AUD/USD's sharp decline and break of 0.6910 support last week suggests that rebound from 0.6831 has completed at 0.7082 already. The three wave corrective structure suggests that larger decline from 0.7295 is in progress and is possibly resuming. Initial bias stays on the downside this week for 0.6831 support first. Break will confirm and target 0.6722 low next. On the upside, break of 0.6955 minor resistance will turn intraday bias neutral again.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

In the longer term picture, prior rejection by 55 month EMA maintained long term bearishness in AUD/USD. That is, down trend from 1.1079 (2011 high) is still in progress. Sustained break of 0.6826 will target 0.6008 low and then 61.8% projection of 1.1079 to 0.6826 from 0.8135 at 0.5507.

USD/CAD's rebound and break of 1.3143 resistance last week suggests short term bottoming at 1.3016. That case after failing to sustain below 1.3052/68 key support zone. Initial bias stays on the upside this week for 55 day EMA (now at 1.3212). Sustained break there would pave the way back to 1.3564/3664 resistance zone. On the downside, break of 1.3116 minor support will turn bias back to the downside for 1.3016 low instead.

In the bigger picture, focus stays on 1.3068 cluster support (38.2% retracement of 1.2061 to 1.3664 at 1.3052) will confirm completion of up trend from 1.2061 (2017 low). Further fall should be seen to 61.8% retracement at 1.2673 next. On the upside, sustained break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685, is needed to confirm resumption of up trend from 1.2061 (2017 low). Otherwise, risk will stay on the downside.

In the longer term picture, outlook remains unchanged that price actions from 1.4689 (2016 high) are forming a corrective pattern. Rejection by 1.3793 resistance would raise the chance of lengthier extension, with risk of dropping through 1.2061 low before completion.

Dollar ended as the strongest one last week as boosted by solid economic data from the US. While markets are still pricing in full chance of a Fed rate cut this week, strong data argue against the chance of further easing after that. Euro and Canadian Dollar were the next strongest. ECB's meeting and press conference came out less dovish than expected. While ECB did open the door for more rate cut, President Mario Draghi's press conference suggested that he's not in dead urgency to deliver easing.

On the other hand, New Zealand and Australian Dollar were the weakest one for the week. There were increasing expectation for more RBA rate as momentum in the Australian job market could slow, which would limit upward path in inflation. Sterling ended mixed after suffering late selling. It's now Boris Johnson's era as UK Prime Minister and we'll see how he's going to deliver Brexit on October 31 as promised.

There was basically no change in the expectations for Fed's rate cut on July 31 this week, despite some solid economic data from the US. June PCE inflation and July consumer confidence will be the only pieces on data before FOMC meeting. Core PCE might pick up to 1.7% yoy, in accordance with core CPI. But it will unlikely alter policymakers' minds. ISM manufacturing and non-farm payroll reports are important, but they'll come after Fed's decision.

For now, fed fund futures are still pricing in 78.6% chance of a 25bps cut, and 21.4% chance of 50bps cut. We'd admit that it's unlikely for Fed to upset such expectations. But still, we'd view the FOMC meeting as live. Firstly, there is no guarantee that over half of voters would give in to market "bullying". Secondly, and more importantly, Fed would have many different ways to "communicate" the rate cut, even if it's delivered. That is, this could be a "neutral" cut where Fed would signal a long pause afterwards. Dollar could be lifted quite notably in such case.

US stocks surged to new record highs last week, with support from Fed expectation while economic data continued to be strong. S&P 500's rise from 2728.81 is in progress and would likely extend this week. However, it's now close to two important projection levels, with diminishing upside momentum as seen in daily MACD. The closer level is a long term one, 61.8% projection of 1810.10 to 2940.91 from 2346.58 at 3045.42. We're expecting strong resistance in this zone to limit upside at initial attempt.

Dollar index's rebound from 95.84 extended higher to close at 98.01 last week. For now, we're still seeing the index as in consolidation from 98.37 high. Thus, in next rise, we don't envisage a firm break of 98.37 yet. That corresponds to 1.1107 low in EUR/USD. Break of 96.75 support will bring another falling leg inside the consolidation pattern and target 95.84 and below. However, sustained break of 98.37, together with firm break of 1.1107 in EUR/USD, will confirm up trend resumption.

