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Cable eased from the session high at 1.3213 as probe through pivotal barrier at 1.3208 (Fibo 61.8% of 1.3362/1.2957 failed at the initial attempt.

Brexit talks are to resume with UK PM May retaking control of Brexit which could supportive factor for sterling.

Scope is seen for 1.32+ gains in renewed attempt which could result in extension towards 1.3267/80 (Fibo 76.4% / falling 55SMA) and possible attack at 1.3300 (base of falling thick daily cloud) but corrective dips may precede fresh advance as momentum is weak.

Bull-cross of 5/10SMA’s (1.3140) underpins and should ideally contain dips to keep bulls intact.

Conversely, close below 10SMA would generate bearish signal and risk further easing.

Res: 1.3213, 1.3267, 1.3280, 1.3300
Sup: 1.3174, 1.3140, 1.3112, 1.3071

EU-US trade tensions ease

US equities had a great deal of relief on news that the US and the EU are holding off from implementing new tariffs and will start negotiations. Both parties confirmed their willingness to reduce tariffs while European Commission President Jean-Claude Juncker pledged to increase imports of natural gas and soybeans (which is subject to a 25% tax by China). In return, the US should reassess duties on steel and aluminum that it introduced earlier to the EU. As a reminder, steel and aluminum tariffs were imposed in 23. March to China and 1. June 2018 to EU, Mexico and Canada.

Overnight, US equities were heading higher, the DJIA rose by +0.68% while S&P500 and Nasdaq increased by +0.91% and +1.17% respectively. The Nasdaq-100 Technology Sector Index is approaching its historical high of 4496.59 (12/03/2018), currently given at 4414.50. On European side, markets are recovering from yesterday’s loss, led by the DAX +1.40%, Euro Stoxx 50 +0.65%, CAC40 +0.65% and SMI +1.10% while FTSE 100 is neutral, thus announcing a good market session for the day.

However, despite current sentiment of relief on the marketplace, we remain skeptical that the trend will sustain. Indeed, Trump remains hard on China and no agreement is signed with the EU. The move could also be a political maneuver to maintain strong ties with his supporters amid November US Congress midterm elections and in order to stay above water – as resistance is felt from public opinion and inside the Republican Party.

Showing some strength in yesterday late session, the USD is currently trading sideways against major currencies. Today’s loss against JPY (-0.25%) is expected to reverse in the afternoon. The pair is currently trading at 110.70 and heading towards 111.

All eyes on ECB meeting

Now that Trump and Juncker are friends again, as they pledge to deescalate the trade crisis, the spotlight will inevitably fall on today’s ECB meeting. Even though the agreement triggered a relief rally in the equity market, the lack of reaction in the FX market suggest that the EU-US dispute was not the market’s biggest worries. China remains the main target.

The last batch of PMIs for the euro zone, together with the Trump-Junker “cease-fire” agreement, mean that Mario Draghi will likely feel relaxed for today’s meeting. Nevertheless, we do not expect a ground breaking announcement as Draghi already set out his plan during the June meeting. Therefore, the attention will focus on the council’s view of the economic outlook as well as inflation development. Since the June meeting, investors have reviewed there expectations to the downside and do not expect the ECB to hike interest rate before at least summer 2019.

The single currency appreciated yesterday evening with EUR/USD climbing 0.60% to reach 1.1740. Since then the pair has been erasing gains slowly as investors preferred to remain cautious. Historically, Draghi’s speeches have never been euro positive. There is no reason for it to change today.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.16805
Open: 1.17297
% chg. over the last day: +0.44
Day's range: 1.17206 – 1.17342
52 wk range: 1.0571 – 1.2557

Yesterday, the bullish sentiment was observed on the EUR/USD currency pair after the publication of a weak report on new home sales in the US. In June, sales fell to 631K, while experts expected 669K. At the moment, the technical pattern is ambiguous. The key support and resistance levels are: 1.17150 and 1.17450, respectively. We recommend opening positions from these marks. The further growth of the trading instrument is not excluded.

The news feed on 2018.07.26:

A decision on the interest rate by ECB at 14:45 (GMT+3:00);

Core durable goods orders in the US at 15:30 (GMT+3:00).

Indicators point to thw power of buyers: the price has fixed above 50 MA and 200 MA.

The MACD histogram is located in the positive zone, but below the signal line, which gives a weak signal to buy EUR/USD.

Stochastic Oscillator is in the neutral zone, the %K line has crossed the %D line. There are no accurate signals.

Trading recommendations

Support levels: 1.17150, 1.16850, 1.16500
Resistance levels: 1.17450, 1.17800

If the price fixes below 1.17150, we recommend considering sales of EUR/USD. The movement is tending to 1.16850-1.16500.

