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EURUSD (1.1568): The EURUSD currency pair was seen extending the declines on Wednesday following the bearish engulfing candlestick pattern formed the day before. Price action was seen falling sharply on the day to test the support level at 1.1540. On the 4-hour chart, the Stochastics oscillator has been posting a hidden bullish divergence with a lower low while price action as formed a higher low. This potentially indicates a move to the upside. Price action will need to clear the support area of 1.1610 1.1540 region in order to confirm the upside.

Daily Pivots: (S1) 126.99; (P) 127.67; (R1) 128.08; More....

EUR/JPY is staying above 16.63 minor support and intraday bias remains neutral first. Break of 126.62 will resume the fall from 130.33 and target a test on 124.61 low. This will also affirm the case that larger decline from 137.49 is still in progress. On the upside, break of 130.33 resistance will confirm resumption of rise from 124.61. That will also revive the case of near term reversal and turn bias to the upside for 133.47 key resistance.

In the bigger picture, despite rebounding strongly ahead of 124.08 resistance turned support, there was no clear follow through buying. Note again that there is bearish divergence in daily MACD. 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. Nonetheless, decisive break of 133.47 key resistance will likely extend the rise from 109.03 through 137.49 high.

Daily Pivots: (S1) 0.8793; (P) 0.8811; (R1) 0.8829; More...

EUR/GBP rises to as high as 0.8837 so far with focus now on 0.8844 resistance. Firm break there will confirm resumption of rebound from 0.8620. In such case, further rise to be seen to 0.8967 cluster resistance (50% retracement of 0.9305 to 0.8620 at 0.8963) next. Rejection by 0.8844 will extend recent sideway trading. Still, further rally is expected as long as 0.8693 support holds.

In the bigger picture, for now, the decline from 0.9305 is seen as a leg inside the 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) 1.5682; (P) 1.5755; (R1) 1.5813; More....

A temporary top is formed again at 1.5823 and intraday bias is turned neutral. Another rise is expected as long as 1.5617 holds. Above 1.5823 will extend the rebound from 1.5271 towards 1.6139 high. However, break of 1.5617 will turn bias to the downside for 1.5425 minor support first.

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 rise medium term rise from 1.3624 (2017 low) is not completed yet. Break of 1.6189 will target 1.6587 key resistance (2015 high).

The RBNZ's monetary policy meeting held in the overnight session showed that the central bank left the overnight cash rate unchanged at its meeting as widely expected.

The New Zealand dollar was seen falling sharply on the RBNZ’s decision as a result.

The day ahead is relatively quiet with the U.S. trading session marked by the release of the final GDP figures from the U.S. Economists forecast no changes to the GDP as the final first quarter GDP is expected to be confirmed growing at a pace of 2.2%.

Among central bank speeches, the BoE's Andy Haldane will be speaking followed by the FOMC member Bostic.

Daily Pivots: (S1) 1.1500; (P) 1.1529; (R1) 1.1550; More....

EUR/CHF is staying in tight range above 1.1478 and intraday bias remains neutral for the moment. Another decline remains mildly in favor with 1.1585 minor resistance intact. Below 1.1478 will target 1.1366 first. Break will resume the larger corrective decline from 1.2004. On the upside, above 1.1585 will likely extend the rebound from 1.1366 through 1.1656. But in that case, upside should be limited by 61.8% retracement of 1.2004 to 1.1366 at 1.1760.

In the bigger picture, current development suggests solid rejection 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 euro has dropped to a new weekly trading-low against the greenback, as German political resurfaced and the US dollar index soared back above the key 95.00 level. The EURUSD pair has so far found interim technical support around the 1.1540 level, with the MACD indicator across the four-hour time frame pointing to further downside. Traders now look to key eurozone Inflation data and the 2018 trading-high on the US dollar index.

The EURUSD pair is strongly bearish while trading below the 1.1599 level, key intraday support is located at the 1.1540 and 1.1507 levels.

