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The Aussie dollar cracked 0.74 round-figure barrier (also Fibo 61.8% of 0.7442/0.7322 bear-leg and base of thick 4-hr cloud) on strong bullish acceleration in Asia on Friday.

The pair dipped to new 17-month low earlier this week but subsequent bounce which accelerated today, sidelined immediate downside threats.

Rally broke above pivotal barrier, provided by falling 10SMA and looks for bullish signal on weekly close above, while daily RSI and momentum turned north and support scenario.

Indicators show enough space for stretch towards key barrier at 0.7442 (22/25 Jun double-top), break of which would generate signal for stronger correction of 0.7676/0.7322 descend.

Meanwhile, bulls may hold in extended consolidation under thick 4-hr cloud which weighs on near-term action, with dips expected to hold above hourly cloud (spanned between 0.7355 and 0.7365) to keep fresh bullish bias in play.

Res: 0.7400, 0.7423, 0.7458, 0.7477
Sup: 0.7375, 0.7365, 0.7355, 0.7322

Summer lull is here

After three straight days of gains, the USD took a breather on Friday as trade war worries take a backseat. EUR/USD surged more than 0.50% after European countries finally reached a deal on migration. It is quite surprising to see that the market is cheering this achieved given the fact that investors spent the last two weeks focusing exclusively on trade tensions. However, it is always more fun to end the week on a positive note.

The equity investors are also enjoying the last trading day of the week as most of indices are wearing green. The Nikkei ended the day up 0.15%; Chinese stocks partially erased previous losses with the CSI rising 2.55%. Nevertheless, Australian and New Zealand stocks were the exception as they fell 0.33% and 0.62% respectively.

With central banks in the rear-view mirror, market participants will pay more attention to political developments and trade tensions during the summer. There is therefore a good chance that the market will remain in risk-off mode.

European leaders summit started on yesterday finally ended on a positive note. The European Council came up with a unanimous decision to relocate refugees among member states. Key measures decided during the meeting consist of a more effective control of EU external borders, halt smugglers routes and the possibility of setting up migrant centers at a later stage.

Accordingly, the announcement came in positively on the marketplace. The single currency is leading the way this morning, heading higher against major pairs while Euro Stoxx 50, CAC 40 and DAX indices are up +1.37%, +1.36% and +1.29% respectively. Overall, we maintain a positive view on the EU region, as political uncertainties around the EU easing slightly. The risk remains on UK side with regard to Brexit deadline agreement (March 2019).

The EUR/USD bullish momentum continues, currently trading at 1.1630 and approaching hourly resistance at 1.1666 (29/06/2018 high).

German inflation above the 2% mark for two months in a row

Slightly decreasing at 2.10% (prior: 2.20%), German inflation remains above the 2% threshold set by the European Central Bank, a rather positive signal for the German economy that remains worrisome amid its short dip in Q1 growth numbers (Q1 GDP y/y: +1.60%; prior: +2.30%), maintained trade war tensions and a decline in May retail sales.

Growing energy prices and decreasing revenues from non-specialized stores, wholesale and related consumption markets (-0.70% m/m) and non-specialized stores (-3.50%) suggest a strong decline in disposable income as of May, suggesting a possible downtrend in German growth 2018 forecast of 2%.

The pair hit new two-week high at 110.78 on Friday, supported by rally in EURJPY cross, extending recovery rally into fourth straight day.

Fresh advance probes through trendline resistance / Fibo 76.4% of 111.39/108.11 at 110.62, opening way towards 110.90 (15 Jun high), which guards key barrier at 111.39 (21 May peak).

The action is supported by formation of 5/200SMA Golden Cross and 5/100 bull-cross, with next week’s twist of weekly cloud expected to attract.

Formation of bullish engulfing on weekly chart is also expected to support bulls.

Weekly close above trendline resistance (the upper boundary of larger triangle) would generate bullish signal for final push towards 111.39 target.

Corrective dips are expected to hold above 200SMA to keep bullish stance.

Res: 110.90, 111.39, 111.49, 111.85
Sup: 110.63, 110.37, 110.18, 109.97

GBPJPY started the day in bullish territory and surpassed the 20-simple moving average (SMA) in the 4-hour chart. The pair has finally reversed to the upside in the near-term, however, it is still developing within a downtrend in the medium-term picture.