Alternative option. If the price fixes above the resistance level of 1.17450, the EUR/USD quotes are expected to grow. The movement is tending to 1.17800-1.18000.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31421
Open: 1.31887
% chg. over the last day: +0.41
Day's range: 1.31847 – 1.31981
52 wk range: 1.2361 – 1.4345

Yesterday, the bullish sentiment was observed on the GBP/USD currency pair. At the moment, the technical pattern is ambiguous. Investors expect additional drivers. The key support and resistance levels are: 1.31700 and 1.32200, respectively. The positions must be opened from these marks. In the near future, a technical correction is not ruled out.

The news feed on the UK economy is calm.

Indicators point to the power of buyers: the price has fixed above 50 MA and 200 MA.

The MACD histogram is in the positive zone, but below the signal line, which gives a weak signal to buy GBP/USD.

Stochastic Oscillator is located in the neutral zone, the %K line is below the %D line, which also sends a signal to sell GBP/USD.

Trading recommendations

Support levels: 1.31700, 1.31200, 1.30700
Resistance levels: 1.32200, 1.32600, 1.33000

If the price fixes above 1.32200, further growth of GBP/USD is expected. The movement is tending to 1.32600-1.32800.

Alternative option. If the price fixes below support 1.31700, the correction of the GBP/USD quotes is expected. The movement is tending to 1.31200-1.31000.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31542
Open: 1.30451
% chg. over the last day: -0.87
Day's range: 1.30352 – 1.30454
52 wk range: 1.2059 – 1.3795

Yesterday, aggressive sales were observed on the USD/CAD currency pair. The decrease in quotations was almost 100 points. At the moment, the trading instrument is in a sideways trend. Local support and resistance levels are: 1.30250 and 1.30550, respectively. The positions must be opened from these marks. The trading instrument is tending to reduce.

Publication of important news from Canada is not expected.

Indicators point to the power of sellers: the price has fixed below 50 MA and 200 MA.

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell USD/CAD.

Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which gives a signal to sell USD/CAD.

Trading recommendations

Support levels: 1.30250, 1.29800
Resistance levels: 1.30550, 1.31000, 1.31400

If the price fixes below the support level of 1.30250, further reduction of the currency pair is expected. The movement is tending to 1.29800-1.29600.

If the price fixes above 1.30550, one should look for entry points to the market to open long positions. The target movement level is 1.31000-1.31200.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 111.141
Open: 110.974
% chg. over the last day: -0.31
Day`s range: 110.651 – 110.732
52 wk range: 104.56 – 114.74

During yesterday's trading the bearish sentiment prevailed on the USD/JPY currency pair. The quotes fell by more than 70 points. At the moment, the key levels of support and resistance are: 110.600 and 110.900, respectively. The positions must be opened from these marks. We recommend you to pay attention to the yield of US 10-year government bonds.

The news feed on Japan's economy is calm.

Indicators point to the power sellers: the price has fixed below 50 MA and 200 MA.

The MACD histogram is in the negative zone, but above the signal line, which gives a weak signal to sell USD/JPY.

Stochastic Oscillator is located in the neutral zone, the %K line is above the %D line, which indicates the growth of quotations.

Trading recommendations

Support levels: 110.600, 110.300
Resistance levels: 110.900, 111.300, 111.800

If the price fixes below the 110.600 level, the USD/JPY currency pair is expected to decline. The movement is tending to 110.300-110.000.

Alternative option. If the price fixes above the 110.900 mark, you should consider buying USD/JPY. The movement is tending to 111.300-111.500.

The GBP/USD has broken through a trend line that marks a possible continuation of a bullish move. The POC zone is 1.3165-85. The price needs to make a close above 1.3209 to proceed further up. Intraday target zone is 1.3220-30 while the extension on a positive bullih momentum can lead up to 1.3260. If the trend persists we could see 1.3311 by the end of the week.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

The first part of Wednesday's trading session showed the same lack of direction as during the preceding session. The pair was restricted from the upside by the 55-hour SMA, while support was provided by the 100– and 200-hour SMAs and the weekly PP at 1.1680.

The market was supplied with bullish momentum in the evening, as the Euro was boosted by expectations of a possible trade deal between the US and the EU. This pushed the rate up to a strong July resistance at 1.1750. A downward-sloping trend-line and the 23.60% Fibonacci retracement are likewise located in this area.

Technical indicators flash mixed signals; however, it is more likely that the rate appreciates towards 1.18 in this session. Traders should watch closely data releases today.

The last four trading sessions have been beneficial for the GBP/USD exchange rate, as it has appreciated 1.90% since July 19. At the time, the pair reversed from the senior channel line and is now moving gradually towards its upper boundary near 1.3250.