If EURUSD buyers move price back above the 1.1599 level, price could correct back towards the 1.1644 and 1.1674 levels.

The British pound has fallen towards the lowest trading of 2018 against the US dollar, after Bank of England Governor Mark Carney warned of growing global risks on Wednesday. The GBPUSD pair remains under selling pressure, as traders closely watch the current yearly trading-low, at 1.3101. Sellers will try to break the 1.3101 support level, while buyers will look for a bullish double-bottom pattern above 1.3101.

The GBPUSD pair will turn strongly bearish below the 1.3101 level, key support is found at the 1.3065 and 1.3033 levels.

If the GBPUSD pair trades above the 1.3142 level, key technical resistance is found at the 1.3160 and 1.3193 levels.

Economic data will drive headlines on Thursday, with key figures from both sides of the Atlantic scheduled for release.

Action begins at 06:00 GMT with a report on German consumer confidence courtesy of GfK. Germany's leading index of consumer sentiment is projected to decline slightly to 10.6 in July from 10.7 the previous month.

Three hours later, Italy will release its headline consumer inflation report for June. The final consumer price index (CPI) is forecast to rise 1.3% year over year.

At 09:00 GMT, the European Commission's statistical agency will release a bevy of sentiment indicators, including: economic sentiment, business climate, industrial confidence, consumer confidence and services sentiment. The July readings are expected to change very little compared with the previous month.

The German government will release final consumer inflation data at 12:00 GMT. Consumer inflation in Europe's largest economy is expected to weaken slightly to 2.1% annually in June, based on the harmonised index of consumer prices (HICP).

Shifting gears to North America, the US Department of Labor will report on initial jobless claims at 12:30 GMT. The number of Americans filing for first-time unemployment benefits is projected to rise 2,000 to a seasonally adjusted 220,000 in the week ended 22 June.

The Commerce Department is scheduled to release its third and final estimate of first-quarter gross domestic product (GDP) at 12:30 GMT. The world's largest economy likely expanded 2.2% annually on the quarter, matching the previous estimate.

At 15:00 GMT, the Federal Reserve Bank of Kansas will deliver the June edition of its manufacturing index.

In terms of monetary policy, Federal Open Market Committee (FOMC) member Raphael Bostic will deliver a speech at 16:00 GMT. Fed Bank of St. Louis President James Bullard is also scheduled to speak.

EUR/USD

Europe's common currency continued lower on Wednesday and is now threatening the year-to-date swing low set on 30 May. EUR/USD is currently trading at 1.1560, having declined more than 100 pips from Wednesday's high. At present, the pair faces immediate support at 1.1530, the low from 19 June. Resistance is likely found up ahead at 1.1720, which is the high from Wednesday.

GBP/USD

Cable extended its losing streak in mid-week trading, falling to the lowest level since November. GBP/USD is currently trading in the low 1.3100 region, with the bears eyeing a breakdown below 1.3040. On the flipside, immediate resistance is likely seen at 1.3235.

USD/CAD

The Canadian dollar plunged on Wednesday, as rising oil prices failed to lift the commodity-sensitive loonie. USD/CAD maxed out at 1.3366, its highest level of the year. The pair would later settle around 1.3330. The Fed's hawkish stance on the economy and interest rates continue to propel the greenback higher.

Rates: EM stress lifts core bonds

Dollar strength weighted on EM assets, triggering risk aversion on a larger scale. Core bonds profited with US Treasuries outperforming German Bunds. German inflation data lost market relevance after the ECB's recent signal, suggesting focus remains on the likes of BRL, ZAR, IDR,CNY,…

Currencies: Vicious circle of EM risk-off and USD strength to persist?

Yesterday, the dollar extended gains. The move was supported by ongoing stress/capital outflows from emerging markets. Today, eco data will probably be of second tier importance. The EU summit is a wildcard. Key question remains whether EM stress will persist. If so, the dollar will remain in the driver's seat. EUR/USD might go for a test of the 1.1510 support.

