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Daily Pivots: (S1) 0.9832; (P) 0.9853; (R1) 0.9869; More...

No change in USD/CHF's outlook and intraday bias remains neutral. Further decline is in favor with 0.9908 resistance intact. Below 0.9803 will extend the fall from 0.9951 to retest 0.9695 low. On the upside, break of 0.9908 resistance would resume the rebound from 0.9695, through 0.9951, to 1.0014 resistance.

In the bigger picture, up trend from 0.9186 (2018 low) should have completed at 1.0237 already. Deeper decline would be seen to 61.8% retracement of 0.9186 to 1.0237 at 0.9587 and below. For now, USD/CHF is seen as in long term range pattern between 0.9186 and 1.0342. Hence, we'd pay attention to bottoming signal below 0.9587. However, sustained break of 1.0014 will revive medium term bullishness and turn focus back to 1.0237 high.

Stock indices are growing on expectations of the Fed and the ECB’s imminent policy easing. Meanwhile, Haruhiko Kuroda, Governor of the Bank of Japan, has also hinted at the willingness to join the key "trend" of recent weeks. Speculations about a possible reduction in rates help the markets, causing the euro and the Japanese yen to weaken, since the event – albeit a potential one – is already embedded in the dollar quotes.

It is worth noting that the readiness of the largest central banks to help the economy is very commendable and supports optimistic sentiments. However, it is surprising that central banks rush to act on the basis of only a small range of signals, without waiting for the appearance of clear signs of an economic downturn. Such a rush distinguishes this situation from previous historical episodes. There are reasons to believe that financial regulators are led by governments, whose sole purpose is to gain a competitive advantage in international trade.

The EU and US PMI data were released with a decline yesterday. At the same time, composite indexes remain above 50, in the growth territory. In Britain, have seen an increase in the number of mortgage loans issued in the last three months, demonstrating that borrowers maintain a confidence in the future.

Stocks

The Nasdaq and S&P500 closed Wednesday at historic highs, due to speculation around a possible policy easing. Texas Instruments Inc gave hints that the slowdown in the semiconductor industry may not be as long as previously stated. The company's comments had a strong influence on the indices, as it is considered one of the overall economic situation barometers.

EURUSD

The single currency continues to be under pressure this week. Since Monday, the markets have been revising their expectations from the ECB’s actions, taking into account that the rate cut is not the only lever in the regulator's hands. There are other measures that may well be taken in order to maintain liquidity, and of which we could learn about any statement of intent, during today's Mario Draghi press conference.

AUDUSD

The Australian dollar has been losing ground since last Friday, despite the positive dynamics of the US and Japanese stock markets. The Australian currency has its own reasons for weakening, as investors expect further steps to be taken in reducing rates from the RBA. However, AUD often acts as a reliable indicator of sentiment, and the Aussie now warns that, despite the growth of markets, difficult times may lie ahead.

Daily Pivots: (S1) 1.2433; (P) 1.2478; (R1) 1.2528; More....

Intraday bias in GBP/USD remains neutral first. With 1.2579 resistance intact, further decline is still in favor. On the downside, sustained break of 1.2391 key support will resume larger down trend for 61.8% projection of 1.4376 to 1.2391 from 1.3381 at 1.2154 next. Though, break of 1.2579 will indicate short term bottoming and bring stronger rebound back to 1.2783 resistance. In this case, consolidation from 1.2391 would extend with another rise, towards 1.3381 resistance, before completion.

In the bigger picture, down trend from 1.4376 (2018 high) is still in progress. Break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

• Euro struggles near two-month lows as ECB decision is awaited
• Pound bounces higher after new prime minister signals big spending increases
• US dollar clings onto gains as Wall Street hits another record and trade talks make headway

Euro mired by Eurozone doom and gloom

Following yesterday's poor Eurozone PMI readings, there was little support for the European common currency on Thursday as investors anxiously awaited the outcome of the European Central Bank's monetary policy meeting later today. The euro was headed towards fresh two-month lows and was last trading at $1.1130 as traders bet that the ECB will signal some form of policy easing when it announces its latest decision at 11:45 GMT.

Futures markets are pointing at odds of about 50% that the ECB will lower its deposit rate by 10 basis points today and a cut is fully priced in for September. But even if the ECB was to meet the markets' very dovish expectations, there's doubts as to how much lower Eurozone government bond yields can go, hence, the scope for further downside for the euro may be more limited than what the short-term technical picture suggests.

