Sample Category Title

Pivot (invalidation): 1.1370

Our preference Short positions below 1.1370 with targets at 1.1340 & 1.1320 in extension.

Alternative scenario Above 1.1370 look for further upside with 1.1390 & 1.1410 as targets.

Comment The RSI is bearish and calls for further decline.

Daily Pivots: (S1) 0.7005; (P) 0.7014; (R1) 0.7032; More...

AUD/USD edged higher to 0.7034 but quickly dropped back to below 0.7022 resistance. At this point, we'd still expect rejection from 0.7022 to complete the rebound from 0.6831. 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.

• Rates: Trump and Xi agree to resume trade talks
  Presidents Trump and Xi Jinping agreed to resume trade talks, refrain from new tariffs and ease restrictions on Huawei. US (and to a lesser extent German) yields rebound. US data is expected rather soft today. Nonetheless, we think global core bonds will hold on to (at least part of the) losses in the wake of the trade ceasefire 2.0.
• Currencies: Dollar rebounds on higher US yields after G20 meeting
  A new trade truce between the US and China caused a diffuse reaction on global FX markets. The yuan rebounds. At the same time, the dollar strengthens against the yen and the euro as the risk-rebound also raises US yields. The focus for USD trading will soon return to the eco data. Will a soft manufacturing ISM already slow the post-G20 USD rebound?

The Sunrise Headlines

• US stocks ended in green after a rather volatile session ahead of the G20 summit. The S&P500 (+ 0.58%) outperformed. Asian equities soar with China outperforming (+ 2-3%) after a renewed trade truce.
• Presidents Trump and Xi agreed to resume trade talks during a meeting at the G20 summit. Trump also pledged not to introduce more import tariffs while toning down on China’s Huawei.
• Russian President Putin said this weekend the oil output cuts, which expired in June, could be extended with another six to nine months. Saudi Arabia supported Putin’s talk. Oil prices jumped.
• China’s Caixin manufacturing PMI unexpectedly dipped below the 50 boom/bust mark in June (49.4). Japan’s Tankan survey also showed another loss of confidence in both small and large (non-)manufacturing companies.
• EU discussions to choose the next EC president are at an impasse. The Dutch socialist Timmermans, in pole position after the EPP’s Weber failure to secure backing, meets with resistance from eastern European states.
• During a ‘surprise visit’ by Trump to North Korean leader Kim Jong Un both agreed to push forward talks about the denuclearization of North Korea. US Secretary of State Pompeo told a new round would likely happen in July.
• In today’s economic calendar ISM/PMI manufacturing confidence is due in the US and UK. European data is of secondary importance. ECB VP de Guindos and Fed VC Clarida are scheduled to speak.

Currencies: Dollar Rebounds On Higher US Yields After G20 Meeting

Dollar rebounds on higher yields post-G20

(FX) investors refrained from building big direction positions last Friday ahead of the meeting between Presidents Trump and Xi on Saturday. US income and spending data were OK, but price deflators were close to expectations. The report had little impact on the dollar. EUR/USD closed at 1.1373, from Thursday. USD/JPY finished at 107.85 (from 107.79).

Presidents Trump and Xi agreed to restart trade talks, avoiding a further escalation in the tariffs war. There are indications of mutual goodwill, but several important issues still must be addressed. For now, there few indications that the US pushed for an aggressive USD weakening, but the issue isn’t out of the way yet. The trade truce triggers a risk rally in Asia. The impact on FX trading was mixed. The dollar profits from higher US yields, with USD/JPY outperforming (currently 108.35 area). EUR/USD is drifting further below 1.1350. At the same time, the yuan strengthened (USD/CNY 6.8375) despite mediocre China PMI’s. The AUD reversed earlier strength as poor Chinese data and market caution ahead of the RBA meeting weighed. The pair is drifting back below the 0.70 barrier.

Today, markets will continue to assess the consequences of the Trump-Xi meeting. The USD might profit a bit further of the rise in US yields, but question is how far this move will go. The focus will turn to the early month data, with the EMU PMI’s and the US manufacturing ISM. The ISM is expected to ease further to 51.0 from 52.1, in line with recent soft reading of other US business sentiment indicators. We expect any rise and US yields and subsequent USD rebound to remain guarded. The EUR/USD 1.1300/1.1250 area should provide solid support.

