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Anxiety about the global economy growth rate and the threat of new EU tariffs set to be launched by the US, is keeping investors from actively buying profitable assets. On the debt markets, there is a declining trend in the yield of long-term government bonds of developed countries: American 10-year-old treasuries dropped to 1.95%, and the German Bonds update their historical minimums at -0.40%. This should be regarded as a sign of concern about the long-term growth rate, despite the expectations of incentives in the short term.

Stocks

The S&P500 spent Tuesday near the opening levels, and only returned to highs at the end of the day. The FxPro Analyst team have repeatedly noted that this is a good signal for stocks, since it reflects confidence in the prospects from professional investors. According to FxPro analysts, the decline in yield is an alarm, setting up a possible correctional pullback of stock exchanges in the coming days.

EURUSD

On Tuesday, the single currency unsuccessfully attempted to return above 1.1300. However, by the end of the day, dollar purchases increased, returning EURUSD to the two-week levels. Today, several PMIs in services are published that will once again compare the US and EU economy dynamics. On Monday, the EU production data came out weaker than expected, while the US indicators are exceeding forecasts and are expected to stay noticeably stronger than the EU's. As a result, this has placed significant pressure on the EURUSD at the beginning of the week, continuing into today. Similar data divergence can reinforce the downtrend on EURUSD.

GBPUSD

The British pound risks becoming another victim of a dovish turn in the central bank’s rhetoric. During yesterday's speech, Bank of England Governor Mark Carney noted the growing risks for the national economy, due to the global trade wars and the effect of a potential 'no deal’ Brexit. As a result, GBPUSD fell 0.4% to 1.2580.

More and more central banks of developed countries are getting involved in the soft version of currency wars, either reducing rates or promising to do so in the near future.

Gold is unstoppable. After a retracement to the POC zone at 1385-1390 the price continued going up. We have the new POC zone formed at the ATR low.

1.1410-1.1415 could make the price bounce again on a bullish reversal candlestick pattern. If we don’t see a retracement to the POC watch for a continuation above D H4 camarilla pivot at 1438. The main target is 1442. However a strong bullish impulse could lead to 1450 and 1456. Only a break below the lower trend line 1390 could make Gold neutral again. So far, buying the dip is obvious on intraday time frames.

Daily Pivots: (S1) 1.1267; (P) 1.1294; (R1) 1.1313; More...

Intraday bias in EUR/USD remains on the downside for the moment. Recovery from 1.1107 might have completed earlier than expected at 1.1412. Break of 1.1181 support will confirm and bring retest of 1.1107 low. Though, above 1.1344 minor resistance will turn bias back to the upside to resume the rebound from 1.1107 through 1.1412 instead.

In the bigger picture, considering bullish convergence condition in daily and weekly MACD, a medium term bottom should be in place at 1.1107 after hitting 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Further rise should be seen to 38.2% retracement of 1.2555 to 1.1107 at 1.1660. Reactions from there could indicate whether rebound from 1.1107 is a corrective rise or reversing medium term trend. In any case, risk will stay mildly on the upside as long as 1.1107 low remains intact.

Daily Pivots: (S1) 1.2569; (P) 1.2609; (R1) 1.2635; More....

Intraday bias in GBP/USD remains on the downside for 1.2506 support. Break there will resume larger fall from 1.3381 to 1.2391 low. On the upside, above 1.2645 minor resistance will extend the consolidation from 1.2506 with another rise. But upside should be limited by 38.2% retracement of 1.3381 to 1.2506 at 1.2840 to bring fall resumption eventually.

In the bigger picture, down trend from 1.4376 (2018 high) is still in progress. Break of 1.2391 would target a test on 1.1946 long term bottom (2016 low). For now, we don't expect a firm break there yet. Hence, focus will be on bottoming signal as it approaches 1.1946. In any case, medium term outlook will stay bearish as long as 1.3381 resistance holds, in case of strong rebound.

• Lagarde to take over ECB after Draghi; markets bet on more QE
• BoE's Carney strikes dovish tone, drags pound down
• Oil retreats as traders ‘sell fact' after OPEC
• US ADP jobs and ISM non-manufacturing to drive dollar today

IMF's Lagarde chosen as next ECB chief

In an otherwise quiet session on Tuesday, the biggest piece of news was that EU leaders finally reached a consensus on who to nominate for the Union's top jobs. German defense minister Ursula von der Leyen is set to take over the Commission – the institution that holds most of the executive powers. More importantly for markets, IMF director Christine Lagarde was chosen to lead the ECB after Mario Draghi's term ends in October.

Her reputation as a veteran in dealing with crises, coupled with her past support for unconventional monetary policy measures, mean that investors saw her appointment as adding continuity to ECB policy after Draghi. She is regarded as more of a dove that's unlikely to push back on another dose of QE, for instance. Hence, ‘business as usual' at the ECB.

