the front end underperforming as markets reduced any remaining easing bets.

The Hong Kong Monetary Authority (HKMA) took out HKD 9.42bn from circulation this morning to defend the ceiling of the USD/HKD linked exchange rate system (7.75-7.85). Last month, the HKMA pumped HKD 129.4bn currency into the system when genuine USD-weakness triggered a test of the peg’s floor. The subsequent abundance of liquidity in the HKD market led to a decline in HKD interbank rates, and the widened HKD-USD interest rate differential incentivized carry trade activities that sold HKD for USD, causing the HKD exchange rate to weaken. Other factors like the peaking of stock dividend payout season, the FX conversion of HKD proceeds raised from recent IPO’s or bond issuance by non-local companies for repatriation and the wrapping up of the seasonal half-year-end funding preparation collectively added to the HKD weakening. The HKMA will continue to closely monitor market developments and the external environment to ensure the orderly operation of the Hong Kong dollar markets.

German consumer sentiment slipped slightly in July, with the Gfk index easing from -20.0 to -20.3, missing expectations of a recovery to -19.0.

The drop came despite a strong rebound in the economic expectations component, which surged seven points to 20.1—its highest since the early stages of the Ukraine war. Income expectations also improved for the fourth consecutive month, rising to 12.8.

Yet the consumer climate remains weighed down by caution. The willingness-to-buy index was subdued at -6.2. The notable jump in the savings indicator to 13.9, the highest since April 2024, suggests that households are still holding back on discretionary spending.

GfK’s Rolf Bürkl pointed to rising savings as a key drag, reflecting continued uncertainty and a lack of confidence in making large purchases.

Full German Gfk consumer sentiment release here.