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Daily Pivots: (S1) 130.12; (P) 130.54; (R1) 131.18; More....

EUR/JPY's rally resumes after brief consolidation and reaches as high as 131.17 so far. Intraday bias is back on the upside to extend the rise from 124.61, targeting 100% projection of 124.61 to 130.33 from 127.13 at 132.85 next. On the downside, below 129.90 minor support will turn bias neutral again to bring consolidation.

In the bigger picture, for now, EUR/JPY is holding above 124.08 key resistance turned support. Fall from 137.49 could be proven to be a correction. Decisive break of 133.47 resistance will confirm its completion and should extend the rise from 109.03 (2016 low) through 137.49 high. However, firm break of 124.08 will confirm trend reversal. That is, whole rise from 109.03 (2016 low) has completed at 137.49 already. In that case, deeper fall should be seen back to 61.8% retracement of 109.03 to 137.49 at 119.90 and below.

The US dollar had moved to its highest trading level against the Japanese yen currency since January this year, as buyers finally breached the important former swing-high, at 111.39. The strong technical breakout has provoked a fresh wave of buying in the USDJPY pair, with price now trading above the 112.00 level. The bullish sentiment surrounding the pair is likely to remain intact while price holds above 111.39 level.

The USDJPY pair is now strongly bullish while trading above the 111.39 level, key resistance is found at the 112.40 and 113.10 levels.

If the USDJPY pair moves below the 111.39 level, sellers will likely test towards the 111.00 and 110.80 support levels.

Yesterday, Ethereum continued to fall reaching a low of $415. It is currently trading at $430. This is disappointing for crypto fans who expected the rally started last week to continue.

The current decline was not triggered by government regulation changes or bearish comments from top investors. The only major news reported in the past few days was the hacking of Bancor, a cryptocurrency exchange based in Israel.

The exchange hack was significant as it yet again raised concerns regarding crypto security. In recent days, cryptocurrencies worth hundreds of millions of dollars have been stolen, resulting in negative press and increased worries regarding digital assets.

In other news, crypto fans gathered in Hong Kong for the RISE conference which started on 9 July 2018 and will conclude today (12 July 2018). The event attracted major panellists including Michael Novogratz (a leading Wall Street figure), Jacky Wong (from Wall Street Journal) and Joseph Rubin (the CEO of Galaxy Digital). During the event, Novogratz shared his positive crypto views stating that Bitcoin was likely to become digital gold while Ethereum will become a crypto-fuel for decentralized systems.

The current ETH/USD price is $430, which is at the same level as the 25 and 50-day moving average. It is also at the middle level of the Bollinger Bands with the RSI at 48. Therefore, at this point, the pair could continue moving lower to test the $400 support level.

Economic data is back in focus Thursday, with reports from Europe and the United States set to headline an active newswire. Investors will also get a small dose of monetary policy speculation in the form of ECB meeting minutes and a Federal Reserve speaker.

The German government will kick off the session with a final estimate of June consumer inflation. The consumer price index (CPI) is projected to rise 0.1% month-on-month and 2.1% annually. The harmonised index of consumer prices (HICP) is projected to grow 2.1% compared with 12 months earlier.

France will also issue final CPI figures for June at 06:45 GMT. The EU-harmonised CPI inflation rate is forecast to grow 2.4% annually.

Shifting gears to Brussels, the European Commission's statistical agency will report on industrial production at 09:00 GMT. Output across Eurozone factories likely rose 1.2% in May following a 0.9% drop the month before. That translates into a year-over-year growth rate of 2.1%.

At 11:30 GMT, the European Central Bank (ECB) will release the account of its most recent policy meeting, where officials unveiled a plan to wind down their record stimulus program.

The North American session will begin with a myriad of developments, chief among them being US CPI figures. Consumer inflation in the world's largest economy likely rise 0.2% for June and 2.9% annually. So-called core inflation, which strips away food and energy costs, is projected to climb 2.3% year-over-year.

At the same time as the CPI report, the Labor Department will unveil weekly jobless claims numbers. The number of Americans filing for first-time unemployment benefits likely fell by 6,000 to 225,000 in the week ended 3 July.