As apparent on the chart, this strong bullish momentum has allayed which is caused primarily by the 200-period (4H) SMA being located at 1.3210. This has resulted in a slight movement sideways today right below this line.

It is expected that the pair continues appreciating until the senior channel; however, the aforementioned long-term SMA might postpone this up-move today if no fundamentals strengthen bulls. The daily high is likely to be 1.33, while the daily low— a support cluster at 1.3120.

USD/JPY has been trading sideways for two consecutive sessions. This movement does show a slight tendency downwards, guided by the 55-hour SMA. This has allowed the pair to reach the bottom boundary of the senior channel near 110.70.

The US Dollar breached this channel line and the 200-period (4H) SMA early on Thursday—a move which is likely to strengthen bears during the following hours, as some downside potential is still apparent in the market. This fall is unlikely to exceed the combined support of the weekly S2, the monthly PP and the 61.80% Fibonacci retracement at 110.25.

Given the strong resistance levels located nearby, it is unlikely that bulls gather enough momentum to overcome the 55– and 100-hour SMAs at 111.25.

Gold continues to appreciate against the US Dollar in a short-term ascending channel for the fourth consecutive day. This upside momentum weakened during the previous session, as a surge was restricted by the 200-hour SMA and a weekly resistance at 1,235.00.

Given that the pair has overcome this long-term SMA and the 55-period one on the 4H chart, the yellow metal is expected to continue its upward movement today, as well. This movement should be supported by the 55– and 100-hour SMAs.

The nearest resistance is the channel line and the 100-period SMA at 1,240.00. Another resistance is the 200-period SMA at 1,260.00.

In case bears manage to take over the market, no support is limiting a fall until the senior channel near 1,210.00.

The Euro remains constructive in early Thursday's trading and cracked triangle resistance (1.1747) in extension of Wednesday's advance. Positive tone from Trump-Juncker meeting, as US and EU agreed to work together on zero tariffs, sidelined concerns about trade war and pushed the greenback lower. Wednesday's penetration and close within thick daily cloud was bullish signal, which was reinforced by close above pivotal 1.1718 barrier (Fibo 61.8% of 1.1848/1.1508 descend). Bullish setup of daily MA's is supportive but negatively aligned momentum and stochastic approaching overbought territory, warn of recovery stall. Clear break above triangle resistance is needed to generate bullish signal for extension towards key short-term barriers at 1.1790 (09 July high) and 1.1848 (14 July peak). Otherwise, the pair may hold in extended sideways mode, with dips to be contained by 10SMA (1.1689) to keep near-term bullish bias. ECB policy meeting is the key event today, with focus on Mario Draghi's comments about key points: inflation, growth, bond purchases and possible hints about rate change before the summer 2019, with any hawkish signal from the ECB, expected to further boost the single currency.

Res: 1.1742, 1.1750, 1.1790, 1.1840
Sup: 1.1720, 1.1698, 1.1687, 1.1663

Here are the latest developments in global markets:

FOREX: The US dollar index – which tracks the greenback’s performance against a basket of six major currencies – is down by 0.27% on Thursday, extending the notable losses it posted in the previous session as trade tensions faded. The euro is little changed as traders await the main event of the day; the ECB policy meeting. The yen, meanwhile, is up across the board today amid continued speculation for a hawkish tilt by the BoJ next week.

STOCKS: US markets closed firmly in the green yesterday, buoyed by signs of de-escalation on the trade front, as the US and EU reached a preliminary deal aimed at avoiding new tariffs. The Nasdaq Composite (+1.17%) reached a new record high, while the S&P 500 (+0.91%) and Dow Jones (+0.68%) also touched multi-month peaks, with the S&P flirting with its own all-time high. However, futures suggest the S&P, Dow, and Nasdaq 100 are set to open lower today, something likely owed to disappointing earnings results from titans like Facebook, whose stock collapsed by more than 20% in after-hours trading. Asia was mixed today, with Japan’s Nikkei 225 declining 0.12% but the Topix advancing by 0.70%. In Hong Kong, the Hang Seng was down by 0.76%. Meanwhile, all major European indices were set to open significantly higher today, futures suggest.

COMMODITIES: Oil prices advanced on Wednesday, aided by a correction lower in the dollar and a much-larger-than-expected drawdown in the weekly EIA crude inventories. News that Saudi Arabia suspended some oil shipments due to tensions in the Gulf may have added fuel to the move. WTI and Brent are mixed today, with WTI being down marginally (-0.08%), but Brent trading higher (+0.52%). Gold rebounded yesterday as well, fueled by a correction lower in the greenback, which renders the dollar-denominated metal more attractive for investors using foreign currencies. That said, the yellow metal is down by 0.17% again today at $1,228 per troy ounce, still hovering just above its lows for the year.

