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Ethereum is once again starting to appear comfortable above the $300.00 level as the second largest cryptocurrency tracks Bitcoin higher. A test of demand around the $335.00 level appears likely if ETHUSD bulls can break above the $315.00 resistance level. A confirmed failure to create a new higher high on the monthly chart may also weigh technically on the ETHUSD pair.

If the ETHUSD pair trades above the $300.00 level, key resistance is found at the $315.00 and $330.00 levels.

If the ETHUSD pair trades below the 300.00 level, key support is found at the $290.00 and $280.00 levels.

The Japanese yen declined after the country released its inflation-adjusted real wages. The numbers showed that the wages declined 1.0% in May, which was the fifth straight month of declines. April’s wages were revised downwards to 1.4%. In May, the nominal cash earnings declined by an annual rate of 0.2% after being revised by 0.3% in April. Further, the regular pay declined by an annual rate of 0.6% while one-off special payments increased by 2.5% in May. In Japan, one of the biggest risks has been low inflation, which has been attributed to the low wage growth.

The DAX futures declined by 30 units as investors continued to focus on the crisis at Deutsche Bank. On Sunday, Germany’s biggest lender announced its restructuring plan that will see more than 18k job cuts. The bank also intends to form a bad bank with more than 74 billion euros in assets. It also intends to exit the equities trading business, which will see jobs lost in London, United States, and in Asia. Deutsche is not the only German company in trouble. Yesterday, BASF, which is the biggest chemicals company in the world announced that it was slashing its full-year forecast and warned that profits would nearly halve in the second quarter. The company blamed this on the ongoing trade conflict.

Today, the economic data will be limited. Investors will receive the unemployment rate data for Switzerland. They expect the data to show that the unemployment rate declined to 2.2% in June from the previous 2.3%. In Canada, they will receive the housing starts and the building permits data. In the US, they will receive the JOLTs job openings numbers, which are expected to show openings of more than 7.470 million. They will also listen to Fed speakers like Quarles, Bostic, Bullard, and Jerome Powell. Finally, they will receive the API crude oil inventories for the previous week.

EUR/USD

The EUR/USD pair was relatively unchanged in the Asian session and is currently trading at the 1.1212 level. On the hourly chart, the pair’s price is between the lower and middle line of the Bollinger Bands while the RSI has remained unchanged at the 40. Today, with no major economic data from Europe and US, the pair will likely make major moves in reaction to the statements of the Fed speakers.

USD/JPY

The USD/JPY pair ended the strong downward trend two weeks ago. Since then, the pair has been moving higher and today it reached a high of 108.90. On the four-hour chart, the pair is slightly below the 38.2% Fibonacci Retracement level. The pair is also above the 25-day and 14-day moving averages while the RSI has moved to the overbought level. The pair will likely continue moving higher, to test the 50% Fibonacci Retracement level of 109.60.

GER30

The DAX reached a high of €12,656 last week. Yesterday, the index declined to a low of €12,500 and according to the futures, it is expected to drop when the market opens. On the hourly chart below, the index is trading below the 14-day and 28-day moving averages while the signal line of the stochastic oscillator has moved closer to the oversold level. The index will likely move lower to clear the gap shown in red below.

Daily Pivots: (S1) 135.71; (P) 135.93; (R1) 136.31; More...

GBP/JPY is staying in consolidation from 135.17 and intraday bias remains neutral first. Upside of recovery should be limited by 137.78 resistance to bring fall resumption. On the downside break of 135.17 will resume the fall from 148.87 and target 131.51 low next.

In the bigger picture, current development suggests that GBP/JPY's medium term fall from 156.59 (2018 high) is still in progress. Break of 131.51 will target 122.36 (2016 low). Structure of such decline is corrective looking so far, arguing that it's just the second leg of consolidation from 122.36. Thus, we'd expect strong support from 122.36 to contain downside to bring reversal.

Daily Pivots: (S1) 121.64; (P) 121.81; (R1) 122.09; More....

Intraday bias in EUR/JPY stays neutral at this point and outlook is unchanged. We're favoring the case that consolidation from 120.78 has completed with three waves to 123.35. Below 121.31 will target retest of 120.78 first. Break will resume fall from 127.50 to 118.62 low. In case of another rise as consolidation from 120.78 extends, upside should be limited by 123.73 resistance to bring fall resumption eventually.

