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USDJPY: The pair looks to strengthen further as it close on Tuesday. On the downside, support lies at the 111.00 level where a break if seen will aim at the 110.50 level. A cut through here will turn focus to the 110.00 level and possibly lower towards the 109.50 level. On the upside, resistance resides at the 111.50 level. Further out, we envisage a possible move towards the 112.00 level. Further out, resistance resides at the 112.50 level with a turn above here aiming at the 113.00 level. On the whole, USDJPY faces further upside pressure.

The British Pound has been under significant pressure for the last few days after the Brexit complications escalated once again. This time, the key lies in the British ministers.

David Davis, the British Secretary of State for Exiting the European Union, resigned from his position because he was extremely against the exiting strategy promoted and supported by the Prime Minister Theresa May. Davis made a stand against keeping close trade and economic relations with the European Union. This issue, which is very important for the UK, is some kind of a “cornerstone” in the Brexit talks and the European Union knows how to use and take advantage of it when politicians start discussing financial compensations and legal boundaries.

Apart from this, Davis was disappointed by the fact that May and her supporters approved the strategy of UK’s behavior after the Brexit without his participation. Theresa May counts on the “soft” Brexit, which may cost more money, but implies keeping business relations intact, which is really necessary for the British companies and enterprises.

Davis was replaced by Dominic Raab, a member of Britain's Parliament. Raab is no stranger to the Brexit procedure: in the past, he worked both with Davis and Dominic Grieve, who had always been in favor of keeping the United Kingdom in the European Union. As a result, May’s new “top lieutenant” studied a case from the ground up.

The British Pound hasn’t been able to recover yet despite quite neutral fundamental background and the weakness of the American currency. Later in the afternoon, there will be many numbers from the United Kingdom, such as the Manufacturing Production and the GDP. In this light, the Pound may find some reasons for more active movements, especially if the published reports provide support.

The current technical picture of GBPUSD may be considered as a correctional uptrend. After breaking the resistance line of the descending channel, the price has started moving towards the resistance line of the projected channel. The target area may be between 1.3450 and 1.3530. Still, reaching one of the targets will depend on the short-term dynamics and the movement structure. If the pair keeps the current pace, the target will be at 1.3450. However, in case the instrument speeds up and breaks the local resistance level at 1.3363, it may grow and reach 1.3530. Another scenario implies that the pair may start a new downtrend after breaking the support level at 1.3200. In this case, the main short-term target will be the psychologically-crucial support level at 1.3000.

West Texas Intermediate (WTI) crude oil futures seem to have lost momentum since hitting the 75.24 multi-year high on July 3. Price action is at the moment taking place above the 20- and 40-simple moving averages in the 4-hour chart after they recorded a bearish cross but are currently pointing up.

Looking at momentum indicators, the RSI is lacking direction slightly above it neutral threshold of 50, suggesting that the market could keep consolidating in the near term. The MACD also supports this view in the positive territory but is currently embraced by its red trigger line.

If prices continue to head higher, resistance should come from the high of 75.24, identified by the July 3 top. A jump above this level would reinforce the medium-term bullish view and open the way towards the 161.8% Fibonacci extension level of 78.70 level of the downleg from 72.89 to 63.37.

However, should a downside reversal take form, immediate support will likely come from the 72.20 level. A break below this region would push oil prices towards the 71.00 handle.

When looking at the bigger picture, oil recorded the third bullish week in a row, following the rebound on the 63.37 barrier, signaling further gains in the next few sessions.

The Canadian dollar has posted slight gains in Tuesday trading. Currently, USD/CAD is trading at 1.3128, up 0.15% on the day. On the release front, Canadian construction data beat expectations. Housing Starts jumped 248 thousand, crushing the estimate of 195 thousand. This marked the highest gain since November. Building Permits followed the same trend, climbing 4.7%, compared to the estimate of 0.1%. This was the strongest gain in four months. The U.S will release JOLTS Jobs Openings, which is expected to climb to 6.88 million.

All eyes are on the Bank of Canada, which holds its monthly rate meeting on Wednesday. The markets are expecting that Bank policymakers will raise rates by a quarter-point to 1.50%, a level not seen since December 2008. BoC Governor Stephen Poloz said that the July rate decision would be based on economic data, and Friday’s strong employment data will be added ammunition in favor of raising rates at the upcoming meeting. The economy created 31.8 thousand jobs in June, well above the estimate of 22.3 thousand. Wage growth also looked strong, as hourly earnings gained 3.5% in June on an annualized basis.

U.S employment data was a mix on Friday, as job growth remained above the 200-thousand level, but wage growth faltered. Nonfarm payrolls dropped to 213 thousand, but this beat the estimate of 195 thousand. Average Hourly Earnings edged lower to 0.2%, shy of the estimate of 0.3%. There was a surprise as the unemployment rate climbed to 4.0%, above the forecast of 3.8%. The data demonstrates that the U.S labor market remains strong, and the economy continues to perform well. The markets remain bullish on U.S growth, despite uncertainty in Europe and elsewhere, as well as the growing threat of an all-out trade war between the U.S and China.