Federal Open Market Committee (FOMC) member Neel Kashkari is scheduled to deliver a speech at 12:30 GMT.

EUR/USD

Europe's common currency nosedived on Wednesday, as EUR/USD fell nearly 80 pips from its intraday high. The pair now sits at 1.1678. The euro-dollar exchange rate is in a bearish predicament insofar as prices hold below 1.1700. If price action penetrates this level, immediate resistance is likely found at 1.1725.

USD/CAD

The Canadian dollar suffered fresh losses on Wednesday even after its central bank in Ottawa voted to raise interest rates for the fourth time in 12 months. USD/CAD is now trading above 1.3200 for the first time in over a week after tacking on more than 150 pips following Wednesday's intraday low of 1.3068.

GBP/USD

Cable was another dollar casualty on Wednesday, as the pair broke below 1.3200 for the first time since early July. GBP/USD is currently trading just above the 1.3200 level, though negative sentiment surrounding Brexit could leave the pair exposed to further losses in the short run.

Daily Pivots: (S1) 0.7333; (P) 0.7397; (R1) 0.7432; More...

Intraday bias in AUD/USD remains on the downside for retesting 0.7309. As noted before, corrective recovery from there has completed at 0.7483 already. Sustained break of 0.7328 cluster support (61.8% retracement of 0.6826 to 0.8135 at 0.7326) will extend the larger fall from 0.8135 to 0.7158 support next. On the upside, above 0.7429 minor resistance will delay the bearish case and extend the correction with another rise through 0.7483. But still, upside should be limited below 0.7676 resistance to bring fall resumption eventually.

In the bigger picture, medium term rebound from 0.6826 is seen as a corrective move that should be completed at 0.8135. Deeper decline would be seen back to retest 0.6826 low. This will now remain the favored case as long as 0.7676 resistance holds.

Daily Pivots: (S1) 1.3111; (P) 1.3163; (R1) 1.3262; More...

Despite dipping to 1.3063, USD/CAD drew strong support from 1.3067 key resistance turned support and rebounded. Break of 1.3173 indicates that corrective pull back from 1.3385 has completed already. Intraday bias is turned back to the upside for retesting 1.3385 first. Break will resume larger rally to 1.3685 fibonacci level. In case of another retreat, we'd continue to extend strong support from 1.3067 to contain downside.

In the bigger picture, as long as channel support (now at 1.2838) holds, we'll holding to the bullish view. That is, fall from 1.4689 (2015 high) has completed at 1.2061, ahead of 50% retracement of 0.9406 (2011 low) to 1.4689 (2015 high) at 1.2048. Further rally should be seen for 61.8% retracement of 1.4689 to 1.2061 at 1.3685 and above. However, sustained break of the channel support will argue that rise from 1.2061 has completed and will bring deeper fall to 1.2526 support to confirm.

EUR/USD

Current level - 1.1680

The bias is negative, for a slide towards 1.1600. Crucial on the upside is yesterday's peak at 1.1755.

USD/JPY

Current level - 112.20

The break through 111.40 peak clearly shows, that the prolonged consolidation since the end of May is over and the pair will challenge 114.50 resistance zone. Intraday, the bias is also positive, for a rise towards 112.90.

GBP/USD

Current level - 1.3205

The consolidation pattern above 1.3200 is over and the outlook is negative, for a slide towards 1.3100, en route to 1.3040.

Daily Pivots: (S1) 1.1641; (P) 1.1699 (R1) 1.1734; More.....

EUR/USD's break of 1.1679 minor support suggests that corrective rise from 1.1507 has completed at 1.1790 already. Intraday bias is turned back to the downside for retesting 1.1507 first. Break will resume larger fall from 1.2555. In that case, EUR/USD should drop through 50% retracement of 1.0339 to 1.2555 at 1.1447 to 61.8% retracement at 1.1186. On the upside, in case of another recovery, upside should be limited by 1.1851 resistance to bring reversal.

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.