Bond markets reacted the most, with 10-year yields in Germany, France, and Spain hitting record lows today, as traders attempt to front-run a new round of ECB bond buying. In the FX market, the reaction was more muted, with the euro moving only slightly lower. Despite the latest losses, the broader outlook for the single currency is not necessarily negative. If both the Fed and the ECB start easing ‘guns blazing', the potential losses in the dollar would likely eclipse those in the euro, given that the Fed has much more ammunition with which to ease.

BoE's Carney changes tune, pushes sterling lower

The British pound took a hit on Tuesday, which uncharacteristically came from the economic arena. The nation's construction PMI unexpectedly dropped to 43.1, much lower than the anticipated 49.3, signaling that the sector is contracting at a faster pace – an alarming sign.

That was followed by some remarks by BoE Governor Carney, who adopted a much more cautious tone, highlighting that a global ‘sea change' is underway amidst trade tensions and slowing growth. Reading between the lines, his message was that the BoE may soon abandon its plans to raise rates, which would bring the Bank's official stance closer to market pricing that currently suggests a ~60% chance for a rate cut by December.

The services PMI will be released today, and will be closely watched, as it accounts for nearly 80% of the British economy.

Oil retreats as investors focus on a slowing global pulse

In the broader market, one of the biggest movers was oil, which posted severe losses even despite the agreement by OPEC and Russia to prolong their production-cut deal by another nine months. The losses seem more like a ‘sell the fact' reaction after the OPEC meeting concluded more or less as predicted, with worries that the global economy is slowing down perhaps also playing a role.

Dollar holds its breath ahead of ADP and ISM non-manufacturing

All eyes will turn back to the US today, where the ADP jobs data will be released ahead of the ISM non-manufacturing PMI, both for June. The private ADP figures will give traders a flavor of what to expect from the official payrolls report on Friday, while the ISM print could shed some light on whether the manufacturing slowdown has also started to ‘infect' the service sector.

The probability for a 50 basis points Fed rate cut in July still stands at ~20%, which means the dollar may have more room to recover in the near term if these data are relatively solid.

Daily Pivots: (S1) 0.9836; (P) 0.9863; (R1) 0.9889; More...

With 0.9809 minor support intact, rebound fro 0.9695 is still expected to to extend higher to 1.0014 resistance. But upside could be limited by 61.8% retracement of 1.0237 to 0.9695 at 1.0030. On the downside, below 0.9809 minor support will turn bias back to the downside for retesting 0.9695 low.

In the bigger picture, current development suggests that up trend from 0.9186 (2018 low) has 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.

Daily Pivots: (S1) 107.63; (P) 108.06; (R1) 108.34; More...

Intraday bias in USD/JPY stays neutral for now and with 108.80 resistance intact, outlook remains bearish. On the downside, firm break of 107.56 minor support will bring retest of 106.78 low. Break there will extend recent fall from 112.40 to 104.69 low. Nevertheless, sustained break of 108.80 will confirm short term bottoming at 106.78. In this case, stronger rise should be seen back to 110.67 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.

EURUSD bear pressure targets the 1.1225 area as it looks for price extension. Support comes in at the 1.1225 where a violation will turn risk to the 1.1200 level. A turn below here will target the 1.1150 level. Further down, support lies at the 1.1100. Its daily RSI is bearish and pointing lower suggesting more decline. Conversely, on the upside, resistance resides at 1.1350 level with a break through there opening the door for further upside towards the 1.1.1400 level. Further up, resistance comes in at the 1.1450 level where a violation will expose the 1.1500 level. All in all, EURUSD bear pressure targets the 1,1225 area as more weakness is expected.

EUR/USD

Current level - 1.1285

The downtrend remains intact below 1.1320 intraday resistance  and a test of 1.1250 lies ahead. I favor a reversal around the latter, for a bounce back towards 1.1450.

USD/JPY

Current level - 107.64

The violation of 108.10 support led to a dip to 107.50 and the bias is still bearish, risking a dive towards 106.80. Crucial on the upside is 107.90

GBP/USD

Current level - 1.2580

No sign of a reversal here and the bias remains bearish, focused at 1.2503 low. Crucial on the upside is 1.2660.

Daily Pivots: (S1) 0.6971; (P) 0.6986; (R1) 0.7009; More...

Intraday bias in AUD/USD remains neutral at this point. We're still viewing the rebound from 0.6831 as a correction. And, upside should be limited by 0.7022 resistance. On the downside, break of 0.6941 minor support will turn bias back to the downside for retesting 0.6831 low. However, firm break of 0.7022 will indicate near term bullish reversal and turn outlook bullish for 0.7205 resistance next.

In the bigger picture, with 0.7393 key resistance intact, medium term outlook remains bearish. The decline from 0.8135 (2018 high) is seen as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.