Major movers: Stocks rally after Juncker-Trump accord; loonie & peso soar on NAFTA hopes

The President of the European Commission and the US President reached a preliminary accord on trade issues yesterday during their meeting in Washington. The two sides agreed that the EU will increase its imports of US soybeans and liquified natural gas, while the US will hold off from imposing any new tariffs, for instance on imported cars. Moreover, both agreed to enter negotiations with an aim to lower industrial tariffs and align regulatory standards to allow for fewer barriers to trade.

Overall, although nothing particularly concrete was agreed other than to continue negotiating, the spirit of the accord was rather conciliatory, allowing investors to breathe a sigh of relief that the situation at least won’t escalate for now. Major US stock indices raced higher, with the benchmark S&P 500 closing at its highest level since late January, and not far below its all-time highs. Meanwhile, the dollar – which had enjoyed heightened demand amid trade concerns in recent months – corrected lower.

Meanwhile, price action in the euro, the yen, and the pound was less exciting. While all of them gained against the dollar, there was little movement between them. That said, yen bulls seem to have returned on Thursday, as the currency is trading higher across the board. Its gains appear to be owed mainly to speculation around some hawkish BoJ message next week, as opposed to safe-haven demand.

Elsewhere, NAFTA came back in focus, as Canadian Foreign Minister Freeland met with Mexican Economy Minister Guajardo. Both struck an upbeat tone regarding a deal being reached soon, with Guajardo saying two thirds of the points are already agreed. The loonie and the peso soared, reaching a 6-week and an 11-week high against the dollar respectively, with the loonie’s advance also aided by rising oil prices. There appears to be some optimism that a deal may be achievable prior to the US midterm elections in November. Any signs adding credence to that could lead to an outsized rally in the loonie, as investors price out trade concerns and price in expectations for faster rate increases by the BoC.

Day ahead: ECB firmly in focus; US durable goods data also of interest

All eyes will be on the European Central Bank on Thursday, as it will be concluding its meeting on monetary policy. On the data-front, US durable goods are perhaps the day’s most important release.

Krona pairs will be generating attention as Sweden’s unemployment rate for June is made public at 0730 GMT.

But the lion’s share of attention is expected to fall on the ECB. The central bank’s policy decision is due at 1145 GMT, with the bank widely anticipated to keep policy on hold. This, combined with no new quarterly projections on the agenda, will shift investor focus to the press conference by ECB chief Mario Draghi which is scheduled to start at 1230 GMT. There is uncertainty as regards when the central bank will start normalizing rates and any comments by Draghi on this front are expected to prove market sensitive. In the meantime, remarks on trade will be of interest, especially after what appeared to be a constructive meeting between Juncker and Trump on Wednesday.

A notable 3.0% m/m rise in US durable goods orders is forecasted by analysts during June, after a fall by 0.4% in May. It should also be kept in mind though, that the measures of durable goods that exclude volatile items, are not projected to report such sharp gains, the implication being that the increase is driven by a surge in orders of volatile capital goods. For example, the core measure of durable goods that excludes transportation is anticipated to rise by only 0.5% m/m, after exhibiting zero growth in May. The figures will be hitting the markets at 1230 GMT. Weekly data on initial and continued jobless claims are also due out of the US at the same time.

Of interest will be a visit in Washington by Mexican Economy Minister Ildefonso Guajardo to touch on NAFTA renegotiation efforts; he will be meeting US Trade Representative Robert Lighthizer.

Meanwhile, the BRICS summit taking place in South Africa remains underway and is set to conclude on Friday.

In equities, Amazon, Comcast, Intel, McDonald’s, Starbucks, Under Armour and Xerox are some of the companies releasing quarterly results on Thursday.

Technical Analysis: EURUSD bullish bias appears to ease

EURUSD has retreated a bit after edging closer to the two-week high of 1.1749 recorded on July 23. The Tenkan- and Kijun-sen lines remain positively aligned in support of a positive bias, though the two have eased, pointing to a weakening bullish sentiment. The RSI, which has halted its advance, is projecting a similar picture.

A more hawkish stance by the ECB than expected by markets later today can boost the pair. Immediate resistance may take place around Monday’s two-week high of 1.1749, before the attention turns to the one-and-a-half-month high of 1.1790 from July 9 in the event of steeper gains.

Conversely, a relatively dovish ECB is likely to push EURUSD lower. The region between 1.1703 and 1.1682 captures the Tenkan-sen, 100-period moving average, Kijun-sen, Ichimoku cloud top, and the 50-period MA and thus may be of importance, providing support to declines. Further below, the area around 1.650 was congested in the past and may also provide support in case of sharper losses.

US durable goods data may also move the pair.