Sample Category Title

Pivot (invalidation): 1.3050

Our preference Short positions below 1.3050 with targets at 1.3000 & 1.2980 in extension.

Alternative scenario Above 1.3050 look for further upside with 1.3070 & 1.3095 as targets.

Comment The RSI is bearish and calls for further downside.

Pivot (invalidation): 0.9845

Our preference Short positions below 0.9845 with targets at 0.9805 & 0.9780 in extension.

Alternative scenario Above 0.9845 look for further upside with 0.9870 & 0.9885 as targets.

Comment As Long as the resistance at 0.9845 is not surpassed, the risk of the break below 0.9805 remains high.

Pivot (invalidation): 107.65

Our preference Short positions below 107.65 with targets at 107.35 & 107.20 in extension.

Alternative scenario Above 107.65 look for further upside with 107.85 & 108.05 as targets.

Comment The upward potential is likely to be limited by the resistance at 107.65.

Daily Pivots: (S1) 0.9785; (P) 0.9838; (R1) 0.9868; More...

Breach of 0.9817 minor support suggests resumption of fall from 0.9951. Intraday bias is turned back to the downside for 0.9695 first. Break will resume larger fall from 1.0237. On the upside, break of 0.9908 resistance will likely 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.

Pivot (invalidation): 1.2520

Our preference Long positions above 1.2520 with targets at 1.2575 & 1.2600 in extension.

Alternative scenario Below 1.2520 look for further downside with 1.2495 & 1.2460 as targets.

Comment A support base at 1.2520 has formed and has allowed for a temporary stabilisation.

Pivot (invalidation): 1.1245

Our preference Long positions above 1.1245 with targets at 1.1280 & 1.1300 in extension.

Alternative scenario Below 1.1245 look for further downside with 1.1225 & 1.1210 as targets.

Comment The RSI calls for a rebound.

Daily Pivots: (S1) 107.00; (P) 107.51; (R1) 107.81; More...

Intraday bias in USD?JPY remains on the downside for 106.78 support first. Break there will resume whole decline from 112.40 and target 104.69 low. On the upside, break of 108.37 will extend the correction from 106.78 with another rise, possibly through 108.99 resistance.

In the bigger picture, decline from 118.65 (Dec 2016) is still in progress, with the pair staying inside long term falling channel. Break of 104.62 will target 100% projection of 118.65 to 104.62 from 114.54 at 100.51. For now, we'd expect strong support above 98.97 (2016 low) to contain downside to bring rebound. In any case, break of 112.40 is needed to the first serious sign of medium term bullishness. Otherwise, further decline will remain in favor in case of rebound.

Daily Pivots: (S1) 1.3003; (P) 1.3050; (R1) 1.3073; More....

USD/CAD breached 1.3018 temporary low but quickly recovered. Initial bias remains neutral first. Further decline is expected with 1.3143 resistance intact. Sustained trading below 1.3052/68 cluster support should confirm medium term reversal. Deeper decline should then be seen to 1.2781 support next. Nevertheless, break of 1.3143 resistance will confirm short term bottoming and bring stronger rebound.

In the bigger picture, the case of bearish reversal continues to build up. Decisive break of 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.

A fresh report on Wednesday saying the US-China have failed to make any progress since the G20 hurt sentiment. Moreover, there is a growing sense that the conditions aren't right for a deal. GBP is the strongest currency on a combination of stronger than expected UK retail sales and comments from EU chief Brexit negotiator reviving hopes of reaching a compromise on the Irish border issue.See the notes on Alcoa, CSX and Netflix below. Euro lost ground on a report stating that the ECB may revamp its approach to inflation. Both of this week's newly added Premium trades are in the green. There are currently 6 trades open. The Premium Video titled "The Short Backed by All 3 Metrics" is out.

A WSJ report said US-China talks are hung-up on executing the US pledge to allow Huawei to buy US technology. Once that's sorted out, China has pledged to buy US agricultural goods. The problem is the White House is struggling to decide what to allow the Chinese telecommunications company to buy so everything has grinded to a standstill

The inability to make any concrete progress after several indications of an agreement is a sign of trouble. Equity markets stumbled Tuesday after initial comments from Trump expressing displeasure and they fell further Wednesday on the report.

The economic backdrop also makes it tough to envision a deal. The US reopened talks in December after a 20% drop in stock markets; now they're at record highs. There are also signs that China's economy is surviving a pivot towards consumers with retail sales strong in the latest quarter.

G7 FX Chatter

Here is a tweet from Ashraf on the G7 meeting in Paris:

In other economic news, the Fed's Beige Book underscored a solid US economy with 'modest' growth. Commentary highlighted unease about trade but a 'generally positive' outlook and higher loan demand. Earnings continue to paint a slightly different picture. Railway operator CSX warned of softening demand Tuesday and aluminum giant Alcoa cut its global demand forecast Wednesday. Netflix tumbled 13% on news that it lost 130K US clients.