Momentum indicators in the 4-hour chart though are currently supporting that positive momentum is likely to weaken in the short-term. Specifically, the RSI is flattening above 50 and the MACD continues to distance itself above its red signal line in the bearish area. Moreover, the stochastic oscillator is turning lower in the overbought zone, suggesting a possible bearish movement.

Should the market continue the bullish bias, resistance could be met at the 23.6% Fibonacci retracement level of the downleg from153.80 to 143.20, around 145.70. If there is a jump above this region the next major resistance would come from the 146.20, which stands near the falling trend line.

To the downside, immediate support is being provided by the 143.75 hurdle. Further losses could push the pair towards the 143.20 key level, taken from the low on May 29.

The downward pattern that started in mid-April, however, may not change unless the market manages to crawl substantially above the descending line.

Sterling, the currency is down nearly -3% YTD
The Euro is the winner currency for us when we look at the G-10 currency table

Sterling, the currency is down nearly -3% YTD. The upcoming current account number and final GDP q/q/ data would be watched closely. The Q1 GDP is expected to come in at 0.1% and this would confirm some improvement but for the bank of England, it is more of a consumer spending, mortgage approval, inflation and unemployment story which matters the most. Any weakness in the consumer credit from previous month's reading of £1.8m would be deemed as an adverse element for the economy. As for the technical analysis, we are looking at the 1.30 level for the GBP-USD pair, and if this support holds, the odds would be skewed in favour of the uptrend. Under that scenario, it may not be any harm to target the level of 1.40 for the GBP-USD pair.

The Euro is the winner currency for us when we look at the G-10 currency table. It spiked against the dollar on the back of the news that the euro leaders have shown a united front. The EU came together and it resolved important issues such as trade and immigration. Together they have sketched a plan which would resolve the root cause of many of the qualms which traders are facing. Investors wanted the EU leaders to come up with an unwavering response to Trump’s protectionism policies and show that they stand together. Italy refused a ship of immigrants recently and that rattled many in the EU. However, the country promised to speed up the migrant process and distribute them evenly.

The SPDR gold trust's holding shows that investors are still dumping the precious metal.

The precious metal is on track to record its worst quarterly loss since the end of 2016 and third consecutive weekly loss. The SPDR gold trust's holding shows that investors are still dumping the precious metal. The data shows the holding stood at 820.51 or in other words down by 1.18 tonnes from the previous business day. The dollar index has lost some of its strength but we have not seen any meaningful move for the precious metal. Given that we have broken the 1250 support, it is likely that the price may test 1235 mark, the 50-day moving average on a quarterly chart.

EU leaders to come up with an unwavering response to Trump’s protectionism policies

The crypto king, Bitcoin is trading nearly one-third of its December 2017 price, clearly a very strong bear. The futures market for Bitcoin has brought one thing for Bitcoin, reduction in the volatility and it can be argued that Bitcoin may not see the kind of volatility it used to see it. Traders have been selling the crypto-currency king for the past 4 consecutive weeks. Switching it to the monthly chart, the picture shows that we have two consecutive months of selling, a trend which is not witnessed all the way back to mid-2016.

When it comes to the oil market, one element is pretty much clear that OPEC has started to bow to the US. We have doubts if Iran won't be able to sell the oil in the market despite the US pressure. It is possible that the Iranian oil customers may start to flee sooner just to be on the right side of the US and this is despite the fact the US has adopted its hardest stance when it comes to the protectionist policies. However, Iran only needs to convince only one major buyer, China to keep its oil flow going and given the US-China trade war situation, it may not be hard at all.

If there is one thing on which many can agree on is this that China hasn’t adopted its aggressive stance yet, it has many other high yielding option if the Trump administration continues to pressure China. Buying oil from Iran stands tall among other options. Thus, Iran is not in a horrible position at all. American allies do not hold the kind of relationship with Trump administration that they had during President Obama's term. Thus, bringing the Iranian oil export to zero may not be possible at all.