In the bigger picture, down trend from 137.49 is still in progress with the cross staying inside long term falling channel. Break of 118.62 will extend the fall to 109.48 (2016 low). On the upside, break of 127.50 resistance is needed to be the first sign of medium term reversal. Otherwise, outlook will remain bearish in case of strong rebound.

The USD/JPY could be building a bearish ABC (purple) pattern if price bounces and reverses at the 138.2% Fibonacci level. A break above this level, however, invalidates the current ABC pattern and makes it likely that the wave 2 (pink) has already been completed at the recent bottom (where wave A purple is now). A bullish breakout and continuation, either immediately or after a deeper retracement in wave 2, is likely to be an impulsive wave 3 (purple).

The USD/JPY could be building a bullish ABC (blue) pattern within the wave B (purple) but if this wave pattern becomes invalidated, then the bullish wave count becomes the main analysis with price building multiple 5 wave patterns. It is also important to keep an eye on the Fibonacci retracement levels of wave 4 vs 3 because if price reverses at these levels, then it could indicate a wave 4 (orange) and more expected upside.

Daily Pivots: (S1) 0.8951; (P) 0.8962; (R1) 0.8971; More...

EUR/GBP is staying in consolidation from 0.8992 temporary top. Intraday bias remains neutral at this point. With 0.8872 support intact, further rise is expected. However, considering bearish divergence condition in 4 hour MACD, we'd look for topping signal as it approaches 0.9101 key resistance. On the downside, break of 0.8872 will indicate short term topping. In this case, deeper pull back could be seen to 55 day EMA (now at 0.8843) first.

In the bigger picture, medium term decline from 0.9305 (2017 high) is seen as a corrective move. No change in this view. Current development argues that it might have completed with three waves down to 0.8472, just ahead of 38.2% retracement of 0.6935 (2015 low) to 0.9306 at 0.8400, after hitting 55 month EMA (now at 0.8527). Decisive break of 0.9101 resistance will confirm this bullish case. Nevertheless, as EUR/GBP is still staying inside long term falling channel, correction from 0.9305 could still extend to 0.8400 fibonacci level before completion, if upside is rejected by 0.9101.

• Rates: Summer's here
  Core bonds oscillated near Friday's post-payrolls low in this week's uneventful opening session. The consolidation process is set to continue today in similar low volume conditions. Fed and ECB speakers are wildcards, but most of them recently ruffled their dovish feathers.
• Currencies: USD preserves recent gains as investors await guidance from Powell
  The dollar maintained its post-payrolls gains yesterday as markets pondered how much room there is for Fed easing in the near future. ECB governors keeping the door open for further easing also capped the topside in EUR/USD. Trading in the major cross rates might be quite similar to yesterday

The Sunrise Headlines

• Wall Street ended lower on Monday as little inspired investors awaited Fed's Powell testimony later this week. The Nasdaq (-0.78%) underperformed. Asian markets follow suit with India (-0.8%) underperforming.
• Hong Kong's leader Lam said that the extradition bill was 'dead' and that there's no plan to restart the legislative process. The bill that would allowed HK to extradite people to China sparked the city's biggest political crisis in decades.
• The US government said that its producers were harmed by subsidized steel imports from China and Mexico. In a response, Mexico said the US antidumping probe was not related to president Trump's earlier tariff threats.
• While talks are scheduled for this week, South-Korea said it could not exclude countermeasures to Japan's high-tech export restrictions if it did not withdraw them soon. It also plans to involve the WTO as the diplomatic row escalates.
• After easing mortgage lending rules last week, the Australian regulator also decided to increase the bank capital buffer by less than originally proposed. Banks would now have to raise A$50 bn in the coming years vs. A$75 bn initially.
• Tory rebel Grieve tabled an amendment that forces the next PM to update Parliament every two weeks starting from October until December, effectively preventing any PM to set aside Parliament to pursue a no-deal Brexit on Oct 31.
• Today's event calendar eyes rather empty again. US NFIB small business optimism (June) is due. Several ECB and Fed governors are scheduled to speak. The US mid-month refinancing operation kicks off

Currencies: USD Preserves Recent Gains As Investors Await Guidance From Powell

Dollar preserves recent gains.