The Sunrise Headlines

• US equity markets opened positive yesterday but eventually closed with losses. Nasdaq (-1,54%) underperforms the bunch. Asian stock markets opened mixed this morning. Japanese markets lose marginally but China recovers.
• With the EU summit starting today, Greece's prime minister Tsipras has backed German Chancellor Angela Merkel in her migration proposal. This sudden support is needed as other EU countries, like Italy, already opposed to the plan.
• Japanese retail sales have fallen at the fastest pace since 2016, with a month-on-month decline of 1.7% while a decline of 0.8% was expected. The retail sales of April were also downwardly revised from 1.4% to 1.3%.
• The EU is preparing for a no-deal Brexit, by elaborating a contingency plan in case no deal is found with UK's departure of the bloc. “The parachute”, as it is named, will prepare for issues in transport, financial services and customs.
• The Reserve Bank of New Zealand kept the official cash rate at 1.75%, as expected. Governor Adrian Orr said the RBNZ is prepared to cut them if needed, since economic growth slows and inflation remains below target.
• Domestic opposition against US President Trump's tariffs on US import is growing, with the American Institute for International Steel taking action in the US Court of International Trade to forfeit the tariffs on steel.
• On today's eco calendar the US publishes Initial Jobless Claims. In the EU, the Economic Confidence of the EMU for June is released, as is German CPI EU Harmonized MoM/YoY. BoE chief economist Haldane and FED's Bullard speak

Currencies: Vicious Circle Of EM Risk-Off And USD Strength To Persist?

Vicious circle of EM risk-off and USD strength

On Wednesday, dollar strength prevailed. This reinforced a risk-off trade on most markets (except for Europe). The sell-off in several EM currencies, including the yuan, was an important factor for USD outperformance and for weakening risk sentiment. The EUR/USD rebound at the end of last week and early this week had stalled. EUR/USD again took the way south, mostly on dollar strength rather than on euro weakness. The US administration taking a less aggressive stance on foreign investment in the US was not enough to reverse the US risk-off sentiment. So were decent US eco data. USD strength prevailed and EUR/USD dropped to the mid 1.15 area. Understandably, the gain in USD/JPY was more modest due to the risk-off and declining core yields. The pair closed the session modestly higher 110.26. Overnight, Asian markets still show a mixed, unconvincing picture. Most regional equity markets are again trading in negative territory. China outperforms, but the gain is very small given recent losses. The decline of the yuan slows (USD/CNY 6.6170), but there is no trend reversal yet. The USD rally is taking a breather. EUR/USD trades in the 1.1560 area. USD/JPY hovers near 110.30. The trade-weighted dollar is holding near recent peak (95.30).

Today, the EC confidence data and German CPI will be published. Confidence is expected to ease slightly. German inflation is expected at 0.2% M/M and 2.1% Y/Y (from 2.2%). The impact of inflation data for (FX) markets has probably diminished after the ECB meeting. US data (final GDP claims) are probably not that important. Key question is whether the vicious circle of a strong dollar and EM (and US) risk-off persists. For now, we see no trigger to halt this trend. If so, a retest of the 1.1510 support, or even a break is possible. Next supports come in at 1.1448 & 1.1187 (50% and 62% retracement). There will be plenty of headlines from the EU summit. They might be a slight additional negative for the euro, but it will probably be of second tier importance. The rise in USD/JPY might be less outspoken due global uncertainty.

Yesterday, sterling remained in the defensive. EUR/GBP held near recent highs mostly at 0.88+ levels. Cable dropped to a new correction low just north of 1.31. Today, there are no UK eco data, but BoE's Haldane speaks. The EU summit most likely won't bring any progress in the Brexit progress. A risk-off context is also no help for sterling. At test of the 0.8843 range top might be on the cards

DXY (USD trade-weighted): dollar allies on EM risk-off