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The common European currency has decreased in trading arrange against the Australian Dollar after it reached a two-month high level at the 1.5887 mark on July 11. The exchange rate lost 309 base points or 1.95% of its value during this short period.

A strong resistance level set by the weekly, the monthly and the combination of the 55-, 100-, and 200– hour SMAs has provided a significant resistance to shoot the rate lower.

Everything being equal, it is likely that the EUR/AUD currency exchange rate continue moving in the ascending channel within this session.

The price movement of the EUR/AUD exchange rate has been constrained by a descending channel. The currency pair reversed from the upper boundary on July 20 and has since reached the bottom border of a long-term ascending channel pattern.

However, the pair has bounced off its lower boundary of the dominant channel during the last trading session, and as a result, it breached the 55-hour simple moving average.

By and large, it is likely that the bullish sentiment could continue during the following trading session for a potential at 1.5283.

Daily Pivots: (S1) 143.79; (P) 144.12; (R1) 144.42; More...

GBP/JPY falls to as low as 143.15 so far and intraday bias remains on the downside. Decisive break of 143.18 low will resume larger decline from 156.59 and target 139.29/47 key support level next. On the upside, 144.26 minor resistance will turn intraday bias neutral first. But outlook will stay mildly bearish as long as 147.13 resistance holds.

In the bigger picture, decline from 156.59 is seen as a corrective move. In case of another fall, strong support should be seen above 139.29 cluster support (50% retracement of 122.36 to 156.59 at 139.47) to contain downside and bring rebound. However, sustained break of 139.29/47 will confirm medium term reversal and turn outlook bearish for 122.36 (2016 low) again.

Both imports and exports higher than estimate

Imports rose 27.3% y/y in US dollar terms, the fastest pace of growth since January, and beat economists' forecasts of +16.2% by a large margin. Exports also topped estimates, rising 12.2% y/y, defying speculation that the imposition of the first US tariffs on Chinese imports would have an adverse effect on trade. The trade surplus narrowed to $28.05 billion, giving back most of June's gains. The stronger imports numbers gave the Aussie a quick knee-jerk boost, but it failed to breach the 55-day moving average at 0.7450 to the US dollar.

RBA'S Lowe says no case for near term rate move

In a speech today, RBA Governor Lowe said there is every chance that the next move in rates would be higher, something he he has said before, if the economy evolves as predicted, but current conditions do not present a convincing case for a move in the near term. He reiterated that the timing of the move would be dependent on unemployment data and inflation moving to the middle of the target range. He also admitted that an escalation of the trade war could be damaging for the global economy. AUD/USD was already mildly higher after the Chinese trade data and the comments assisted the gains, though not aggressively so. The pair is currently trading at 0.7425.

Trade wars continue

Late yesterday the US Administration announced it would be imposing 25% duties on another $16 billion of Chinese imports in two weeks, which prompted China to respond that it would retaliate again with dollar-for-dollar tariffs of its own. In a dinner engagement, US President admitted that they are having a troubled relationship with China at the moment, but praised his own trade policies and predicted that Q3 growth would have a “5” in front of it. That seems an ambitious call, given that the most optimistic of forecasters in surveys conducted by Bloomberg sees only 4.4% quarter-on-quarter growth. The median estimate is for just 2.9%.

Barren data calendar

It's another lackluster day on the data front with US mortgage applications and a speech by Fed member Barkin the only items of note. Weekly EIA crude stockpiles feature on the commodities side, while late in the session the RBNZ will announce its latest interest rate decision. No change in rates is expected and the accompanying statement is not expected to differ much from the last meeting.

Daily Pivots: (S1) 128.76; (P) 129.00; (R1) 129.41; More....

Despite a rather strong rebound, upside was limited below 129.25 minor resistance. Intraday bias in EUR/JPY stays neutral first and deeper fall is expected. As noted before, rebound from 124.61 could have completed with three waves up to 131.97 already. Below 128.49 will target 127.13 support for confirmation. Overall, near term risk will stay on the downside as long as 131.13 resistance holds, even in case of stronger than expected rebound.

In the bigger picture, for now, EUR/JPY is still holding above 124.08 key support turned resistance. And the larger rise from 109.03 (2016 low) mildly in favor to resume. Break of 133.47 should send the cross through 137.49 high. However, decisive break of 124.08 will confirm medium term reversal and could then pave the way back to 109.03 low and below.

Daily Pivots: (S1) 0.8937; (P) 0.8952; (R1) 0.8982; More...

