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Swiss KOF Economic Barometer rose to 97.1 in July, up fro 93.8 and beat expectation of 93.3. KOF said: "Slightly more favourable signals than before are coming from manufacturing, other services, accommodation and food service activities as well as financial and insurance services. Construction is contributing slightly to the positive development. Consumer prospects are practically unchanged. On the other hand, the indicators for demand from abroad have a dampening effect."

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EUR/USD

Current level - 1.1145

The test of the support level at 1.1126 was not successful. This may lead to a rise of the price up to the resistance level at 1.1220. Alternatively, a breakthrough of the support level could mean a continuation of the downward movement for a test of the next support at 1.1110. 

USD/JPY

Current level - 108.80

The currency pair continues its upward trend and is heading for a test of the resistance level at 108.95. A break through that zone can mean a rise to 110.50.

GBP/USD

Current level - 1.2222

The price broke the support level at 1.2380 which led to a further drop of the price. We may consider the level at 1.2100 for the next major support. Only a test and break of the level at 1.2500 could lead to a reversal of the trend.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.11238
Open: 1.11448
% chg. over the last day: +0.12
Day's range: 1.11328– 1.11471
52 wk range: 1.1111 – 1.2009

EUR/USD has stabilized after a long fall. At the moment, the trading instrument is consolidating. There is no defined trend. Local levels of support and resistance are 1.11200 and 1.11500. Financial market participants are waiting for the Fed meeting. Tomorrow the regulator will announce its decision on the key interest rate. Today, investors will evaluate a number of important economic releases from the United States. We recommend to open positions from key levels.

The Economic News Feed for 30.07.2019:

Personal Income (MoM) (Jun) (US) – 15:30 (GMT+3:00);

CB Consumer Confidence (Jul) (US) – 17:00 (GMT+3:00);

Pending Home Sales Index (Jun) (US) – 17:00 (GMT+3:00);

Indicators do not give accurate signals: the price crossed 50 MA and 100 MA.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line crossed the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.11200, 1.11000
Resistance levels: 1.11500, 1.11850, 1.12100

If the price consolidates above 1.11500, expect further recovery toward 1.11800-1.12000.

Alternatively, the price will descend toward 1.11000-1.10800.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.23748
Open: 1.22147
% chg. over the last day: -1.28
Day's range: 1.21182 - 1.22258
52 wk range: 1.2118 - 1.3385

GBP is still under pressure due to the growing risks of “tough” Brexit. There are aggressive sales on the GBP/USD currency pair. During yesterday's and today's trading, the drop in quotes exceeded 230 points. The trading instrument reached two-year lows. At the moment, the key support and resistance levels are: 1.21200 and 1.22000, respectively. We do not exclude a further decline in the GBP/USD currency pair. We recommend to keep track of current information on the issue of Brexit. Positions must be opened from key levels.

Publication of important economic reports from the UK is not planned.

Indicators signal the strength of sellers: the price has fixed below 50 MA and 100 MA.

The MACD histogram is in the negative zone and below the signal line, which gives a strong signal to sell GBP/USD.

The Stochastic Oscillator is in the oversold zone, the %K line crossed the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.21200, 1.20500
Resistance levels: 1.22000, 1.22650, 1.23000

If the price consolidates below 1.21200, expect further decline toward 1.20800-1.20600.

Alternatively, he price may correct toward 1.22500-1.22700.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31650
Open: 1.31634
% chg. over the last day: -0.03
Day's range: 1.31560 - 1.31772
52 wk range: 1.2727 - 1.3664

CAD has stabilized after a rather long growth. At the moment, the USD/CAD currency pair is trading in a flat. Local levels of support and resistance are: 1.31500 and 1.31800, respectively. Financial market participants expect additional drivers. Today we recommend to pay attention to economic reports from the USA. Trading instrument has the potential for further growth. Positions must be opened from key levels.

The Economic News Feed for 30.07.2019 is calm.

Indicators do not give accurate signals: the price crossed 50 MA and 100 MA.

The MACD histogram is located near the 0 mark.

The Stochastic Oscillator is in the overbought zone, the %K line crossed the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.31500, 1.31200, 1.30900
Resistance levels: 1.31800, 1.32000

If the price consolidates above 1.31800, expect further growthto 1.32200-1.32400.

Alternatively, the price could drop toward 1.31250-1.31000.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 108.629
Open: 108.779
% chg. over the last day: +0.20
Day's range: 108.562 – 108.947
52 wk range: 104.97 – 114.56

An ambiguous technical picture emerged on the USD/JPY currency pair. The trading instrument is in lateral movement. Currently, the local support and resistance levels are 108.550 and 108.900, respectively. The Bank of Japan, as expected, kept the main parameters of monetary policy at the same level. The regulator has worsened forecasts for the growth of GDP and consumer prices for the current fiscal year. Open positions from the key levels and pay attention to the releases in the US.

The Economic News Feed for 30.07.2019 is calm.

Indicators do not give accurate signals: the price crossed 50 MA and 100 MA.

The MACD histogram is located near the 0 mark.

The Stochastic Oscillator is in the oversold zone, the% K line crossed the% D line. There are no signals at the moment.

Trading recommendations

Support levels: 108.550, 108.250, 108.000
Resistance levels: 108.900, 109.250

If the price consolidates below 108.550, the price will fall to 108.250-108.000.

Alternatively, the price will grow toward 109.200-109.300.

The heavy sell-off in GBPUSD stretched into Tuesday’s session as fears over a no-deal Brexit mounted, with the pair diving below 1.22 and towards its post-Brexit referendum troughs.

The RSI is slipping below 30, the Stochastics are heading towards the 20 level, while the market action is currently taking place under the lower Bollinger band, all flagging that conditions are oversold, and an upside reversal could be around the corner. Yet any recovery could prove short-lived if the MACD continues to strengthen in the negative territory.

