Sample Category Title

Pivot (invalidation): 112.60

Our preference Short positions below 112.60 with targets at 112.20 & 112.05 in extension.

Alternative scenario Above 112.60 look for further upside with 112.85 & 113.10 as targets.

Comment The upward potential is likely to be limited by the resistance at 112.60.

Pivot (invalidation): 1.2980

Our preference Long positions above 1.2980 with targets at 1.3050 & 1.3080 in extension.

Alternative scenario Below 1.2980 look for further downside with 1.2955 & 1.2915 as targets.

Comment The RSI lacks downward momentum.

Pivot (invalidation): 1.1615

Our preference Long positions above 1.1615 with targets at 1.1665 & 1.1700 in extension.

Alternative scenario Below 1.1615 look for further downside with 1.1595 & 1.1575 as targets.

Comment The RSI lacks downward momentum.

Pivot (invalidation): 7274

Our preference nLong positions above 7274 with targets at 7861 & 7995 in extension.

Alternative scenario Below 7274 look for further downside with 7048 & 6913 as targets.

Comment The RSI lacks downward momentum.

The USD/JPY made a bearish reversal after hitting the -27.2% Fibonacci target at 113.23 and breaking the rising wedge chart pattern. Price is now showing strong bearish momentum which could indicate that the wave Y corrections have been completed and a new bearish swing is starting via a potential wave A (red). The next support trend line (blue) is visible around 111.

The USD/JPY could be creating a 5 wave pattern within wave A (red) but only if price does not retrace above the 61.8% Fibonacci retracement level. A break below the support trend line (blue) could indicate a bearish breakout and continuation for wave 5 (orange).

The onshore USD/CNY breached 6.81 earlier today as selling in Yuan continued. But on suspected intervention by state owned banks, USD/CNY quickly dropped through 6.8 handle and it's now back at 6.78.

The offshore USD/CNH also followed and dropped through 6.8 too.

The news and the development helped lifted the Shanghai SSE composite back into positive territory. It's now trading above 2% and is back above 2800. It's also helped lifted Hong Kong HSI by more than 400 pts back above 28200.

The pair stands at the back foot in early Friday’s trading, following sharp fall of over 100 pips late Thursday, which left new multi-month high at 113.17 and sidelined immediate bulls.

The greenback was hit by comments from US President Trump, who expressed concerns about dollar’s strength, which could put the US at a disadvantage.

Trump also showed worries Fed’s monetary tightening and potential impact on the US economy.

Combination of negative news and overbought techs sent the greenback significantly lower and completed Doji reversal pattern on daily chart, signaling further weakness as strong bullish sentiment weakened.

Thursday’s drop violated key near-term supports at 112.19/06 zone (16 July trough/Fibo 38.2% of 110.27/113.17) but failed to close below on first attempt.

Supports are reinforced by rising 10SMA (112.15) and sustained break lower is needed to confirm reversal and open way for further retracement of 110.27/113.17 upleg.

Daily RSI and slow stochastic reversed from overbought territory and head south, supporting scenario along with weakening momentum.

Break below 112 handle could extend weakness towards next strong supports at 111.38/28 (Fibo 61.8% / rising 20SMA).

Only return and weekly close above 113 handle would neutralize downside threats and shift focus higher.

Res: 112.62, 113.17, 113.38, 113.63
Sup: 112.05, 111.72, 111.38, 111.00

Rates: Sideways consolidation ranges hold firm

Core bonds gained ground yesterday, but remain stuck within narrow sideways consolidation ranges. Today's eco calendar is uneventful, suggesting risk sentiment or the dollar's performance will affect core bonds gyrations. We don't expect a change to the recent sideways trading pattern though. Low volume, summer trading conditions prevail.

Currencies: Trump comments on Fed block USD rebound

Yesterday, the dollar initially was in good shape. However, fortunes for the greenback changed after US president Trump criticized the Fed rate hikes. The dollar reversed earlier gains on the Trump's remarks. Today, markets will ponder the LT impact of Trump's comments. EUR/GBP is nearing the 0.8968 resistance area.

