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Gold turned sideway after hitting 1211.65 last week. There seems to be some support from 1205.20 support level, which is close to 1200 psychological level. Oversold condition, as seen in daily MACD was also limiting downside momentum.

However, the recovery is so far limited below 1238.00 support turned resistance. Hence, there is no confirmation of near term bottoming yet. We're viewing the fall from 1365.24 as a leg in the pattern from 2015 low at 1046.54. And further fall would be seen to 61.8% retracement of 1046.54 to 1375.15 at 1172.06 and possibly below.

Nonetheless, break of 1238.00 resistance will likely bring stronger rebound back to 55 day EMA (now at 1267.53) before staging another fall.

NZDJPY has retreated from the one-month top of 76.84 it touched last week, falling back below the Ichimoku cloud and the 50-day moving average. However, the negative momentum has eased in the past few days and the near-term bias is now looking more neutral as the RSI has flatlined just below the 50 neutral level.

If the RSI fails to rise above 50 in the next day or two and the immediate support of the Kijun-sen line around 75.45 fails, the 75.00 handle would be the next key level to watch. Below that, the previous congestion areas of 74.65 and 74.40 could act as downside hurdles before prices were to reach July’s 1½-year low of 74.06. A breach of that trough would signal a resumption of the year-long downtrend and underscore the bearish outlook.

However, if prices were to find positive momentum again, the 76 handle would be the first target on the upside. This is likely to prove a strong resistance barrier though, as besides being a psychological level, it also coincides with the 50-day moving average and the Tenkan-sen line. A break above this level would open the way towards the Ichimoku cloud, with the cloud bottom just above 76.40 being the next resistance point.

If the pair successfully moves back into the cloud, this would shift the short-term bias to bullish and turn the focus to the upside.

Daily Pivots: (S1) 110.93; (P) 111.23; (R1) 111.49; More...

Intraday bias in USD/JPY remains neutral at this point. On the downside, below 110.74 will extend the correction from 113.17 to 38.2% retracement of 104.62 to 113.17 at 109.90. But downside should be contained there to bring rebound. On the upside, break of 113.17 is needed to confirm rally resumption. Otherwise, we'd expect more consolidation in near term first.

In the bigger picture, corrective fall from 118.65 (2016 high) should have completed with three waves down to 104.62. Decisive break of 114.73 resistance will likely resume whole rally from 98.97 (2016 low) to 100% projection of 98.97 to 118.65 from 104.62 at 124.30, which is reasonably close to 125.85 (2015 high). This will stay as the preferred case as long as 109.36 support holds.

Daily Pivots: (S1) 0.9916; (P) 0.9935; (R1) 0.9958; More...

USD/CHF is staying in tight range above 0.9900 temporary low and intraday bias remains neutral first. With 0.9957 minor resistance intact, further decline is mildly in favor. Below 0.9900 will target 0.9856 support. Break there will pave the way to key support level at 0.9787. On the upside, above 0.9957 minor resistance will turn bias back to the upside for retesting 1.0067.

In the bigger picture, as long as 0.9787 support holds, we're still favoring the bullish case. That is, rise fro 0.9787 is resuming the whole up trend from 0.9186 and should target 1.0342 key resistance on resumption. However, break of 0.9787 will indicate medium term reversal and turn outlook bearish.

Daily Pivots: (S1) 1.3089; (P) 1.3125; (R1) 1.3177; More...

GBP/USD's rebound from 1.2956 is still in progress and could extend higher. But it's seen as a corrective move. Hence, upside should be limited below 1.3362 resistance to bring fall resumption eventually. On the downside, below 1.3070 minor support will bring retest of 1.2956 first. Break of 1.2956 low will resume the decline from 1.4376 to 1.2874 fibonacci level.

In the bigger picture, whole medium term rebound from 1.1946 (2016 low) should have completed at 1.4376 already, after rejection from 55 month EMA (now at 1.4179). Fall from 1.4376 should extend to 61.8% retracement of 1.1946 (2016 low) to 1.4376 at 1.2874 next. Decisive break of 1.2874 will raise the chance of long term down trend resumption through 1.1946 low. On the upside, break of 1.3362 resistance is needed to be the first indication of medium term bottoming. Otherwise, outlook will remain bearish even in case of strong rebound.