The 1.2100 psychological level is now in the spotlight to save the market from additional losses. Should the bears clear that obstacle too, all attention will shift to the 1.20-1.1986 zone, where the market bottomed in early 2017 following the Brexit referendum in June 2016. Any close lower could open the way towards 1.1900.

On the upside, the 1.2200 number could provide nearby resistance. Yet the bearish sentiment is likely to keep weighing unless the price manages to bounce above the 1.2380 barrier. A rally above 1.25 would put the market back to neutrality if the middle-Bollinger band currently at 1.2460 fails to hold, while in the three-month picture (medium-term) a steeper upturn above April’s low of 1.2864 is required for an outlook reversal.

In brief, GBPUSD is strongly bearish both in the short- and the medium-term picture.

• Sterling crumbles as no-deal rhetoric heats up – outlook still negative
• Bank of Japan takes no action, yen likes it
• German and US data due; trade talks resume

Pound collapses as Boris plays ‘chicken’ with EU

There’s no reprieve for the wounded British pound, which fell to a fresh 2½-year low against the dollar earlier today, following another round of worrisome Brexit rhetoric. Boris Johnson and his lieutenants reiterated that the Irish backstop is “dead”, with Foreign Secretary Raab saying that the EU is being “stubborn” and that it will need to move on Brexit, otherwise a no-deal scenario may be the preferred route. Meanwhile, EU officials remain adamant that the withdrawal agreement isn’t up for renegotiation and that any deal must include the backstop.

The situation looks increasingly like a ‘game of chicken’, where both the UK and the EU are digging in, waiting for the other to blink. Alas, since neither is likely to back down, at least for a while, there’s even less time to find a negotiated solution – increasing the probability of a no-deal exit in October further. Accordingly, markets are pricing in a greater chance for rate cuts by the BoE next year to support the Brexit-hit economy, amplifying sterling’s losses.

Looking ahead, the risks around the pound still seem tilted to the downside, and a return to the $1.20 area may be imminent. For the tide to turn, investors would either need to see signs of real progress in the talks – which seems highly unlikely for now – or Parliament may have to trigger a General Election that fuels hopes for another referendum down the road.

BoJ stands pat, yen ticks up

The Bank of Japan (BoJ) kept its gargantuan stimulus program unchanged earlier today, as was widely expected. Perhaps a little more surprising was that policymakers also kept their forward guidance unchanged, disappointing those looking for an even more dovish tone, amid a darkening global outlook and a slowing domestic data pulse.

As for the yen, the broader outlook remains positive, even if the BoJ softens its tone going forward. Both the Fed and the ECB are preparing to ease, which implies we are entering a paradigm of monetary policy convergence as the BoJ has very limited firepower to ease further. Hence, rate differentials will likely narrow in the yen’s favor, increasing its appeal. Not to mention that any piece of bad news – like another escalation in trade tensions – would likely fuel safe haven demand for the Japanese currency.

Perhaps the biggest risk to this view, would be the BoJ threatening direct FX market intervention to weaken the yen if it gains rapidly – something policymakers were vocal about back in 2016.

European and American data releases eyed as trade talks resume

On the data front, the day kicks off with preliminary inflation data for July out of Germany. Remember that the regional data are released ahead of the nationwide numbers, so any reaction in the euro may begin with those.

In the US, traders will keep an eye on the personal consumption and income data for June, as well as on the core PCE price index, which is the Fed’s preferred inflation measure.

In Shanghai, the trade talks between the US and China will resume, though any real breakthrough – outside of easing some restrictions on Huawei for instance – seems unlikely.

Meanwhile, the earnings season enters high gear, with Apple, Procter & Gamble, and Under Armour being among the biggest names releasing their results today.

Pivot (invalidation): 56.75

Our preference Long positions above 56.75 with targets at 57.60 & 58.00 in extension.

Alternative scenario Below 56.75 look for further downside with 56.25 & 55.90 as targets.

Comment The RSI shows upside momentum.

Pivot (invalidation): 16.3700

Our preference Long positions above 16.3700 with targets at 16.4800 & 16.5200 in extension.

Alternative scenario Below 16.3700 look for further downside with 16.3000 & 16.2500 as targets.

Comment The RSI is mixed to bullish.

Pivot (invalidation): 1419.50

Our preference Long positions above 1419.50 with targets at 1428.00 & 1433.50 in extension.

Alternative scenario Below 1419.50 look for further downside with 1414.50 & 1411.00 as targets.

Comment The RSI is mixed to bullish.

German Gfk consumer confidence for August dropped -0.1 to 9.7, matched expectations. Economic expectations dropped from 2.4 to -3.7. Income expectations improved from 45.5 to 50.8. Propensity to buy dropped from 53.7 to 46.3. Gfk noted that "It is apparent that the global economic slowdown, trade conflict and Brexit discussions are having an ever increasing impact on consumer confidence. Thus, economic expectations continue to decline and the propensity to buy has dropped off slightly as well."

Economic expectation fell below its long-standing average of 0 for the first time since March 2016. It's also the lowest reading since November 2015. Gfk said: "The trade war with the US, ongoing Brexit discussions and the global economic slowdown continue to drive fears of a recession. Employees in export-driven sectors in particular, such as the automotive industry and its suppliers, are most immediately affected by this. In addition, reports of downsizing add to employees' fears of losing their jobs."

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Pivot (invalidation): 3016.00

Our preference Long positions above 3016.00 with targets at 3028.00 & 3032.00 in extension.

Alternative scenario Below 3016.00 look for further downside with 3010.00 & 3004.50 as targets.

Comment The RSI is mixed with a bullish bias.