AUD/USD Weekly Outlook

AUD/USD's sharp decline and break of 0.6910 support last week suggests that rebound from 0.6831 has completed at 0.7082 already. The three wave corrective structure suggests that larger decline from 0.7295 is in progress and is possibly resuming. Initial bias stays on the downside this week for 0.6831 support first. Break will confirm and target 0.6722 low next. On the upside, break of 0.6955 minor resistance will turn intraday bias neutral again.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

In the longer term picture, prior rejection by 55 month EMA maintained long term bearishness in AUD/USD. That is, down trend from 1.1079 (2011 high) is still in progress. Sustained break of 0.6826 will target 0.6008 low and then 61.8% projection of 1.1079 to 0.6826 from 0.8135 at 0.5507.

GBP/JPY stayed in consolidation above 133.85 last week and outlook is unchanged. Near term outlook remains bearish with 136.05 resistance intact. On the downside, break of 133.85 will resume the decline from 148.87 to retest 131.51 low. Though, break of 136.05 will indicate short term bottoming and bring stronger rebound to 137.78 resistance.

In the bigger picture, medium term fall from 156.59 (2018 high) is still in progress. Break of 131.51 will target 122.36 (2016 low). Structure of such decline is corrective looking so far, arguing that it's just the second leg of consolidation from 122.36. Thus, we'd expect strong support from 122.36 to contain downside to bring reversal.

In the longer term picture, firstly, GBP/JPY's is kept well below 55 month EMA, keeping outlook bearish. But we're treating price actions from 122.36 as a corrective pattern. Hence, we'd expect range trading to continue longer. In case of an extension, strong resistance is likely to be seen at 50% retracement of 195.86 (2015 high) to 122.36 at 159.11 to limit upside. However, break of 122.26 will put 116.83 (2011 low) back into focus.

EUR/JPY dropped to 120.05 last week but formed a temporary low there and recovered. Initial bias remain neutral this week first for some more consolidation. But still, outlook remains bearish as long as 122.32 resistance holds. on the downside, break of 120.05 will resume the decline from 127.50 for retesting 118.62 low. Though, break of 122.32 would indicate short term bottoming and bring stronger rebound to 123.35 resistance and above.

In the bigger picture, down trend from 137.49 is still in progress with the cross staying well inside long term falling channel, and below falling 55 week EMA. Break of 118.62 will extend the fall to 109.48 (2016 low). On the upside, break of 127.50 resistance is needed to be the first sign of medium term reversal. Otherwise, outlook will remain bearish in case of strong rebound.

In the long term picture, EUR/JPY is staying in long term sideway pattern, established since 2000. Fall from 137.49 is seen as a falling leg inside the pattern. Break of 118.62 will extend this falling leg through 109.48 (2016 low). With EUR/JPY staying below 55 month EMA, this is now the preferred case.

EUR/GBP's pull back from 0.9051 extended to 0.8891 last week, but drew support from 55 day EMA and rebounded. Initial bias remains neutral this week first. Consolidation from 0.9051 could extend with another fall through 0.8891. But downside should be contained by 38.2% retracement of 0.8489 to 0.9051 at 0.8836 to bring rebound. On the upside, break of 0.9051 will indicate rise resumption for 0.9101 key resistance next.

In the bigger picture, medium term decline from 0.9305 (2017 high) is seen as a corrective move. No change in this view. Current development argues that it might have completed with three waves down to 0.8472, just ahead of 38.2% retracement of 0.6935 (2015 low) to 0.9306 at 0.8400, after hitting 55 month EMA (now at 0.8545). Decisive break of 0.9101 resistance will confirm this bullish case. And this will be the preferred case as long as 55 week EMA (now at 0.8801) holds.

In the long term picture, we’re holding on to the view that rise from 0.6935 (2015 low) is resuming the up trend from 0.5680 (2000 low). As long as 38.2% retracement of 0.6935 to 0.9306 at 0.8400 holds, further rise should be seen through 0.9305 to 0.9799 and above down the road.