EUR/GBP surges to as high as 0.8983 so far today. The solid break of 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963) firstly indicates resumption of rise from 0.8620. It also confirms completion of whole decline from 0.9305. Intraday bias is back on the upside for 61.8% retracement at 0.9043 next. On the downside, below 0.8936 minor support will turn intraday bias neutral first. But outlook will remain bullish as long as 0.8854 support holds and further rise is expected.

In the bigger picture, EUR/GBP is staying in long term range pattern from 0.9304 (2016 high). The corrective structure of the fall from 0.9305 to 0.8620 is raising the chance that rise from 0.8312 to 0.9305 is an impulsive move. But we're not too confident on it yet. In any case, we'd stay cautious on strong resistance from 0.9304/5 to limit upside in case of further rally. Meanwhile, if there is another medium term decline, strong support will likely be seen from 0.8303 to contain downside.

Daily Pivots: (S1) 1.5586; (P) 1.5628; (R1) 1.5675; More....

A temporary low is in place at 1.5578 with 4 hour MACD crossed above signa line. Intraday bias is turned neutral first. Upside of recovery should be limited 4 hour 55 EMA (now at 1.5703) to bring another fall. Below 1.5578 will target 61.8% retracement of 1.5271 to 1.5888 at 1.5507. Sustained break there will pave the way to retest 1.5271 low. Overall, even in case of stronger rebound, risk will stay on the downside as long as 1.5888 resistance holds.

In the bigger picture, the rebound from 1.5271 was somewhat weaker than expected. EUR/AUD also failed to sustain above 55 day EMA and hints on some underlying bearishness. Though, for now, as long as 1.5271 support holds, medium term rise from m 1.3624 (2017 low) is still mildly in favor to extend through 1.6189 high, to 1.6587 key resistance (2015 high). Nevertheless, firm break of 1.5271 will complete a head and shoulder top pattern (ls: 1.5770, h: 1.6189, rs: 1.5888). That would indicate medium term reversal and turn outlook bearish.

Daily Pivots: (S1) 1.1520; (P) 1.1535; (R1) 1.1561; More...

Intraday bias in EUR/CHF remains neutral for consolidation above 1.1489 temporary low. We'd expect upside of recovery to be limited by 1.1603 minor resistance to bring fall resumption. We're holding on to the view that corrective rebound from 1.1366 has completed at 1.1713. Break of 1.1478 support will confirm and target 1.1366 low and below. However, break of 1.1603 will turn bias back to the upside for 1.1713 resistance instead.

In the bigger picture, 1.2004 is seen as a medium term top with bearish divergence condition in daily and weekly MACD. 1.2000 is also an important resistance level. Hence, the corrective pattern from 1.2004 is expected to extend for a while before completion. We're not anticipating a break of 1.2004 in near term. Another decline cannot be ruled out yet. But in that case, strong support should be seen at 1.1198 (2016 high), 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to contain downside.

Yen surges broadly in the later part of Asian session, early European session. The selloff in Chinese stocks in the final two hours could be a factor driving risk aversion. The Shanghai SSE index closed down -1.27% at 2744.07. European indices open mixed with German DAX slightly down by -0.2% at the time of writing.

Despite the strong rebound from 128.49, EUR/JPY was limited below 129.52 minor resistance and drops sharply. 128.49 is back into focus and break will resume whole decline from 131.97. Based on the position strategy as our weekly report, we sold EUR/JPY at 128.60 at open this week. We'll hold on to the short position, with stop at 129.60, slightly above 129.52 minor resistance. 127.13 is the first target but we'd expect at least a test on 124.61 low if things turns out as we expected.

Also, we're holding on GBP/CHF short, sold at 1.2971. The development so far is in line with out expectation. We'll lower the stop to break even at 1.2971. 61.8% projection of 1.3854 to 1.3049 from 1.3265 at 1.2768 as first target. And there is prospect of extending to 100% projection at 1.2460 in medium term.

A reversal from the senior channel and a breakout from a junior one was followed by a 48-pip surge on Tuesday. The Euro managed to push through several resistance levels until the 200-hour SMA at 1.1635 was reached early today.

Given that the 1.1650 area is likewise strengthened by the 55-, 100– and 200-period (4H) SMAs, bulls could be reluctant to push the rate above this resistance cluster. Technical indicators are likewise bearish for this session. A near-term support target is the 55– and 100-hour SMAs and the monthly S1 at 1.1580.

If no downside pressure pushes the rate below this mark, it is likely that the Euro trades with low volatility in between the aforementioned barriers today.