The Euro remains in red at the beginning of the US session on Tuesday and holds below daily cloud base, after being hit by downbeat German data earlier today. German ZEW data showed investor morale fell strongly in July and hit the lowest levels since August 2012. Political uncertainty in Germany and concerns about escalation of trade tensions were the key drivers. Negative signals are generating on probe below cloud base and south-turning slow stochastic and momentum, with close below daily cloud to complete reversal pattern on daily chart and signal further weakness. Broken cloud base now marks solid resistance which should cap and maintain negative near-term bias.

Res: 1.1762; 1.1790; 1.1840; 1.1854
Sup: 1.1710; 1.1690; 1.1665; 1.1650

Investors are likely to remain extremely wary of holding onto the Pound this week due to ongoing political uncertainty in the United Kingdom.

The sudden resignations of Foreign Secretary Boris Johnson on Monday and Brexit Secretary David Davis less than 24 hours earlier initially triggered concerns over greater political in instability in Westminster. Although fears seem to have somewhat faded today over Prime Minister Theresa May facing a leadership challenge after losing two key cabinet ministers, the Pound remains vulnerable to downside risks. An unanswered question lingering on the minds of many investors is whether Brussels will accept Theresa May’s new customs plan during the new round of negotiations scheduled for next week.

Market anxiety created from heightened political risk and ongoing Brexit uncertainty continues to be reflected in the Pound’s depressed price action. The fact that the currency struggled to find any support from the positive GDP figures, which rose 0.3% in May, continues to reflect how investors are more concerned with domestic political developments. Although expectations remain elevated over the Bank of England raising UK interest rates in August, political drama at home coupled with Brexit-related uncertainty could throw a spanner into the works. Such a scenario may result in the central bank leaving rates unchanged and ultimately, further damage buying sentiment towards the Pound.

Regarding the technical picture, the GBPUSD remains under pressure on the daily charts. Although prices have punched above the 1.3290 lower highs the bulls seem to be running out of steam, with the GBPUSD trading around 1.3254 as of writing. A solid daily close below the 1.3250 level could encourage a decline towards 1.3190 and 1.3130, respectively. Alternatively, prices need to break above 1.3358 to open a path to 1.3454.

Daily Pivots: (S1) 1.1724; (P) 1.1758 (R1) 1.1783; More.....

EUR/USD drops sharply today but stays above 1.1679 minor support so far. Intraday bias remains neutral first. On the downside, break of 1.1679 will indicate that corrective rise from 1.1507 has completed. Intraday bias should then be turned back to the downside for retesting 1.1507. Firm break there will resume larger fall from 1.2555. Above 1.790 will extend the corrective rice. But upside 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.

Daily Pivots: (S1) 1.3178; (P) 1.3271; (R1) 1.3350; More...

Intraday bias in GBP/USD remains neutral at this point. On the downside, break of 1.3189 minor support should confirm that corrective rise from 1.3048 has completed at 1.3362. And intraday bias will be turned to the downside for 1.3048 first. Break will resume larger fall from 1.4376 for 1.2874 fibonacci level next. In case of another rise through 1.3362, we'd expect strong resistance from 1.3471 to limit upside to finish the corrective rebound.

In the bigger picture, whole medium term rebound from 1.1936 (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 1.1936 (2016 low) to 1.4376 at 1.2874 next. We'll pay attention to the reaction from there to asses the chance of long term down trend resumption. On the upside, sustained break of 38.2% retracement of 1.4376 to 1.3048 at 1.3555 is needed to indicate medium term bottoming. Otherwise, outlook will remain bearish in case of strong rebound.

Daily Pivots: (S1) 0.9872; (P) 0.9902; (R1) 0.9945; More...

USD/CHF rebounds strongly today but it's staying in range of 0.9855/9991. Intraday bias remains neutral for the moment. . On the downside, break of 0.9855 will extend the corrective pattern from 1.0056 with another fall to 0.9787 and below. Nonetheless, we'd expect strong support from 38.2% retracement of 0.9186 to 1.0056 at 0.9724 to bring rebound. On the upside, firm break of 0.9991 will target a test on 1.0056 high.

In the bigger picture, rise from 0.9186 is seen as a leg inside the long term range pattern. For now, further rise is expected as long as 38.2% retracement of 0.9186 to 1.0056 at 0.9724 holds. Above 1.0056 will target 1.0342 (2016 high). In that case, we'd be cautious on strong resistance from 1.0342 to limit upside. However, sustained break of 0.9724 will dampen this bullish view and would at least bring deeper fall to 61.8% retracement at 0.9518.

Daily Pivots: (S1) 110.49; (P) 110.70; (R1) 111.05; More...

USD/JPY surges to as high as 111.34 so far today. Break of 111.13 suggests resumption of rise from 108.10. Intraday bias is now on the upside with focus on 111.39 key resistance. Decisive break there will resume whole rally from 104.62 low. That will also add credence to the case of medium term reversal and target 114.73 resistance for confirmation. On the downside, however, break of 110.34 will indicate near term reversal. And, the consolidation pattern from 111.39 would then start the third leg for 108.10 again before completion.

In the bigger picture, at this point, we're slightly favoring the case that corrective decline from 118.65 (2016 high) has completed with three waves down to 104.62. Above 111.39 will affirm this view and target 114.73 for confirmation. However, it should be noted that USD/JPY is bounded in medium term falling channel from 118.65 (2016 high). Sustained break of 61.8% retracement of 104.62 to 111.39 at 107.20 will likely resume the fall from 118.65 through 104.62 low.