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The monthly jobs report from the UK saw the average hourly earnings rising more than expected. Earnings index rose 3.4%, beating estimates of a 3.1% increase. Data for the previous release was revised higher to show a 3.2% increase in the three months to the year basis. The UK's unemployment rate held steady at 3.8%. The sterling was however unmoved as concerns of a no-deal Brexit overshadowed the economic data.

GBPUSD at Fresh Two-Year Lows

The currency pair slipped to a fresh two-year low as it tested 1.2395 briefly. Price action remains weak especially after breaking past the previously established lows. In the short term, we could expect to see a modest rebound to 1.2450 level. This could act as resistance which will keep the downside bias intact.

Crude oil prices extended declines further for a second consecutive day. WTI Crude oil fell over 3% on Tuesday. The declines came after Washington said that it was in talks with Tehran over the nuclear deal from which the US had pulled out earlier. This had led to escalating tensions between the US and Iran.

Crude Oil at Support

The declines in crude oil came as price stalled close to the resistance area of 60.64. This led to prices falling to the lower support area of 57.50 as a result. However, price action is likely to remain caught within the range established. A breakout below 57.50 could trigger further declines lower. The next main target will be the 50 handle which marks a psychological level of support.

The monthly retail sales report from the US showed a larger than expected gain. June retail sales grew 0.4% on the month, beating estimates of a 0.1% increase. The data for May was revised down to show a 0.4% increase. Excluding autos and gasoline, retail sales grew by 0.7%. The better than expected report pushed the USD higher as a result.

EURUSD Loses the 1.1250 Handle

The EURUSD currency pair broke below the 1.1250 level of support to which it held on to earlier. This sent the currency pair to a weekly low. Further downside momentum could push the common currency to test the previous lows of 1.1188. We expect the sideways range to continue in the short term.

The GBP/USD seems to have completed a bullish ABC (orange) pattern within wave 4 (green) before the strong bearish momentum broke below the 1.2420 bottom. Despite the break of the bottom, price is still facing a key support trend line (blue) and 61.8% Fibonacci level which could act as a potential bounce spot. A bearish breakout below the support zone could indicate a bearish continuation towards the Fibonacci targets of wave 5 vs 1+3.

If the GBP/USD makes a bullish bounce at this spot, then price might be completing a wave 3 (orange) impulse and expecting a wave 4 (orange) pullback. The Fibonacci levels of wave 4 vs 3 are expected to act as a resistance levels for a bearish bounce and continuation lower. The wave 4 (orange) pattern is invalid if price breaks above the bottom of wave 1 (orange), although a break above the 61.8% Fibonacci makes a wave 4 already less likely.

Pivot (invalidation): 108.35

Our preference Short positions below 108.35 with targets at 108.05 & 107.80 in extension.

Alternative scenario Above 108.35 look for further upside with 108.60 & 108.85 as targets.

Comment The RSI shows downside momentum.

Pivot (invalidation): 1.2430

Our preference Short positions below 1.2430 with targets at 1.2395 & 1.2370 in extension.

Alternative scenario Above 1.2430 look for further upside with 1.2450 & 1.2470 as targets.

Comment Technically the RSI is below its neutrality area at 50.

Pivot (invalidation): 1.1220

Our preference Short positions below 1.1220 with targets at 1.1200 & 1.1190 in extension.

Alternative scenario Above 1.1220 look for further upside with 1.1240 & 1.1255 as targets.

Comment A break below 1.1200 would trigger a drop towards 1.1190.

Pivot (invalidation): 5.7200

Our preference Short positions below 5.7200 with targets at 5.6950 & 5.6790 in extension.

Alternative scenario Above 5.7200 look for further upside with 5.7330 & 5.7580 as targets.

Comment The upward potential is likely to be limited by the resistance at 5.7200.

Pivot (invalidation): 0.7025

Our preference Short positions below 0.7025 with targets at 0.6985 & 0.6970 in extension.

Alternative scenario Above 0.7025 look for further upside with 0.7045 & 0.7060 as targets.

Comment The RSI shows downside momentum.

Pivot (invalidation): 1.3060

Our preference Long positions above 1.3060 with targets at 1.3100 & 1.3120 in extension.

Alternative scenario Below 1.3060 look for further downside with 1.3040 & 1.3020 as targets.

Comment Technically the RSI is above its neutrality area at 50.