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Daily Pivots: (S1) 128.58; (P) 129.07; (R1) 129.43; More....

EUR/JPY is staying in range of 127.13/130.33 and intraday bias remains neutral at this point. On the upside, break of 130.33 will resume the rebound from 124.61. And by then, EUR/JPY should have also taken out near term falling channel decisively. That would be a strong sign of trend reversal. In that case, further rise should be seen to 133.47 resistance for confirmation. On the downside, break of 127.13 will bring retest of 124.61 low instead.

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.

Daily Pivots: (S1) 0.8822; (P) 0.8844; (R1) 0.8859; More...

Intraday bias in EUR/GBP remains neutral for consolidation below 0.8890 temporary top. Downside of retreat should be contained by 0.8796 minor support to bring rally resumption. On the upside break of 0.8890 will resume the rebound from 0.8620 and target 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963).

In the bigger picture, EUR/GBP is staying in long term consolidation pattern from 0.9304 (2016 high). Such consolidation pattern could extend further. Hence, in case of strong rally, we'd be cautious on strong resistance by 0.9304/5 to limit upside. Meanwhile, in another decline attempt, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside.

Daily Pivots: (S1) 1.5725; (P) 1.5808; (R1) 1.5868; More....

Intraday bias in EUR/AUD remains neutral for the moment. Another rise is in favor with 1.5696 minor support holds. Above 1.5886 will target 1.6139/89 resistance zone. However, as the rebound from 1.5271 is not clearly impulsive yet and momentum isn't too convincing. Break of 1.5695 minor support could be an early sign of near term topping. In such case, focus will be back on 1.5425 support.

In the bigger picture, current development suggests that fall from 1.6189 is a corrective move and has completed at 1.5217 already. Key support levels of 1.5153 and 38.2% retracement of 1.3624 to 1.6189 at 1.5209 were defended. And medium term rise from 1.3624 (2017 low) is not completed yet. Break of 1.6189 will target 1.6587 key resistance (2015 high).

Daily Pivots: (S1) 1.1557; (P) 1.1572; (R1) 1.1586; More....

Intraday bias in EUR/CHF remains neutral at this point. Considering the structure of price actions from 1.1478, another fall is mildly in favor. Break of 1.1478 will urn bias to the downside for 1.1366 first. Break will resume the corrective fall from 1.2004. On the upside, above 1.1656 will resume the rebound from 1.1366 to 61.8% retracement of 1.2004 to 1.1366 at 1.1760. But we would expect strong resistance from there to limit upside.

In the bigger picture, EUR/CHF was solidly rejected by prior SNB imposed floor at 1.2000. Considering bearish divergence condition in daily and weekly MACD, 1.2004 should be a medium term top. And price action from 1.2004 is correcting the up trend from 1.0629. Such correction is expected to extend for a while and therefore, we're not anticipating a break of 1.2004 in near term. Another decline cannot be ruled out yet. But in that case, strong support should be seen at 1.1198 (2016 high), 61.8% retracement of 1.0629 to 1.2004 at 1.1154 to contain downside.

The British pound continues to press higher against the greenback, as the US dollar index comes under further selling pressure. The GBPUSD pair currently trades around the 1.3205 level, with further upside advancement likely while price holds above the 1.3194 level. Traders now look to the release of important UK PMI Services data, which comprises close to eighty per cent of the United Kingdom’s GDP.

The GBPUSD pair is intraday bullish while trading above the 1.3195 level, key resistance is found at the 1.3249 and 1.3300 levels.

If the GBPUSD pair trades below the 1.3194 level, further declines towards the 1.3144 and 1.3120 support levels remain possible.

The euro continues to advance higher against the greenback, as the EURUSD pair’s recent recovery from the 1.1600 level gathers pace. The EURUSD pair has been finding dip-buying demand on pullbacks, and retains an intraday bullish bias while trading above the 1.1674 level. Buyers will try to move price above the 1.1674 level, while intraday sellers will target the recent swing-low, at 1.1618.

The EURUSD pair is only intraday bullish while trading above the 1.1674 level, key resistance is found at the 1.1700 and 1.1724 levels.

If EURUSD pair fails around the 1.1674 level, key technical support is found at the 1.1642 and 1.1618 levels.

Chinese officials tried to calm the markets yesterday. After a meeting, People’s Bank of China (PBOC) officials said that they would not use the yuan as a negotiation tool in current trade conflict. This news follows days of declines in which the yuan reached the lowest level this year. As the trade conflict continues, currency manipulation is one way a country can aim to seek leverage. By lowering the value of its currency, China can make its exports more attractive. The services sector in China grew at the fastest pace this year according to the services PMI data released by Caixin. The PMI was 53.9, which was better than the expected 52.7.

