Sample Category Title

1.1646 is our pivot (invalidation) point.

Our preference As Long as 1.1646 is support look for 1.1680.

Alternative scenario Below 1.1646, expect 1.1633 and 1.1626.

Comment The RSI is above its neutrality area at 50. The MACD is below its signal line and positive. The pair could retrace. Moreover, the pair is trading above both its 20 and 50 MAs (respectively at 1.1654 and 1.1640).

Pivot (invalidation): 0.8890

Our preference Short positions below 0.8890 with targets at 0.8850 & 0.8835 in extension.

Alternative scenario Above 0.8890 look for further upside with 0.8900 & 0.8915 as targets.

Comment The RSI is mixed and calls for caution.

Our pivot (invalidation) point is at 6802.

Our preference The downside prevails as Long as 6802 is resistance.

Alternative scenario The upside breakout of 6802, would call for 6995 and 7109.

Comment The RSI is below its neutrality area at 50. The MACD is negative and below its signal line. The configuration is negative. Moreover, the pair is trading under both its 20 and 50 MAs (respectively at 6683 and 6697).

GBPUSD had an aggressive roller coaster move on Monday as it opened with a gap up and challenged a new one-month high, but finished the day in the red. Also, the cable almost touched the 50.0% Fibonacci retracement level of the upleg from 1.2100 to 1.4375, around 1.3180, but currently it remains above the 20-simple moving average (SMA) in the daily timeframe.

From the technical point of view, the Relative Strength Index (RSI) lost its positive momentum and bounced off the threshold of 50, pointing to the downside. The %K line of the stochastic oscillator completed a bearish crossover with the %D line in the overbought zone, indicating a strong downside pressure in price.

Should the market extend its bearish mode and slip below the 50.0% Fibonacci, support could be met between the lower Bollinger Band near 1.3090 and the 1.3040 barrier, taken from the low on June 28. Then, if the market attempts to break this zone, the next stop could come at the 61.8% Fibonacci around the 1.2900 psychological level.

In case of an upward movement, GBPUSD would likely meet resistance at the upper Bollinger band, currently at 1.3350. A break above the Bollinger band would ease further declines, while a climb above the 38.2% Fibonacci near 1.3475 would help turn the short-term bias to a bullish one.

In the medium term, the bearish outlook remains intact, with the moving averages all pointing down. Looking at the weekly timeframe, the 20-SMA is ready for a bearish crossover with the 40-SMA.

Cable (GBPUSD) took a hit yesterday as Boris Johnson resigned from the Cabinet following the earlier decision by David Davis to part ways with his post as Brexit Secretary. The initial move on the Davis resignation was for Cable to rally from 1.33000 up to 1.33500 but news of Johnson's departure sent the pair down to 1.31940. Jeremy Hunt replaced Johnson as Foreign Secretary, PM Theresa May was quick to right the ship saying that there would be no second referendum on Brexit but that the Cabinet agreed to step up preparations for a “No Deal” scenario. GBPUSD bounced to 1.32690 as reports came in that a no-confidence vote on May's leadership would not occur.

Elsewhere China and the Germany signed a Commercial Accord involving VW, Siemens, BASF and others and committed themselves to multilateral global trade through the World Trade Organisation rules. Chinese Premier Li stressed the need to fight protectionism. The pair also agreed to remain committed to the Iran Nuclear agreement securing Iranian Oil shipments and stabilizing the region. This pushes US President trump further to one side as he is against the Iran Deal and will impose sanctions on companies doing business with the country. Both Germany (and the EU) and China are being hit with US trade tariffs, so for them this comes as a natural response to US trade disruption. President Trump is to visit the UK later this week, with large scale protests expected.

Consumer Credit Change (May) came in at $24.56B against an expected $12.50B from a previous reading of $9.26B which was revised up to $10.27B. This time the data beat expectations after coming in under expectations for five months in a row. The beat was nearly double the forecast and shows a considerable pick up in credit taken out last in May. Increases in this metric are a sign of consumer confidence as consumers take on more debt and lenders feel confident issuing loans.

