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Daily Pivots: (S1) 1.6105; (P) 1.6147; (R1) 1.6216; More...

EUR/AUD's recovery from 1.6025 is still in progress and focus is back on 1.6259 minor resistance. Break will confirm that corrective pull back from 1.6448 has completed. And further rise should be seen back to retest 1.6448 high. On the downside, break of 1.6025 will extend the fall from 1.648 to 1.5683 support and below.

In the bigger picture, as long as 1.5346 support holds, 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.

Pivot (invalidation): 1.2480

Our preference Short positions below 1.2480 with targets at 1.2440 & 1.2420 in extension.

Alternative scenario Above 1.2480 look for further upside with 1.2500 & 1.2520 as targets.

Comment The RSI calls for a new downleg.

Pivot (invalidation): 1.1195

Our preference Long positions above 1.1195 with targets at 1.1220 & 1.1235 in extension.

Alternative scenario Below 1.1195 look for further downside with 1.1180 & 1.1160 as targets.

Comment The RSI calls for a bounce.

Daily Pivots: (S1) 1.1120; (P) 1.1139; (R1) 1.1155; More...

Intraday bias in EUR/CHF remains neutral at this point. Consolidation from 1.1056 could extend further. But in case of recovery, upside should be limited below 1.1264 resistance to bring fall resumption. On the downside, break of 1.1056 will extend the larger down trend for 61.8% projection of 1.2004 to 1.1173 from 1.1476 at 1.0962 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.

The US dollar is testing the 109.00 level against the Japanese yen in early Wednesday, with bulls advancing price above the neckline of an inverted head and shoulders pattern. The pattern shows an upside move towards at least the 110.00 resistance level. The testimony from Federal Reserve Chair Powell will be the market mover for the USDJPY, with bulls needing to hold the pair above the 108.78 level.

The USDJPY pair is bullish while trading above the 108.78 level, key technical resistance is found at the 109.40 and 110.00 levels.

If the USDJPY pair trades below the 108.78 level, key technical support is found at the 108.45 and 108.10 levels.

The British pound is holding below the 1.2480 level against the US dollar ahead of the release of key GDP data from the United Kingdom economy. The GBPUSD pair has so far found technical support from the 1.2438 level, with major weekly support still untested below, at 1.2424. Buyers may also be looking to enter into the GBPUSD pair if a bullish double-bottom forms on the daily time frame.

The GBPUSD pair is heavily bearish while trading below the 1.2480 level, key support is found at the 1.2438 and 1.2424 levels.

The GBPUSD pair is only bullish while trading above the 1.2505 level, key resistance is found at the 1.2530 and 1.2570 levels.

Litecoin is trading fairly cautiously on Wednesday, as the fifth largest cryptocurrency by market capitalization awaits the next breakout move in Bitcoin. The daily time frame is showing that the LTCUSD pair is trapped within a neutral triangle pattern. A bearish breakout may provoke a move towards the $100.00 level, while a bullish breakout may see a test towards the $140.00 level.

The LTCUSD pair is only bullish while trading above the $125.00 level, key resistance is found at the $140.00 and $160.00 levels.

If the LTCUSD pair trades below the $115.00 level, key support is found at the $100.00 and $88.00 levels.

The US dollar index moved slightly higher in the Asian session as investors waited for Jerome Powell's testimony to Congress. This will be the first testimony after Friday's job report, which was much better than expected. Numbers from the Bureau of Labor Statistics (BLS) showed that the economy added more than 224k in June, which was much better than May's 75k. In today's testimony, Powell will likely provide guidance on the number of interest rates cuts that will be expected this year. Investors will also receive the minutes of the previous FOMC meeting.

In the United Kingdom, investors will receive important economic data from the Office of National Statistics. The industrial production is expected to have gone up by 1.6%, which will be higher than the previous decline of -2.7%. On a YoY basis, the production is expected to have increased by 1.1%. The manufacturing production is expected to have increased by 1.0%, which will be higher than the previous -0.8%. The trade deficit is expected to have increased to GBP 12.55 billion from the previous GBP 12.11 billion. The GDP is expected to have expanded by 0.3%.

The Bank of Canada will conclude the monetary policy meeting started yesterday. The bank is expected to leave interest rates unchanged at 1.75%. Investors expect the bank to remain relatively hawkish because it is under no pressure to slash rates. This makes it one of the few central banks that are not talking about a rate cut. However, if the Fed cuts rates more than once, the bank could be under pressure to slash rates as well.

USD/CAD

The USD/CAD was relatively unchanged in the Asian session and is currently trading at 1.3123. This is slightly higher than the month-to-date low of 1.3035. On the four-hour chart, this price is slightly below the 23.6% Fibonacci Retracement levels. It is also below the 25-day and 50-day moving averages. The RSI has moved up to the current high of 60 while the momentum indicator has remained above the 100 level. The pair will likely remain at these levels ahead of the BOC decision.

EUR/USD

The EUR/USD pair was relatively unchanged in the Asian session. It is now trading at 1.1207, which is slightly higher than yesterday's high of 1.1192. On the hourly chart, the pair has been on a steep decline that started on June 25, when it was trading at 1.1412. The current price is along the 25-day moving averages and slightly below the 50-day EMA. The pair will likely remain in this holding pattern as investors wait for the Fed chair testimony.