The Australian dollar is continuing the rally which started yesterday after the Reserve Bank of Australia’s (RBA) interest rate decision. The AUD/USD pair is trading at 0.7408. The catalyst for the movement today was the retail sales data for the month of May. In that month, the sales increased by 0.4%, which was better than the expected 0.3%. The retail sales data is a good indicator of the performance of the economy because it surges when people have more disposable income. On the other hand, the country’s trade balance numbers disappointed. The balance for May was A$0.82 billion which was lower than the expected A$1.21 billion.

The dollar is under increased pressure after yesterday’s positive auto sales data. The data showed that in the first half of the year, auto sales jumped by 1.9%, with June sales increasing by 5%. The increase was mostly by Toyota, General Motors, and Fiat Chrysler which saw improved sales. Ford and Honda’s sales were flat while the sales of Nissan were 5% lower. This is an indication of the effect of the tax cuts. However, as the Trump administration raises tariffs, there is a likelihood that these sales could cool in the coming months.

EUR/USD

The EUR/USD pair is trading at 1.1663, almost unchanged from yesterday’s close. With the US markets being closed today, the key drivers for the pair will be politics and the EU services PMI numbers. As shown below, the pair is forming a symmetrical triangle pattern with the current price being the middle band of the Bollinger bands. Today, the pair will likely move sideways but if there will be a break-out, the price is likely to move higher to 1.1700 or lower to the 1.1590 level.

AUD/USD

The positive retail sales data pushed the Aussie to the highest level since Monday last week. The AUD/USD pair crossed the major resistance level of 0.7407. Today, with no major economic data expected and with volumes expected to remain low, the pair is likely to trade in a sideways direction. If the upward rally continues, the pair will likely find resistance at the 0.7440 level.

GBP/USD

After forming a triangular pattern, the GBP/USD pair broke-out to the higher side yesterday. The pair is now trading at the 1.3200 level, which is a major resistance point. The key catalyst for the pair will be Brexit news and the UK services PMI numbers which will be released in the morning. Positive PMI numbers will likely see the pair continue moving higher, potentially to the 1.3250 level.

The USD/JPY broke below the support trend line (dotted blue) of the uptrend channel after failing to break above the previous top at 111.40. Price is probably expanding the wave X (pink) correction but price would need to break below the next support trend line (blue) to confirm this wave pattern.

The USD/JPY seems to be building 5 bearish waves which could be part of a wave A (blue). A break above the channel could indicate a wave B (blue) retracement if price respects the Fibonacci retracement levels. A break above the 100% Fib invalidates the ABC pattern.

The EUR/USD moved up yesterday but price action was unable to break above the key resistance trend line (red). A bullish break is needed before wave C (purple) can be confirmed.

The EUR/USD is moving sideways in a tight consolidation zone. A bullish break could see price move up to the previous top which is indicated by the red box whereas a break below the support trend lines could indicate that a wave 4-5 patternis still active.

The EUR/USD triangle pattern is key for the next breakout. Price will need to either break below the support trend lines or resistance trend line for a new direction.

General Trend:

• Asian equity markets trade mostly lower; US stocks ended down in shortened session ahead of July 4th holiday
• Chinese and Hong Kong property shares decline
• Japanese chip equipment companies trade generally lower amid declines in shares of Micron: Tokyo Electron -5.1%, Advantest -4.7%, SUMCO -4.9%
• Nikkei weighted Fast Retailing declines, reported drop in monthly SSS
• Chinese Telecom ZTE rises after being given temporary relief by US government
• Samsung expected to report prelim Q2 results on Friday July 6th, Op profit expected to decline q/q
• Aussie rises after better than expected retail sales, later pares gain
• Australian PMI Services surveys paint mixed picture in June: AIG index hits record high, CBA index declined
• China Caixin PMI Services Index unexpectedly rose amid higher input costs
• Yuan (CNY) trades higher despite being fixed weaker by PBoC
• China PBoC Advisers comment on risks related to deleveraging measures
• BoJ’s Harada warns against early rate hike

Headlines/Economic Data

Japan

• Nikkei 225 opened -0.5%
• TOPIX Electric Appliances index -2.3%, Securities -0.8%, Marine Transportation -0.6%; Information & Communication +0.7%, Retail Trade +0.5%, Real Estate +0.5%
• (JP) Japan government said to see FY19 real GDP growth of 1.5% (vs 1-2% that was speculated) - Japanese Press
• (JP) JAPAN JUN PMI SERVICES: 51.4 V 51.0 PRIOR; COMPOSITE: 52.1 V 51.7 PRIOR
• (JP) 10 regional power companies in Japan are planning to sell approx. ¥1.7T in bonds during the current fiscal year (FY19), +17% y/y (the highest amount in 10-years) – Japanese Press
• (JP) Bank of Japan (BOJ) Harada: BOJ bold easing policy is having intended effects; need to continue current easing to reach 2% inflation