EURUSD is down -0.06% overnight, trading around 1.17422.
USDJPY is up 0.25% in the early session, trading at around 111.125
GBPUSD is down -0.17% this morning trading around 1.32328
Gold is unchanged in early morning trading at around $1,257.47
WTI is up 0.32% this morning, trading around $72.96

At 08:30 GMT, UK Industrial Production (May) is expected to be 0.5% (MoM) and 2.7% (YoY) against a previous -0.8% (MoM) and 2.9% (YoY). Manufacturing Production (May) is expected to be 0.7% (MoM) and 3.1% (YoY) against -1.4% (MoM) and 2.9% (YoY) previously. This figure had fallen under the zero mark showing a contraction on the monthly number but this is expected to be erased with today's data with a return to positive territory. The negative impact from Brexit is continuing to plague the economy as orders are delayed and production postponed. The UK will get a new data metric in the form of GDP (MoM) today. GBP pairs can move because of these data releases.

At 09:00 GMT, German ZEW Survey – Current Situation (Jul) is expected at 78.0 against a prior 80.6. ZEW Survey – Economic Sentiment (Jul) is expected to be -18.2 from -16.1 previously. These data points are expected to continue to soften as the economic data in Germany and the wider Eurozone disappoints. The deteriorating trade environment is also a headwind for business outlook. In April the sentiment reading dropped below zero and continues to decline. EUR crosses may be affected by this data.

At 12:15 GMT, Canadian Housing Starts s.a (YoY) (Jun) will be released with an expected number of 210K from a previous 196K last month. This data is showing a strong performance with indications that the headline number will beat expectations this month. CAD pairs can see an increase in price movement from this data.

At 17:00 GMT, ECB's Lautenschlager is expected to speak today at a scheduled event. EUR crosses may be affected by any comments made.

XAUUSD (1259.01): Gold prices extended the gains to hit the 1263 level of resistance. The bullish flag pattern seems to be validated but we expect a near term pullback. Gold prices are likely to retest the breakout level around 1256. A reversal off this level could signal further upside in price. However, gold prices will need to breakout above 1263 resistance level in order to target the 1273.47 region which marks the measured move of the bullish flag pattern.

USDJPY (111.11): The USDJPY currency pair was seen posting a strong reversal as price action moved back above the resistance level of 110Canada's housing starts and building permits report..62. The current gains are expected to hit the previous highs near 111.13. There is scope for price action to post a reversal here as USDJPY could settle in a range within the levels mentioned. A breakout from these levels could trigger the next direction in the currency pair.

EURUSD (1.1745): The EURUSD currency pair was seen giving up some of the gains made on Monday. After rallying to intraday highs of 1.1790, the common currency gave up part of the gains. In the near term, we expect the EURUSD to extend the declines toward 1.1688 where support is likely to be established. With price action trading steadily within the rising price channel, we expect to see a short term correction. A rebound off the 1.1688 support level could trigger renewed upside in price.

The British pound was seen losing 0.47% on the day on Brexit related developments. First, the UK’s Chief Brexit negotiator, David Davis resigned which was later followed by the UK’s foreign minister, Boris Johnson resigning as well.

The exit of the two key figures was however seen by many as the UK’s ability to opt for a soft Brexit with the EU.

On the economic front, data was limited on the day. German trade balance was seen at 20.3 billion euro, matching estimates and posting a slight increase from 19 billion euro registered the month before.

Looking ahead, the economic data for the day will see the start of the first release of the UK's monthly GDP numbers. Forecasts show that the economy expanded at a pace of 0.7% following a 0.5% decline the month before.

Simultaneously, the manufacturing, industrial and construction output reports will be coming out. All three sectors are expected to show a modest rebound in activity.

Data from the Eurozone is relatively quiet for the most part.

The NY trading session is light with the release of Canada's housing starts and building permits report.