EUR/AUD drew support from 55 weekly EMA and recovered strongly last week. However, such recovery from 1.5894 is currently seen as a corrective move. Hence, while stronger rise cannot be ruled out, upside should be limited below 1.6231 resistance to bring fall resumption. Decline from 1.6448 is seen as the third leg of the consolidation pattern from 1.6765 high. Break of 1.5894 will target 1.5683 support and below. Nevertheless, firm break of 1.6231 will dampen this view and target 1.6448 resistance instead.

In the bigger picture, as long as 1.5346 support holds, medium term outlook will still remain bullish. Up trend from 1.1602 (2012 low) is expected to resume sooner or later. Break of 1.6765 will target 61.8% retracement of 2.1127 (2008 high) to 1.1602 at 1.7488 next. However, firm break of 1.5346 key support will indicate trend reversal and turn outlook bearish.

In the longer term picture, the rise from 1.1602 long term bottom (2012 low) is still in progress for 61.8% retracement of 2.1127 to 1.1602 at 1.7488. This will remain the favored case as long as 1.5346 remains intact.

According to the CFTC Commitments of Traders report for the week ended July 24, NET LENGTH for gold futures gained +5 749 contracts to 251 250. Speculative long positions rose +2 346 contracts, while shorts fell -3 403. For silver futures, speculative long positions rose +9 680 contracts while shorts declined -7 656. NET LENGTH for silver futures soared +17 336 contracts to 54 761. For PGMs, NET LENGTH of Nymex platinum futures rose +5 298 contracts to 20 890 while that for palladium added +36 contracts to 12 471.

NET LENGTH for crude oil futures declined -25 911 contracts to 397 581 for the week. Speculative long positions dropped -7 544 contracts and shorts increased +18 367 contracts. For refined oil products, NET LENGTH for gasoline fell -6 103 contracts to 73 872, while NET SHORT for heating oil dropped -3 029 contracts to 2 716 for the week. NET SHORT for natural gas futures soared +35 808 contracts to 191 423 contracts for the week.

EUR/CHF formed a short term bottom at 1.0962 last week, after hitting 61.8% projection of 1.2004 to 1.1173 from 1.1476 at 1.0962. Initial bias remains neutral this week for more consolidations first. In case of stronger recovery, upside should be limited by 1.1172 resistance to bring down trend resumption. On the downside, sustained break of 1.0962 will extend the fall from 1.2004 to 100% projection at 1.0645 next.

In the bigger picture, current development firstly suggests that down trend from 1.2004 is still in progress. More importantly, it’s likely a long term down trend itself, rather than a correction. Outlook will remain bearish as long as 1.1476 resistance holds. EUR/CHF could target 1.0629 support and below.

As suggested in the CFTC Commitments of Traders report in the week ended July 24, NET LENGTH in USD Index gained +1 796 contracts to 29 128. Speculative long positions gained +5 766 contracts while short positions added +3 970 contracts during the week.

Concerning European currencies, NET SHORT for EUR futures soared +7 653 contracts to 39 004. NET SHORT for GBP futures rose +2 226 contracts to 78 583. Speculative long positions dropped -3 255 contracts while speculative shorts slipped -1 029 contracts for the week. As widely expected, Boris Johnson becomes the new Prime Minister of the UK. He has about 3 months to deliver Brexit before the October 31 deadline. We expect him to face same challenge as his predecessor, Theresa May, as neither the Parliament nor the EU agree to compromise on the Irish backstop solution.

On safe-haven currencies, Net SHORT for CHF futures gained +1 461 contracts to 13 193. NET SHORT for JPY futures fell -2 003 contracts to 9 377 during the week. Speculative long positions gained +1 737 contracts while shorts slid -266 contracts.On commodity currencies, NET SHORT for AUD futures dropped -4 596 contracts to 47 980. Speculative long positions decreased -2 343 contracts while shorts plunged -6 939 contracts. Separately, NET SHORT for NZD fell -5 094 contracts to 12 225 contracts last week. NET LENGTH for CAD futures surged +9 786 contracts to 30 750. Recent bullish sentiment about the loonie has been driven by policy divergence.