Nonetheless, the euro is bound to hit turbulence when ECB chief Mario Draghi begins his press conference at 12:30 GMT as a surprise loosening of policy cannot be ruled out at today's meeting and even if there's no change, investors will be eager to get a taste of what to expect at the September meeting.

Boris Johnson energises the pound

The British pound was energised by the new UK Prime Minister Boris Johnson's complete cabinet overhaul on Wednesday and pledge to increase spending even as he positioned himself for a showdown with the European Union, heightening the prospect of a no-deal Brexit.

Johnson promised more spending on schools, policing and social care, while hinting at changes to the tax system. The prospect of a fiscal stimulus would be a welcome boost for the British economy at a time when global growth is slowing, and the Brexit uncertainty is weighing on UK business investment.

The pound recovered from its trough around $1.2425 to briefly climb above $1.25 before easing to around $1.2475. But traders are likely to remain cautious going forward as Johnson's new cabinet is made up almost entirely of Brexiteers, indicating he intends to take the country of the European Union by October 31 with or without a deal.

Dollar holds firms ahead of key data

With the first expected Fed rate cut since the financial crisis just days away, the US currency continued to outshine its rivals as the weak euro lifted the dollar index to near two-month highs. Even against the yen, the dollar held close to the 108 level as positive headlines on the trade war font and a strong performance on Wall Street supported the greenback.

The S&P 500 and the Nasdaq closed closed at record highs yesterday, boosted from a surge in tech stocks, which offset disappointing earnings results from industrial heavyweights such as Caterpillar. Meanwhile, the White House said on Wednesday that Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will travel to Shanghai next week to hold the first face-to-face talks with their Chinese counterpart since negotiations broke down in May.

But with the US manufacturing sector not being immune to the resulting downturn in global trade, the Federal Reserve is expected to press ahead with rate cuts in the coming months regardless of whether trade talks get fully back on track. IHS Markit's manufacturing PMI for the US hit a 10-year low in July, putting even more focus on today's durable goods orders due at 12:30 GMT and tomorrow's preliminary GDP print for the second quarter for better clues about the health of the world's largest economy.

Daily Pivots: (S1) 1.1125; (P) 1.1141; (R1) 1.1154; More...

Intraday bias in EUR/USD remains on the downside, as fall from 1.1412 is targeting 1.1107 low. At this point, we're not expecting a break there yet. Thus, focus will be on bottoming signals around 1.1107. On the upside, break of 1.1158 minor resistance will turn intraday bias remains neutral first. But break of 1.1282 resistance is needed to signal completion of fall from 1.1412. Otherwise, further decline is in favor even in case of recovery.

In the bigger picture, on the one hand, 1.1107 is seen as a medium term bottom on bullish convergence condition in weekly MACD. On the other hand, rejection by 55 week EMA retains medium term bearishness. Outlook stays neutral for now. On the downside, break of 1.1107 will resume the down trend from 1.2555 (2018 high) to 78.6% retracement of 1.0339 to 1.2555 at 1.0813. Meanwhile, break of 1.1412 will resume the rebound to 38.2% retracement of 1.2555 to 1.1107 at 1.1660.

Daily Pivots: (S1) 0.6966; (P) 0.6986; (R1) 0.6999; More...

Intraday bias in AUD/USD remains mildly on the downside at this point. Rebound from 0.6831 should have completed with three waves up to 0.7082. Break of 0.6910 support will confirm and pave the way back to retest 0.6831 support next. Such development will also argue that fall from 0.7295 is in progress for 0.6722 low. On the upside, above 0.7008 minor resistance will turn intraday bias neutral first.

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.

EUR/USD

Current level - 1.1136

After the consolidation from yesterday, the expectations remain negative and a successful break of the support at 1.1110 would push the price down to the 1.0900 zone. Alternatively, a break through the resistance at 1.1200 will push the price higher for a possible test of 1.1400. 

USD/JPY

Current level - 108.17

The outlook is still positive for a test of the resistance level at 108.35 and a successful break up would push the price further to the 109.00 zone. In the opposite direction the support levels аre at 108.00 and 107.20.