XBR/USD

The XBR/USD pair moved higher after data from the American Petroleum Institute (API) showed that US inventories declined by more than 8 million barrels. The pair rose to a high of 64.75, which was higher than the month-to-date low of 61.92. On the hourly chart, the pair is above the 14-day and 28-day moving averages while the RSI has moved slightly higher. The pair will likely continue rising to reach a high of 65.

• Rates: Fed Chair Powell to stick to insurance view
  'An ounce of prevention is worth a pound of cure.' Fed chair Powell is expected to stick to this, discounted, view on the 1st day of his semi-annual testimony in front of US Congress. FOMC Minutes will probably hint on a (25 bps) July rate cut as well. This scenario is by and large discounted and shouldn't trigger a new rally in US Treasuries.
• Currencies: Will Powell testimony trigger a test of EUR/USD 1.1181?
  The dollar remained well bid after Friday's US payrolls as investors are counting down to Fed Powell's testimony before Congress. The Fed president confirming a preventive rate cut this month but remaining cautious on the pace of further cuts might keep the dollar supported short-term. EUR/GBP is attacking the 0.90 barrier.

The Sunrise Headlines

• US stocks ended mixed with the DJI finishing marginally lower (-0.08%) and the Nasdaq higher (+0.54%) after the US relaxed the Huawei ban. Asian markets also trade without direction. South Korea outperforms, Japan is lagging.
• US vacancies unexpectedly declined in May, resuming the topping out after last November's record high. The quits rate (2.3%) stabilized at the highest since 2005, suggesting confidence among workers to find a new job.
• British MP's approved Grieve's amendment that requires Parliament to hold fortnightly sessions – an attempt to fend off proroguing by the next PM to force a no-deal. But they did not back his second proposal that would block it outright.
• US economic advisor Kudlow said talks between USTR Lighthizer and Treasury Secretary Mnuchin and their Chinese counterparts were 'constructive” and will continue. Counselor Conway said US officials might make a trip 'shortly”.
• Greece's new finance minister Staikouras shed light on the public finances. He warned for 'bombs with lighted fuses”, referring to the country's heavily indebted main energy supplier and cash flow problems at the Greek Post Office.
• The US will issue licenses to companies to sell their products to China's Huawei. They were forbidden to do so after US/Sino trade talks collapsed in May. Trump said he would ease the ban after the G20 meeting with China's Xi.
• Today's economic calendar heats up as we watch for Powell to speak before Congress. The Fed releases its latest FOMC meeting minutes. The UK publishes GDP and industrial data. The US, Germany and Portugal tap the bond market

Currencies: Will Powell Testimony Trigger A Test Of EUR/USD 1.1181?

EUR/USD to test 1.1181 support ?

The dollar stayed well supported yesterday with USD/EUR and USD/JPY setting minor correction top levels. The US currency recently regained additional interest rate support as solid US eco data caused market to scale back bets for aggressive Fed easing in the near future. Eco data were second tier and had little impact on trading. Equity sentiment improved throughout the session. The simultaneous gradual rise in core yields was also tentatively USD supportive. EUR/USD closed the session at 1.1208 from 1.1214. USD/JPY finished at 108.85 (from 108.72).

This morning, Asian equity indices mostly show limited to moderate gains with Japan underperforming and Korea outperforming. The dollar struggles to extend recent gains. USD/JPY came close to the 109 level, but no break occurred yet. EUR/USD hovers in the low 1.12 area. The Aussie dollar (AUD/USD 0.6920 area) extended yesterday's decline as consumer confidence weakened substantially. Today, France and Italy will publish production data and the European Commission will release its summer economic forecast/update. However, the focus for (EUR/USD) trading will be on Fed Powell's hearing before Congress. Fed chair will probably stay close to the language of the June meeting, supporting a modest, pre-emptive rate cut at the end of July. If Powell, sounds less engaged on (the pace of) additional rate cuts later year, US yields rise a bit further and the by-default USD bit might continue. Still we assume any further USD gains to remain limited. Last week, EUR/USD drifted lower in the 1.11/1.14 range. First key support comes in at the 1.1181 (correction low). This level might come under test if Powell keeps a modest/balanced tone. A break would open the way for a return to the year lows (1.1100/10 area). A rebound to the 1.13 would ease the downside momentum.

Yesterday, sterling remained in the defensive as persistent political uncertainty, signs of a further cooling of the UK economy and technical factors all conspired against the UK currency. EUR/GBP tested the 0.90 barrier. Today, the monthly GDP estimate, and the UK production data are interesting. The UK Parliament yesterday voted a measure to make it more difficult for the new UK PM to bypass parliament on a Brexit deal, but the road to Brexit remains highly uncertain. We don't expect any sustained sterling rebound anytime soon.

EUR/USD: drifting lower in the 1.14/1.11 trading range. Will Powell's testimony trigger a test of 1.1181?

Daily Pivots: (S1) 1.1194; (P) 1.1207; (R1) 1.1220; More...

A temporary low is in place at 1.1193 and intraday bias in EUR/USD is turned neutral first. As long as 1.1268 minor resistance holds, further decline is expected. On the downside, firm break of 1.1181 support will confirm completion of rebound from 1.1107 at 1.1412. Further fall should then be see to retest 1.1107 low. On the upside, above 1.1268 minor resistance will turn intraday bias back to the upside for 1.1412 instead.

In the bigger picture, bullish convergence condition in daily and weekly MACD suggests that 1.1107 is a medium term bottom. However, rejection by 55 EMA retains medium term bearish. Outlook will be 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.