AUDUSD short-term Elliott Wave view suggests that the decline to $0.7308 low ended Intermediate wave (A) of a possible Zigzag structure coming from 6/06/2018 peak ($0.7676). Above from there, the 3 waves recovery to $0.7484 high ended Intermediate wave (B) bounce. The internals of that Intermediate wave (B) unfolded as Elliott Wave Zigzag correction where Minor wave A ended at $0.7424 high. Subdivision of Minor wave A of (B) unfolded as 5 waves where Minute wave ((i)) ended at $0.7342. Minute wave ((ii)) ended at $0.7312, Minute wave ((iii)) ended at $0.7404. Then Minute wave ((iv)) ended at $0.7368 and Minute wave ((v)) of A ended at $0.7424 high.

Down from there, Minor wave B ended at $0.7359 low. Up from there, Minor wave C of (B) ended at $0.7484 high with internals also unfolded in another 5 waves structure. Minute wave ((i)) ended at $0.7408. Minute wave ((ii)) ended at $0.7371, Minute wave ((iii)) ended at $0.7483. Then Minute wave ((iv)) ended at $0.7452 and Minute wave ((v)) of C ended at $0.7484 high. This rally also completed Intermediate wave (B) bounce there, after reaching the 100%-123.6% Fibonacci extension area of Minor A-B at $0.7475-$0.7503 area. Near-term, while bounces fail below there, expect pair to resume lower in Intermediate wave (C). However, a break below $0.7305 low remains to be seen to validate this view & until than a double correction higher in Intermediate wave (B) bounce can’t be ruled out. We don’t like buying it.

AUDUSD 1 Hour Elliott Wave Chart

Market movers today

Markets will continue to focus on the escalating US-China trade war and UK politics.

ECB minutes today will be more interesting than usual. At the June meeting, the ECB decided to end its APP by the end of the year and strengthen forward guidance on rates, where they will remain at present levels ‘at least through summer 2019'. We look in particular to the discussion to end the APP and rate guidance, particularly in light of yesterday's sources, on top of the normal economic and inflation assessment.

Swedish inflation and Riksbank minutes released. In our view, the probability of inflation surprising on the upside of the Riksbank forecast is rather slim. See preview for details. We still look for the Riksbank to delay the first hike on downside inflation surprises.

US CPI and initial jobless claims due. In terms of the former, our expectation of 0.2% m/m in June is in line with consensus and should not be a game changer for the Fed.

Selected market news

The escalation of the trade dispute has remained in focus even in the absence of any new material developments. China has vowed to retaliate to US measures and said yesterday that it is considering ‘other options' than tariffs; this could possibly take the form of providing US competitors with better access to the Chinese market. That said, the prospect of new talks between the US and China have been raised by officials on either side. Separately, Trump continued the confrontational rhetoric at the NATO summit when reiterating the US's dissatisfaction with the uneven contributions to the alliance. USD ended the day markedly stronger against both EM and majors including JPY as US PPI and wholesale-trade figures came out strong.

An ECB sources story that governing council members are split on the timing of first hike hit the wires on yesterday afternoon. The ECB has said it will keep rates at current levels through the summer of 2019, which the market has taken to imply beyond the September meeting, but some members reportedly said that the phrase should not rule out a first hike as early as July next year. The story helped lift EUR temporarily. Today's ECB minutes will be interesting in this light; we continue to call for a first hike in December 2019.

UK's Brexit-related government unrest continues to linger. Yesterday, sources suggested that EU officials are telling businesses that the chances of a ‘no-deal' Brexit are as high as 50% and are urging companies to ramp up their contingency plans. Separately, as widely expected, the Bank of Canada hiked its policy rate by 25bp. The estimated impact of protectionist policies was fairly moderate, leaving an overall hawkish impression.

The price of crude oil plummeted last night with Brent down close to 7% to now trade around USD74.50/bbl as the combination of USD strength and trade war fears grabbed the market amid news of better supply prospects near term. Following US losses, equities have been cheerful in the Asian session with notably Chinese indices taking back yesterday's losses. US Treasury yields are slightly lower with the 10Y now just above the 2.85% level.