• Rates: Fed governors give final dovish push
  The short term US rate market is roughly split about the outcome of the July FOMC meeting (25 bps or 50 bps rate cut) after final dovish Fed comments ahead of the blackout period. Today's eco calendar is rather uneventful suggesting sentiment-driven and technical trading ahead of the weekend.
• Currencies: Dollar declines as market revives aggressive rate cut bets
  Yesterday, the dollar ceded further ground. US Treasury secretary Mnuchin indicated no change in the USD policy, for now, but it might become an issue later. The dollar lost further interest rate support after Fed Williams subscribed the case for pre-emptive Fed action. Positive UK eco and political news triggered a sterling short squeeze after recent protracted decline

The Sunrise Headlines

• Wall Street managed a close in green after Fed Williams' (unintended?) hint at aggressive monetary policy. The S&P500 outperformed (+0.36%). Asian equities also profit with Japan outperforming (+2%).
• NY Fed Williams said that in a low interest rate environment a worsening economy requires 'swift action', prompting bets on a 50 bps cut end of July. The NY Fed downplayed his remarks as academical rather than policy guidance.
• The US shot down an Iranian drone which was said to threaten the safety of an American vessel near the Strait of Hormuz. It is the latest sign of increased geopolitical tensions between the two countries over Iran's nuclear programme.
• Japanese June inflation remains subdued with some core measures (0.6% YoY) slowing to the weakest in almost 2 years, adding to speculation the BoJ could adopt an even more easier policy stance later this month. The yen declines.
• The US House passed legislation on Thursday to raise the minimum wage to $15 an hour by October 2025. That would be more than a doubling of the current $7.25. The bill still has to pass a Republican-controlled Senate however.
• Spain's Podemos said they would only back Sanchez (Socialists) as PM during a vote next week if they get key positions in his future cabinet, something Sanchez refused to offer so far. November repeat elections are ever more likely.
• Today's economic calendar is rather thin with only the University of Michigan consumer confidence (July) scheduled for release. Fed's Bullard and Rosengren give speeches

Currencies: Dollar Declines As Market Revives Aggressive Rate Cut Bets

Dollar declines on soft Fed talk

Several events triggered profit taking on USD longs and supported EUR/USD yesterday. Initially, the dollar suffered from a risk-off related decline in core yields. EUR/USD returned temporarily to the low 1.12 area on headlines that ECB was studying a (soft) revamp of its policy framework. Later, the dollar met new headwinds, too. US Treasury Secretary Mnuchin said that there is no change in the dollar policy for now but that it can be considered in future. Finally, Fed Williams in a speech reiterated the need for pre-emptive central bank action, fuelling speculation on a rate cut. EUR/USD closed the day at 1.1277 (from 1.1244). USD/JPY finished at 107.30 (from 107.95).

This morning, Asian equities are also propelled by hopes on aggressive easing by the Fed (and by other CB's). Still, the dollar recoups some of yesterday's loss after the NY Fed clarified that Williams didn't intend to signal a big rate cut this month. EUR/USD is changing hands in the 1.1260 area. USD/JPY rebounded to the mid 107 area.

Later today, there are again no EMU data. In the US, the U. of Michigan consumer confidence is expected to stay at a historically high level (98.8). Fed's Bullard and Rosengren are last Fed governors with a chance to guide markets ahead of blackout period before the end of July meeting. Whatever the guidance of those governors, the market feels ever more comfortable to err to dovish side when making up their mind on CB action. Quite some Fed easing is currently already discounted. However, bets on substantial Fed easing this month or further out this year will probably cap any meaningful USD rebound. The EUR/USD 1.1181 support looks solid short-term. Global picture: EUR/USD drifted lower in the 1.11/1.14 range but rebounded (temporary?) after Powell paved the way for a July rate cut. A rebound to the 1.13 would ease the downside momentum. With the most important data before the July FOMC meeting printed, more trading near current levels is likely.

The news flow finally turned sterling supportive yesterday. EU's Barnier suggested there is some room to discuss the Irish, backstop, UK retail sales were strong, and Parliament made it less easy for the next PM to push through a nodeal Brexit. The sterling short-squeeze pushed EUR/GBP back below 0.90. USD selling reinforced the rebound in cable (1.2550 area tested). Today, there are only second tier UK eco data. The protracted sterling downtrend apparently found a ST bottom as investors await the appointment of a new UK PM next week. We expect more technical trading ahead of the July 23.

EUR/USD: dollar declines on new Fed rate cut bets