GBPUSD - The pair continues to retain its upside pressure leaving risk of more strength on the cards in the days ahead. Support lies at the 1.3100 level where a break will turn attention to the 1.3050 level. Further down, support lies at the 1.3000 level. Below here will set the stage for more weakness towards the 1.2950 level. Conversely, resistance stands at the 1.3200 levels with a turn above here allowing more strength to build up towards the 1.3250 level. Further out, resistance resides at the 1.3300 level followed by the 1.3350 level. On the whole, GBPUSD remains biased to upside on correction.

The Canadian dollar has posted slight gains in the Wednesday session. Currently, USD/CAD is trading at 1.3128, down 0.20% on the day. On the release front, there are no Canadian indicators for the remainder of the week. In the U.S, New Home Sales is forecast to drop sharply to 669 thousand. On Thursday, the U.S will release durable goods reports and unemployment claims.

Escalating trading tensions continue to worry Canadian policymakers, as the Canadian economy is heavily dependent on its export sector. NAFTA negotiations are expected to intensify now that the Mexican election is over, and one of the key stumbling blocks is the Trump administration’s insistence on higher U.S content in vehicles produced in North America. Auto tariffs is also a key point in the trade war between the U.S and the EU, with the U.S threatening to slap tariffs on European cars. On Wednesday, European Commissioner President Jean-Claude Juckner will meet with President Trump at the White House. If progress can be made on auto tariffs, this could mean that the U.S is showing some flexibility, which could lead to a breakthrough in the NAFTA negotiations.

The markets have been shaken up by recent trade tensions and investors may have to worry about a global currency war. On Friday, U.S President Trump attacked the EU and China for manipulating their currencies and keeping interest rates lower. The U.S dollar has held its own in the last few weeks, but use of the currency as a trade weapon could backfire. This was underscored on Friday, as the U.S dollar was broadly lower after Trump’s tweets criticizing currency manipulation. Trump has said that he prefers a weaker U.S dollar, which could prompt global investors to dump their dollar assets and send the currency lower.

EURJPY remains under pressure and risk is still to the downside as prices continue to drift lower from the two-month high of 131.97, achieved last week. The short-term technical indicators are neutral to bearish and point to more weakness in the market over the next few sessions.

Looking at the 4-hour chart, prices are looking capped by the 20- and 40-simple moving averages (SMAs) which are negatively aligned after a bearish crossover that took place on July 20. The RSI indicator is moving south near the threshold of 30, while the MACD oscillator is flattening near its trigger line and stands below its neutral level.

The bearish phase remains in play if the pair drops below the 129.73 support and under the 129.55 hurdle. Further downside extensions could drive the price towards the 38.2% Fibonacci retracement level of the upleg from 124.60 to 131.97, around 129.15. Breaking this zone could push the market to the next level of 128.40.

Upsides moves are likely to find resistance at the 20-SMA first and then at the 40-SMA at 130.23 and 130.80 respectively. As a side note, the 20-SMA overlaps with the 23.6% Fibonacci at the time of writing, pointing that is a strong obstacle for the bulls.

Having a look at the medium term, EURJPY is still in a falling mode after the bounce off the 131.97 peak and continues to post a bearish correction.

Daily Pivots: (S1) 1.1652; (P) 1.1685 (R1) 1.1715; More.....

EUR/USD hardly moves today and is engaging in consolidative trading in range above 1.1507/9. Intraday bias remains neutral at this point. Stronger recovery cannot be ruled out as the consolidation extends. But in that case, upside should be limited by 1.1851 resistance to bring fall resumption eventually. On the downside , firm break of 1.1507 will resume larger down trend through 50% retracement of 1.0339 to 1.2555 at 1.1447.

In the bigger picture, EUR/USD was rejected by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. And, a medium term top was formed at 1.2555 already. Decline from there should extend further to 61.8% retracement of 1.0339 to 1.2555 at 1.1186 and below. For now, even in case of rebound, we won't consider the fall from 1.2555 as finished as long as 1.1995 resistance holds.

Dollar and Euro are trading generally lower today, except versus Australian Dollar. The meeting between Donald "master of deal" Trump and Jean-Claude "the brutal killer" Juncker is closely watched. But it's highly unlikely to yield any results on trade. Trump's recent threat on tariffs on all Chinese products, the USD 12B aid programs to farmers, and the urge for farmers to be "patient", all suggested he's not going to back down from the current position. On the other hand, the EU has been clear all the way that they won't negotiate with a gun pointing to their heads. So, there is no ground for any compromise. Euro traders might look through the event to tomorrow's ECB rate decision and press conference. But sorry, it's not going to be inspirational neither.

