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Global markets remain optimistic, which nevertheless does not allay investors' fears at the start of the corporate reporting season. Stronger than expected macroeconomic statistics from the United States and China, as well as the expectations of lower interest rates from the Fed, support demand for risky assets and help stocks to develop an offensive. At the same time, the uncertainty around trade wars is already able to leak from the area of business unrest into real indicators. This, in turn, can manifest itself in the revision of plans, as well as in the form of a reduction in sales of some companies producing equipment and raw materials. In addition, the US retail sales and industrial production will be published today, representing the first stroke of the economy’s portrait, in terms of the effects of trade conflicts.

Stocks

US markets closed Monday with a gain of about 0.1%. Index futures mark positive dynamics, leaving indices in the overbought area on daily charts, near the historical highs. However, one should pay attention to the intraday increase in sales after a growth wave, as more players tend to take profits from the previous rally.

Asian stock markets are showing a slight increase since the beginning of the day, in anticipation of a lighter monetary policy, as well as playing back a portion of positive data from China.

EURUSD

The euro rate has changed a little in pair with the dollar over the course of the past day. On Tuesday morning, the EURUSD is trading near 1.1260, in the middle of the previous four trading sessions, waiting for signals of further trend evolvement. Meantime, the scales of buyers and sellers are balanced: hints of easing are heard from both the Fed and the ECB, and economic indicators can be assessed as “slightly weaker than the trend.” In addition to the US data, the assessment of Germany’s business sentiment by ZEW could influence the EURUSD rate today. Note that the sharp failure of this index a month earlier launched the sale wave on the euro.

GBPUSD

The prospects of Boris Johnson – one of the most consistent supporters of a hard Brexit – becoming UK prime minister, took away about 0.5% from the pound. This manoeuvre returned GBPUSD to the area below 1.2500. Investors are also laying in quotes the possibility of the interest rates lowering, in light of economic growth cooling. Johnson's main message during the Brexit campaign was that this event would not have a negative impact on the economy.

Today, data on employment in Britain will be published, while the inflation and retail sales will become known later this week. The irony is that Mr Johnson may become the prime minister at the very point when the national economy shows signs of weakness regarding the uncertainty around Brexit.

The common European currency depreciated about 43 base points against the Japanese Yen on Monday. The currency pair reversed south from a resistance cluster formed by the combination of the weekly pivot point and the 200-hour simple moving average during yesterday's trading session.

As for the near future, it is likely that the currency exchange rate will aim for the upper line of a descending channel pattern at 121.97.

However, the resistance cluster, as mentioned earlier, could hinder the EUR/JPY exchange rate from making gains today.

A breakout through the lower boundary of a descending channel pattern occurred during the morning hours of today's trading session.

Given that a breakout had occurred, it is likely that the Australian Dollar could continue to lose ground against the US Dollar within this session. The currency pair might target a support cluster formed by the weekly pivot point and the combination of the 100– and 200-hour SMAs at 0.6989 today.

However, the 50-hour simple moving average at 0.7024 could provide support for the currency exchange rate during the following trading session.

During yesterday's trading session, the US Dollar appreciated about 33 base points against the Canadian Dollar. The currency pair breached the 50-hour simple moving average at 1.3038.

By and large, it is likely that the currency exchange rate will trade south during the following trading session. The potential downside target will be near the weekly S1 at 1.2983.

However, given that the USD/CAD currency pair is near the upper line of a downtrend channel, a breakout could occur within this session.

The New Zealand Dollar appreciated about 46 base points against the US Dollar on Monday. However, the currency pair failed to breach the weekly resistance level at 0.6743 during yesterday's trading session.

Given that the NZD/USD exchange rate has breached the lower boundary of an ascending channel pattern, most likely, bearish traders might aim for the 100-hour simple moving average at 0.6680 today.

Although, the 50-hour SMA at 0.6708 could provide support for the currency exchange rate within this session.

German ZEW Economic Sentiment dropped to -24.5 in July, down from -21.1 and missed expectation of -22. Current Situation Index dropped to -1.1, down from 7.8 and missed expectation of 5. Eurozone ZEW economic sentiment dropped slightly to -20.3, down from -20.3 and beat expectation of -20.9. Eurozone Current Situation index dropped -6.9 to -10.6.

ZEW President Achim Wambach said: "Continued negative trend in incoming orders in the German industry is likely to have reinforced the financial market experts' pessimistic sentiment. A lasting containment of the factors that are causing uncertainty in the export-oriented sectors of the German economy is currently not in sight. The Iran conflict seems to be intensifying and the ongoing trade dispute between the USA and China is a burden not only to Chinese economic development. Furthermore, no discernible progress has been made in the negotiations as to what Brexit will look like."

Full release here.

EUR/USD

Current level - 1.1253

The second test of 1.1285 failed as well and the intraday bias is negative, for a slide to 1.1240 static support, The latter should provide a reliable base for another upswing, towards 1.1350.

USD/JPY

Current level - 108.03

I favor a violation of 108.10 resistance, for another attempt towards 108.40, before drowning to 107.50.

GBP/USD

Current level - 1.2482

The slide through 1.2500 signals bearish bias, for a test of 1.2440 lows.

UK unemployment rate was unchanged at 3.8% in the three months to May, matched expectations. It was the lowest level since December 1974. Average weekly earnings including bonus grew 3.4% 3moy, much higher than expectation of 3.1% 3moy. Average weekly earnings excluding bonus also grew 3.6% 3moy, above expectation of 3.5% 3moy. In June, jobless claims rose 38.0k, above expectation of 18.9k.Claimant count rate rose 0.1% to 3.2%.

Sterling drops notably earlier today and remains weak despite stronger than expected wage growth. EUR/GBP is extending rise from 0.8472 towards 0.9101 key resistance. Considering loss of upside momentum as seen in 4 hour MACD. We'd expect strong resistance below 0.9101 to limit upside.

The precious metal remained stuck in a range near the highs above 1400 for four consecutive weeks. Equity markets meanwhile pushed higher as the US corporate earnings get underway. Markets remain muted as investors wait for the Fed meeting due to take place in late July. The prospects for a Fed rate cut look to be priced into the precious metal currently.

Will XAUUSD Maintain the Sideways Range?

Price action has moved into the upper end of the range, trading within 1423 and 1404 levels. A breakout above 1423 is required on a daily basis in order to confirm the upside. However, considering the flat price action near the highs, we expect to see a correction lower in the near term. The breakdown below 1404 will trigger a move to 1383.50.

WTI Crude oil prices closed 1.6% lower on Monday. China’s second-quarter GDP showed a growth rate of just 6.2%. This was much slower compared to the first-quarter GDP growth. In the first half of the year, China’s GDP grew just 6.3%, marking one of the slowest paces of increase in expansion. The data underlined the view that global growth is slowing.

Will Oil Extend Declines?

Crude oil closed bearish on Monday. This comes after two consecutive sessions of declines in the commodity. However, we anticipate price to remain rather flat. Crude oil briefly tested the resistance area of 61.00 before easing lower. Alternatively, unless we see a close above 61.00, oil prices could continue to push lower. The downside target is seen at the 57.50 support area.