The Sunrise Headlines

• Yesterday, all major US stock indices lost ground. The Dow Jones underperformed (-0.53%). Asian markets are trading mixed. China outperforms, gaining up to 1.2% while Japan remains in the defensive (-0.5%).
• Breaking a White House tradition of avoiding monetary policy comments, president Trump criticised the Fed's rate hikes. “I'm not thrilled,” he said, “because we go up and every time you go up they want to raise rates again”.
• Amidst rising concerns about what the two leaders were discussing in Helsinki, president Trump invited his Russian colleague Putin for a second meeting.
• The Chinese yuan recovers from a slide after the country's central bank weakened the fixing rate by 0.9%. Meanwhile, a PBOC official overnight said China's debt increase now has stabilized under it deleveraging campaign.
• Japanese inflation remains modest in June as headline inflation stabilized at 0.7%. Core measures increased from 0.7% to 0.8% (ex food) but slowed from 0.3% to 0.2% (ex food and energy).
• Copper slumped as investor's fears increase that the US-Chinese trade conflict escalates into a global trade war. After hitting a 4-yr high in June, copper lost considerable ground, now heading for the biggest losing streak since Nov2015.
• Today's eco calendar is rather empty, containing only Canadian CPI and German PPI. Fed's Bullard is scheduled to speak

Currencies: Trump Comments On Fed Block USD Rebound

Trump blocks USD rebound.

Yesterday, the dollar initially was in good shape. Positive comments from Fed's Powell before Congress still supported the greenback. At the same time, a cautious risk sentiment and outflows away from EM currencies were also USD positive. US eco data were OK. EUR/USD fell temporarily below 1.16. USD/JPY tried to regain the 113 barrier. Later, president Trump changed fortunes for the USD as he criticised the Fed for raising interest rates. He also said that the strong dollar is putting the US in a disadvantage and referred to recent decline of the yuan. The US dollar reversed earlier gains. EUR/USD closed little changed at 1.1642. The decline of USD/JPY was more pronounced (close 112.47). Overnight, Asian equities opened soft, but sentiment improved later. The dollar shows somewhat of a diffuse picture in the wake of Trump's comments. The dollar is losing further ground against the euro (EUR/USD 1.1665 area) and the yen (USD/JPY 112.25). At the same time, the PBOC fixed the yuan weaker against the dollar. USD/CNY traded temporarily north of 6.80, but CNY rebounded during the session.

Today, the calendar in the US and in EMU is very thin. Markets will make a second reading of the Trump comments trying to assess what it really means for the dollar. The Fed will stick to its independence. Even so, the comments question/weaken the institutional context that makes the dollar a safe haven store of value. We don't draw firm conclusions from the Trump's comments yet, but they might be a slightly negative for the USD ST. Earlier this week, USD momentum improved slightly, but yesterday's price action suggest that a break below the 1.1510 range bottom won't be easy. EUR/USD holds in the middle of the 1.1510/1.1850 range and will still see no trigger to break this stalemate. The USD/JPY rally is clearly losing momentum.

Yesterday, sterling remained in the defensive. The Brexit debate became less prominent. However, UK retail sales were slightly disappointing. Sterling lost slightly further ground. EUR/GBP closed the session at 0.8946. Today, the UK public finance data are no market mover. EUR/GBP is nearing first important resistance at 0.8968. A good reason for the sterling decline at least to take a breather?

EUR/USD: Trump comments block USD rebound

EUR/USD

Current level - 1.1668

The outlook is already bullish, for a break through 1.1690, towards 1.1750 and 1.1790.

USD/JPY

Current level - 112.29

The sell-off after 113.18 peak shows a reversal of the upmove since 109.30 and the intraday bias is bearish below 112.60, for a slide towards 111.40.

GBP/USD

Current level - 1.3032

The reversal at 1.2960 signals a corrective rebound is underway, for a test around 1.3100.

Daily Pivots: (S1) 145.83; (P) 146.72; (R1) 147.28; More...

GBP/JPY's fall from 149.30 is still in progress and intraday bias stays on the downside. As noted before, consolidation pattern from 143.18 could have completed at 149.30 already. Deeper fall would be seen back to 143.18/76 support zone. On the upside, above 147.65 minor resistance will turn bias back to the upside for 149.30/99 resistance zone instead.

In the bigger picture, no change in the view that decline from 156.59 is 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. Meanwhile, break of 153.84 should confirm that the correction is completed and target 156.59 and above to resume the medium term up trend.