In other markets, the global stock markets are rather mixed today. Asia was strong with Nikkei gained 0.46%, Hong Kong HSI up 0.90% and Singapore Strait Times up 1.04%. China Shanghai SSE composite closed down slightly by -0.07%, at 2903.65. European stocks, however, are trading generally in red, with FTSE down -0.85% at the time of writing. DAX is down -0.7% while CAC is nearly flat. Gold's consolidation continues today with another recovery and is back above 1230. WTI crude oil is trading at around 68.5.

EU preparing tariffs on USD 20B in US imports, as counter measures to auto tariffs

Ahead of the meeting with Trump, European Trade Commissioner Cecilia Malmstrom said that "we hope that it doesn't come to that and that we can find a solution. If not, the EU Commission is preparing a rather long list of many American goods. It would be around $20 billion." But the next round of EU tariffs will not target specific US states. Malmstrom said "it's more general goods such as agricultural products, machinery, high-tech products and other things."

According to reports, the EU originally considered tariffs on EUR 9B of US imports. But now, they're looking at going after double that amount, but at half the tariff rate. Also, such tariffs are expected to come into effect at least after US completes its section 232 national security probe on autos. It's expected to be completed in weeks, probably by late August/early September.

EU Oettinger to Trump: Drop your punitive tariffs, and we can talk about all tariff reductions

European Union Budget Commissioner Guenther Oettinger commented regarding EU-US trade relationship, ahead of Juncker's meeting with Trump. Oettinger said "firstly, our common line is that we expect the existing punitive tariffs to be lifted", referring the section 232 national security steel and aluminum tariffs. And, "then we are ready to discuss a reduction and restructuring of all tariffs in all sectors."

He added that "in this way, we want to avoid a further escalation of the trade conflict, and to avoid a trade war/" And, "one could try to untangle the existing tariffs and then … reduce tariffs for various goods and services." He added that " would be a negotiation that would be possible in half a year, and which we could start with the U.S. in the autumn."

German Ifo dropped 0.1 to 101.7 in July, match expectations

German Ifo Business Climate dropped 0.1 to 101.7 in July, inline with expectation. Current Assessment, on the other hand, rose 0.2 to 105.3, above consensus of 105.1. But Expectations dropped 0.4 to 98.2, below expectation of 98.7.

Ifo President Clemens Fuest said in the release that "companies were slightly more satisfied with their current business situation, but scaled back their business expectations slightly. The German economy continues to expand, but at a slower pace."

Also, "the business climate index fell in trade. Traders were increasingly sceptical about their six-month business outlook, but more satisfied with their current business situation. This effect was particularly marked in retailing."

Australian dollar lower after CPI miss, NZD down on trade deficit

Australia CPI rose 0.4% qoq, 2.1% yoy in Q2. The annual rate accelerated from Q1's 1.9% yoy but missed expectation of 2.2% yoy. RBA trimmed mean CPI was unchanged at 1.9%, inline with expectation. RBA weighted median CPI slowed to 1.9% yoy, down from 2.0% yoy, matched expectation. RBA is very clear with its stance that there is no compelling reason to raise interest rate in near term. And the inflation data certainly won't alter that position.

New Zealand trade balance came in at surprised NZD -113m deficit in June, versus expectation of NZD 200m surplus. Exports dropped from NZD 5.35B to NZD 4.91B. Imports also dropped from NZD 5.15B to 5.02B.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1652; (P) 1.1685 (R1) 1.1715; More.....

EUR/USD hardly moves today and is engaging in consolidative trading in range above 1.1507/9. Intraday bias remains neutral at this point. Stronger recovery cannot be ruled out as the consolidation extends. But in that case, upside should be limited by 1.1851 resistance to bring fall resumption eventually. On the downside , firm break of 1.1507 will resume larger down trend through 50% retracement of 1.0339 to 1.2555 at 1.1447.

In the bigger picture, EUR/USD was rejected by 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. And, a medium term top was formed at 1.2555 already. Decline from there should extend further to 61.8% retracement of 1.0339 to 1.2555 at 1.1186 and below. For now, even in case of rebound, we won't consider the fall from 1.2555 as finished as long as 1.1995 resistance holds.

Economic Indicators Update