Korea

• Kospi opened -0.1%
• 005380.KR Hyundai/Kia expected to record Q2 net lower due to slowing sales in US and China - Korean press
• (KR) Bank of Korea (BoK) sells 2-year monetary stabilization bonds; yield 2.06% v 2.10% prior
• (KR) South Korea Jun Foreign Reserves: $400.3B (record high) v $398.9B prior

China/Hong Kong

• Hang Seng opened 0.0%, Shanghai Composite -0.4%
• Hang Seng Energy index -2.7%, Consumer Goods -2.3%, Property/Construction -2.2%, Industrial Goods -2.1%, Materials -2%, Info Tech -2%, Financials -0.9%
• 763.HK US Commerce Dept gives ZTE temporary authorization to resume some business activities until Aug 1st – press
• (CN) PBoC Financial Research Institute Head Sun Guofeng: Reiterates prudent, neutral monetary policy; reiterates 2018 monetary policy not overall loosening; RRR cut doesnt mean monetary policy easing
• (CN) Former PBoC Adviser said to issue warning about risks related to deleveraging - China Financial News
• (CN) China said to be pressuring the EU to issue a ‘strong’ joint statement against US President Trump’s trade policies at the upcoming Sino-European summit (July 16-17); some EU officials said to have concerns about the Chinese proposal – financial press
• (CN) China PBOC Gov Yi Gang: closely watching moves in fx market, reiterates to keep yuan basically stable and at reasonable level; reiterates 'prudent, neutral' monetary policy (after the close yesterday)
• (CN) China State Council financial stability and development committee: China is completely equipped with the favorable conditions to win the battle against major financial risks and counter external risks – Xinhua
• (CN) China PBoC set yuan reference rate at 6.6595 v 6.6497 prior (weakest setting since Aug 23, 2017)
• (CN) China PBoC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v skips prior; Net: CNY80B drain v CNY150B drain prior
• (CN) China PBOC has told mobile-payment providers that they need to deposit all customer funds with the central bank rather than elsewhere; proportion of funds to be placed with the central bank will rise incrementally from roughly 50% now to 100% by next year
• (CN) CHINA JUN CAIXIN PMI SERVICES: 53.9 V 52.7E; COMPOSITE: 53.0 V 52.3 PRIOR
• (CN) China plans to raise fuel standards for diesel vehicles from July 2019 – US financial press

Australia/New Zealand

• ASX 200 opened +0.1%
• ASX 200 Financials index -0.9%, Consumer Discretionary -0.7%; Telecom +1.1%
• (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: -5.0% v -1.2% prior
• (AU) Australia Jun AiG Performance of Service Index: 63.0 v 59.0 prior (record high)
• (AU) Australia Jun CBA PMI Services: 52.7 v 55.9 prior; Composite: 52.9 v 55.6 prior
• (AU) AFR notes uptick in Australia shadow banking in the residential developers market as big banks shy away
• (NZ) New Zealand Jun ANZ Commodity Price m/m: -1.0% v 1.5% prior (1st decline since Dec 2017)
• (AU) Australia sells A$800M v A$800M indicated in Nov 2029 bonds, avg yield 2.6094% v 2.7059% prior, bid to cover 3.50x v 3.62x prior
• (AU) AUSTRALIA MAY TRADE BALANCE (A$): 0.83B V 1.20BE; Exports m/m: +4% v -2% prior; Imports m/m: +3% v 0% prior
• (AU) AUSTRALIA MAY RETAIL SALES M/M: 0.4% V 0.3%E

Other Asia

• (MY) Officials in Malaysia have arrested former PM Najib - financial press

North America

• US equity markets ended lower in holiday shortened session: Dow -0.5%, Nasdaq -1.2%, S&P 500 -0.5%
• S&P500 Technology -1.2%, Telecom -1.2%
• Micron [MU]: Spokesperson: Micron has not yet been served with injunction in China; will not comment until receiving formal court notice
• T-Mobile [TMUS]: Officials from the US House said to call for 'full and robust' probe of transaction between Sprint and T-Mobile USA; cites Softbank's ties to China's Huawei - Japanese Press
• (US) Weekly API Oil Inventories: Crude: -4.5M v -9.2M prior
• (US) On Tuesday, the US Treasury 2 and 10 yield spread hit the flattest level since Aug 2007, the spread declined below 30bps - FT

Europe

• (DE) Bundesbank rejects monetary policy motivated by ECB investment - German press

Levels as of 01:30ET

• Hang Seng -0.9%; Shanghai Composite -0.4%; Kospi flat; Nikkei225 -0.2%; ASX 200 -0.5%
• Equity Futures: S&P500 +0.2%; Nasdaq100 +0.2%, Dax +0.1%; FTSE100 +0.1%
• EUR 1.1654-1.1679; JPY 110.27-110.63; AUD 0.7376-0.7426; NZD 0.6744-0.6779
• Aug Gold +0.4% at $1,258,/oz; Aug Crude Oil +0.6% at $74.60/brl; Sept Copper +0.3% at 2.934$/lb