The dollar maintained its post-payrolls gains yesterday in a session devoid of important data. On the euro side of the story, German May production printed again poor. Later ECB's Coeuré indicated the ECB is ready to cut rates or restart QE if necessary. Both factors also capped any intraday up-ticks of EUR/USD. At the same time, the dollar retained the benefit of the doubt as investors pondered the pace of potential Fed easing, looking forward to Fed Powell's' hearing before Congress. EUR/USD closed at 1.1214 (from 1.1225). USD/JPY was also well bid even as risk sentiment dwindled to close at 108.72 (from 108.47). This morning, Asian equity indices show modest losses, in line with WS yesterday. The recent rebound in US yields and a strong dollar are denting sentiment in the region. Some regional geopolitical issues are a source of investor caution, too. EUR/USD is trading little changed in the 1.1215 area. USD/JPY is holding in the 108.70/75 area.

Today, the calendar in Europe contains again only second tier data, but several ECB members will speak, probably keeping the door open for further ECB stimulus. In the US, the NFIB small business confidence is expected to ease from 105 to 103.1. The release is interesting, but seldom a market mover. So, markets, might stay in some kind fo wait-and-see pattern ahead of tomorrow's appearance for Fed's Powel before Congress. Over the previous days, markets turning a bit more cautious on Fed rate cut expectations combined with a less buoyant risk sentiment favoured the dollar. We don't see a case for big USD swings today, but by-default USD strength might persist.

Last week, EUR/USD drifted lower in the 1.11/1.14 range. First key support comes in at the 1.1181 (correction low). A break would open the way for a return to the year lows (1.1100/10 area). A rebound to the 1.13 would indicate an easing of the downside momentum.

In the UK, the focus in the Brexit debate is shifting from the race for the leadership of the Conservative party to attempts from Tory MP's to prevent the next PM (B. Johnson) from suspending Parliament as it tries to block a no-deal Brexit. For now, it hardly changed the sterling trading dynamics. EUR/GBP hovers in the upper half of 0.89. Eco data and surveys also suggest little or no UK growth in Q2. We expect more erratic trading of sterling near recent lows vs. the euro and the dollar.

EUR/USD: drifting lower in the 1.14/1.11 trading range as markets scale back Fed rate cut speculation post payrolls

Daily Pivots: (S1) 1.1122; (P) 1.1138; (R1) 1.1162; More...

No change in EUR/CHF's outlook as consolidation from 1.1056 is extending. Intraday bias remains neutral for now. In case of another 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.

For that first time since March 2018, CAD futures recorded NET LENGTH of 6 293 contracts, as suggested in the CFTC Commitments of Traders report in the week ended July 2. Recent bullish sentiment about the loonie has been driven by policy divergence. While the Fed is widely expected to lower its policy rate this month and later this year (more below), BOC could likely stand on the sideline, thanks to resilient inflation and job market.

NET LENGTH in USD Index added +51 contracts to 22 417. Speculative long positions dropped -830 contracts while short positions fell -881 contracts during the week. Traders trimmed bets on both sides as they awaited the FOMC meeting later this month. The market has almost fully priced in a rate cut in the upcoming meeting. Meanwhile, there is over 85% chance of two rate cuts from now to the end of the year.

Concerning European currencies, NET SHORT for EUR futures declined -24 562 contracts to 31 733. NET SHORT for GBP futures gained +5 307 contracts to 64 244. Speculative long positions added +1 588 contracts while speculative shorts rose +6 895 contracts for the week. GBP is expected to remain volatile in the near- to medium- term. Overwhelming support for Boris Johnson as the next Prime Minister has increased the likelihood of a no- deal Brexit, although this is no our base scenario.

On safe-haven currencies, Net SHORT for CHF futures declined -5 739 contracts to 10 742. NET SHORT for JPY futures plunged -8 920 contracts to 1 227 during the week. Speculative long positions gained +3 108 contracts while shorts dropped -5 812 contracts. Bets that both currencies will go higher signaled risk aversion.

On commodity currencies, NET SHORT for AUD futures declined -7 585 contracts to 58 735. Speculative long positions increased +4 314 contracts while shorts dropped -3 271 contracts. Aussie should remain under pressure as the the expects RBA to continue cutting interest rates later this year. Separately, NET SHORT for NZD slipped -21 contracts to 24 032 contracts last week.

Daily Pivots: (S1) 1.1202; (P) 1.1219; (R1) 1.1230; More...

Intraday bias in EUR/USD remains mildly on the downside for 1.1181 support. Corrective recovery from 1.1107 should have completed way earlier than expected at 1.1412. Firm break of 1.1181 support will confirm this bearish case and target retest of 1.1107 low. On the upside, above 1.1287 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.