GBP/USD

Current level - 1.2482

Expectations remain positive for a test of the resistance zone 1.2560.  The key support is at 1.2380.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.11515
Open: 1.11408
% chg. over the last day: -0.09
Day's range: 1.11331 – 1.11432
52 wk range: 1.1111 - 1.2009

The EUR/USD currency pair has stabilized after a rather long decline. At the moment, investors have are waiting for the ECB meeting. Participants in financial markets have weakened forecasts for lowering interest rates by the Central Bank at the current meeting. At the same time, most experts believe that the regulator may pave the way for softening the monetary policy in the near future, as the growth of the eurozone economy slows down. We recommend to pay attention to the comments and rhetoric of the ECB. Additional pressure on the euro is driven by the weak reports on business activity for July in Germany and the EU. At the moment, the quotes are consolidating in the range of 1.11300-1.11500. Positions must be opened from these marks.

The Economic News Feed for 25.07.2019:

IFO Business Climate Index (GER) – 11:00 (GMT+3:00);

ECB Interest Rate Announcement (EU) – 14:45 (GMT+3:00);

Durable Goods Sales Report (US) – 15:30 (GMT+3:00);

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

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell EUR/USD.

The Stochastic Oscillator is located near the oversold zone, the %K line has started to cross the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.11300, 1.11000
Resistance levels: 1.11500, 1.11850, 1.12100

If the price fixes below 1.11300, expect a further decline toward 1.11000-1.10800.

Alternatively, the quotes can correct toward 1.12000.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.24370
Open: 1.24828
% chg. over the last day: +0.38
Day's range: 1.24709 - 1.24870
52 wk range: 1.2397 - 1.3385

Yesterday, bullish sentiment prevailed on the GBP/USD currency pair. The quotes grew by 80 points. This movement is largely due to technical factors. The GBP remains under pressure. Participants in financial markets are wary of the “hard” Brexit scenario, in which Britain will leave the European Union without a trade agreement. At the moment, the trading instrument is consolidating in the range of 1.24550-1.24900. We recommend to open positions from key levels.

Today, the publication of important economic releases from the UK is not planned.

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

The MACD histogram is close to the 0 mark.

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: 1.24550, 1.24200, 1.23850
Resistance levels: 1.24900, 1.25200, 1.25550

If the price consolidates above 1.24900, expect further growth toward 1.25200-1.25400.

Alternatively, the quotes can descend toward 1.24300-1.24100.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31307
Open: 1.31395
% chg. over the last day: +0.07
Day's range: 1.31290 - 1.31446
52 wk range: 1.2727 - 1.3664

The USD/CAD is in a sideways movement. There is no defined trend. CAD is testing local support and resistance levels: 1.31200 and 1.31500, respectively. USD/CAD quotes have the potential for further recovery. Today, investors will evaluate important statistics from the United States. We also recommend to pay attention to the dynamics of oil prices. Positions must be opened from key levels.

The Economic News Feed for 25.07.2019 is calm.

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

The MACD histogram is located near 0.

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: 1.31200, 1.30950, 1.30650
Resistance levels: 1.31500, 1.31650, 1.32000

If the price consolidates above the 1.31500, expect further growth 1.31800-1.32000.

Alternatively, the quotes can drop toward 1.30900-1.30750.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 108.217
Open: 108.177
% chg. over the last day: -0.03
Day's range: 108.076 – 108.240
52 wk range: 104.97 – 114.56

An ambiguous technical picture emerged on the USD/JPY currency pair. Trading instrument is in lateral movement. Local levels of support and resistance are 108.000 and 108.300. Financial market participants expect important economic reports from the United States. We recommend to keep track of current information regarding trade negotiations between the United States and China. Positions must be opened from key levels.

The Economic News Feed for 25.07.2019 is calm.

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

The MACD histogram is located near the 0 mark.

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: 108.000, 107.800, 107.600
Resistance levels: 108.300, 108.600

If the price consolidates above the 108.300 mark, expect further growth toward 108.600-108.800.

Alternatively, the quotes can descend toward 107.800-107.600.

Pivot (invalidation): 56.55

Our preference Short positions below 56.55 with targets at 55.35 & 54.85 in extension.

Alternative scenario Above 56.55 look for further upside with 56.95 & 57.30 as targets.

Comment As Long as the resistance at 56.55 is not surpassed, the risk of the break below 55.35 remains high.

Pivot (invalidation): 16.4700

Our preference Long positions above 16.4700 with targets at 16.6300 & 16.7200 in extension.

Alternative scenario Below 16.4700 look for further downside with 16.3100 & 16.1800 as targets.

Comment Even though a continuation of the consolidation cannot be ruled out, its extent should be limited.