On Friday EUR/GBP came close to the 0.90 barrier a real test again didn’t occur. Sterling finally regained modest ground. Today, UK money supply and lending data and manufacturing PMI (expected 49.5 from 49.4) will be published. However, the focus of markets remains on the contest for the leadership of the UK conservative party between Boris Johnson and Jeremey hunt. Both candidates a proposing fiscal stimulus/tax cuts to protect the UK economy in case of a no deal Brexit. It remains uncertain whether that will be enough to contain the damage for the economy, but ST it might be an element for sterling bears to become a bit more cautious. Still we expect any sterling rebound to remain limited if overall uncertainty on Brexit persists.

EUR/USD: dollar profits from higher US yields after G20

Daily Pivots: (S1) 1.3068; (P) 1.3088; (R1) 1.3116; More...

Intraday bias in USD/CAD is turned neutral with today's recovery. Focus stays on 1.3052/68 cluster support zone. Decisive break will carry larger bearish implication and target 1.2673 fibonacci level next. However, break of 1.3151 will indicate short term bottoming and bring rebound back to 1.3239/3432 resistance zone.

In the bigger picture, medium term outlook stays neutral for now even though the case of bearish reversal is building up. Decisive break of 1.3068 cluster support (38.2% retracement of 1.2061 to 1.3664 at 1.3052) will confirm completion of up trend from 1.2061 (2017 low). Further fall should be seen to 61.8% retracement at 1.2673 next. On the upside, sustained break of 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685, is needed to confirm resumption of up trend from 1.2061 (2017 low). Otherwise, risk will stay on the downside.

Daily Pivots: (S1) 1.1350; (P) 1.1371; (R1) 1.1392; More...

EUR/USD drops sharply today and focus is now on 1.1317 minor support. Firm break there will will be an early sign of completion of rise from 1.1107. Intraday bias will be turned back to the downside for 1.1181 support. Though, rebound from 1.1317 will retain near term bullishness. Break of 1.1412 will resume the rebound from 1.1107 low.

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.

Daily Pivots: (S1) 1.2662; (P) 1.2699; (R1) 1.2733; More....

GBP/USD is staying in right range below 1.2783 today so far and intraday bias remains neutral first. In case of another recovery, upside should be limited by 38.2% retracement of 1.3381 to 1.2506 at 1.2840 to complete the corrective rise from 1.2506. On the downside, break of 1.2642 minor support will bring retest of 1.2506 low. However, sustained break of 1.2840 will bring stronger rise to 61.8% retracement at 1.3047 next.

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.

Daily Pivots: (S1) 0.9743; (P) 0.9759; (R1) 0.9779; More...

USD/CHF rebounds further today but it's staying below 0.9854 support turned resistance so far. Intraday bias remains neutral first. On the upside, firm break of 0.9854 will confirm short term bottoming. Stronger rebound should be seen back to 1.0014 resistance next. However, rejection by 0.9854 will retain near term bearishness. Break of 0.9738 will turn bias back to the downside to retest 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.

The US dollar has opened the new trading monthly strongly against the Japanese yen after a positive outcome from the G20 leaders meeting over the weekend. The 109.00 resistance level still remains the overall upside short-term objective for USDJPY bulls this week. USDJPY sellers may attempt to enter around this area, following the heavily bearish candle formation on the monthly time frame.

The USDJPY pair is only bearish while trading below the 108.10 level, key support remains at the 107.80 and 107.00 levels.

If the USDJPY pair trades above the 108.10 level, key technical resistance remains at the 108.44 and 109.00 levels.

The British has opened the new trading month on the backfoot against the US dollar, following a heavy technical rejection from the 1.2730 area on Friday. UK PMI Services data and ISM Manufacturing data are the big drivers for the GBPUSD pair today. Continued weakness is likely to prompt a technical test of the key 1.2660 level, which is likely to act as key defence or the next bearish trigger level for the pair.

The GBPUSD pair is only bullish while trading above the 1.2685 level, key resistance is found at the 1.2730 and 1.2780 levels.

If the GBPUSD pair trades below the 1.2685 level, key support is found at the 1.2660 and 1.2610 levels.

Bitcoin has started to settle into a large trading range after the number one cryptocurrency found strong resistance from the $14,000 level last week. Selling the top-end of the BTCUSD pairs is range the preferred strategy until technical readings on the daily time frame correct from overbought. The $11,800 level is the key pivot point for the BTCUSD pair and also the neckline of a much-larger bullish pattern.

The BTCUSD pair is bullish while trading above the $11,800 level, key resistance is located at the $12,500 and $13,400 levels.

If the BTCUSD pair trades under the $11,800 level, sellers may test towards the $11,000 and $10,600 support levels.