The Euro is the winner currency for us when we look at the G-10 currency table. It spiked against the dollar on the back of the news that the euro leaders have shown a united front. The EU came together and it resolved important issues such as trade and immigration. Together they have sketched a plan which would resolve the root cause of many of the qualms which traders are facing. Investors wanted the EU leaders to come up with an unwavering response to Trump’s protectionism policies and show that they stand together. Italy refused a ship of immigrants recently and that rattled many in the EU. However, the country promised to speed up the migrant process and distribute them evenly.

As for Sterling, the currency is down nearly -3% YTD. The upcoming current account number and final GDP q/q/ data would be watched closely. The Q1 GDP is expected to come in at 0.1% and this would confirm some improvement but for the bank of England, it is more of a consumer spending, mortgage approval, inflation and unemployment story which matters the most. Any weakness in the consumer credit from previous month's reading of £1.8m would be deemed as an adverse element for the economy. As for the technical analysis, we are looking at the 1.30 level for the GBP-USD pair, and if this support holds, the odds would be skewed in favour of the uptrend. Under that scenario, it may not be any harm to target the level of 1.40 for the GBP-USD pair.

The precious metal is on track to record its worst quarterly loss since the end of 2016 and third consecutive weekly loss. The SPDR gold trust's holding shows that investors are still dumping the precious metal. The data shows the holding stood at 820.51 or in other words down by 1.18 tonnes from the previous business day. The dollar index has lost some of its strength but we have not seen any meaningful move for the precious metal. Given that we have broken the 1250 support, it is likely that the price may test 1235 mark, the 50-day moving average on a quarterly chart.

Week

The DAX30 stock index made a strong bearish fall this week but price is now approaching a key support zone.

A bearish break below the support trend line could confirm the continuation of the bearish C (orange) and the start of a larger bearish correction.

Day

The DAX bounced at the 78.6% Fibonacci resistance level of wave B (orange). The current momentum is probably a bearish wave 3 (dark red) but price will need to break below the support trend line (blue) otherwise an ABC wave pattern and triangle chart pattern is possible too. A bearish breakout could see price move towards Fib targets.

Day2

This image shows a zoomed in version of the daily chart. The past several days showed a big fight between bulls and bears as the last two daily candles had big wicks on both the tops and bottoms. A break above the bottom of wave 1 (red) would invalidate the wave 1 and indicate a larger corrective pattern. A bearish break below the wicks could indicate a wave 3 continuation.

Cable was up in early trading on Friday, dragged by Euro's advance on migration deal, but recovery was so far limited by falling thick hourly cloud which continues to weigh. Initial bullish signals were generated on daily RSI reversal from oversold territory and formation of bullish divergence, along with 14-d momentum turning north, but more upside action is required to confirm reversal. Falling 10SMA marks pivotal barrier at 1.3188, break of which is needed to provide relief and sideline immediate bears for further recovery. Overall picture remains firmly bearish and sees current action as positioning for final attack at 1.3038/30 targets (03 Nov 2017 low/psychological support), with extended upticks on end-of-week profit-taking, expected to stall under falling 20SMA (1.3274). UK GDP and CA data are key events for sterling today.

Res: 1.3161, 1.3188, 1.3213, 1.3239
Sup: 1.3101, 1.3065, 1.3049, 1.3038

The Euro accelerated higher in Asia on Friday after the EU leaders reached an agreement on migration. The rally broke through pivotal 10SMA barrier (1.1614), sidelining threats for retest of key support at 1.1508 (21 Jun low) as past three-day weakness found footstep at 1.1527 before bouncing. Bulls pressure next pivotal barrier at 1.1670 (converged 20/30SMA's) after retracing over 61.8% of 1.1720/1.1527 bear-leg and shifting near-term focus higher. Sustained break here is needed to confirm reversal and open way for retest of week's high at 1.1720 (posted on Tuesday) and weekly cloud top at 1.1746, which marks key near-term resistances. Daily RSI and momentum turned north, supporting the advance, with broken 10SMA expected to hold and maintain fresh bullish bias. Today's calendar is full with focus on German labor data and EU inflation numbers, which could further influence Euro's performance after downbeat German retail sales, released earlier this morning, showed minor impact on the single currency.

Res: 1.1670, 1.1700, 1.1720, 1.1766
Sup: 1.1614, 1.1600, 1.1558, 1.1527