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USD/JPY is trading in the red right now and looks determined to take out the dynamic support from the first warning line (wl1) of the ascending pitchfork. The breakdown will attract more sellers on the short term, which will lead the rate towards the 61.8% and lower towards the 38.2% retracement levels.

Price could drop again in the upcoming period after the retest of the fourth warning line (wl4). The USD will take the lead again if the USDX will breakout above the 93.81 static resistance. I’ve said in the previous article that we may have a further drop if will retest the warning line (wl4).

Only a valid breakdown below the 38.2% retracement level will confirm broader corrective phase, the next major downside target will be at the fifth warning line (wl5). We may have a Head and Shoulders pattern if the rate will close below the 0.7222 previous low.

The USD/CHF increased and is trying to recover after the last downside movement.Is trading in the green and looks determined to resume the Friday’s bullish candle. Price was rejected by a strong dynamic support and now is approaching an important dynamic resistance.

However, we may still need a confirmation that will increase further in the upcoming period. USD/CHF increased as the USDX is trading in the green after the Friday’s drop. The dollar index stays right below a dynamic resistance and below the 93.81 static resistance, only a valid breakout above these levels will confirm a large rebound.

We have a poor economic calendar today, so the rate is will be driven by the technical factors. Technically the USDX is somehow expected to increase further in the upcoming period because the behavior has changed (higher lows).

You can see that has found strong support above the second warning line (WL2) of the major ascending pitchfork and now could approach the median line (ml) of the minor descending pitchfork. A valid breakout above the median line (ml) will confirm a further increase in the upcoming period. The failure to close on the warning line (WL2) has signaled a bullish pressure, but the rate could still retest this level before will increase further. Looks like that the rate is developing an Inverse Head and Shoulders pattern, but is far from being confirmed.

Despite all the talking of the Japanese currency and its losing the status of "safe haven", the demand for the Yen rises when the market is unstable.

The Japanese Yen has strengthened significantly against the USD recently. On Friday, the USD/JPY pair was trading at 109.04. By now, the instrument has broken the support level at 109.40, which was considered very significant from the point of view of further sales. The next key support level is at 108.73.

This week, Japan hasn't published much important statistics. There was an interesting report on the Industrial Production in June, which expanded by 2.2% m/m, although the market has expected a smaller number. Also, Japan published a preliminary report on the GDP in the second quarter, which showed the expansion of the economy by 1.0% q/q. In the previous quarter, the indicator added just 0.3% q/q. However, the USD/JPY pair barely responded to these numbers.

On the whole, the USD/JPY pair will remain rather volatile over the next several weeks. Investors' sentiments depend directly on the attitude to the USD: the more reasons to avoid risks they have, the more affection they hold for the Yen.

Some time ago, there were speculations on the market that the Yen was no longer considered as a "safe haven" asset. Arguments were different, from the fact that the Japanese currency was too volatile to the BoJ's approach to the monetary policy. As a matter of fact, the market itself denies these rumors: when the USD gets weaker due to some reasons and investors get rid of unnecessary risks, the demand for the Yen increases automatically. It can be easily seen on any daily chart.

The BoJ's fiscal approach is sure to raise a lot of questions. The most important of them lies in lack of understanding how the regulator and the Japanese government are going to deal with the national debt, which is growing at an exponential rate. However, since the moment the QE program was introduced, there hasn't been any official opinions about it. One can only guess: some part of the debt will be refinanced, but the sums are enormous and have to be covered somehow.

At year-end 2016, the foreign debt of Japan was $2,719,000 million, which is 46% of the country's GDP. At the top 10 of the world's major debtors, Japan is far from the worst and doing better than the USA, The United Kingdom, and Germany. Anyway, as long as the BoJ's QE program is working, the national debt will remain intact.

Weekly

    •    Last Candlesticks pattern: Shooting star 
    •    Time of formation: 31 Jul 2017
    •    Trend bias: Near term up

Daily

    •    Last Candlesticks pattern: Shooting star
    •    Time of formation: 2 Aug 2017
    •    Trend bias: Up

EUR/USD – 1.1800

The single currency continued trading in relatively narrow range since running into resistance at 1.1910 earlier this month, retaining our view that further consolidation below this level would be seen and near term downside risk remains for another corrective fall, below support at 1.1662 would bring retracement of recent rise to 1.1590-00, however, reckon 1.1540-45 would contain correction and bring another rise later. Above 1.1790 would bring test of resistance at 1.1847 but break there is needed to confirm the pullback from 1.1910 has ended, bring retest of this level later. Looking ahead, only break there would confirm recent upmove from 1.0340 low has resumed and extend headway to 1.1950, then psychological level at 1.2000, having said that, loss of upward momentum should prevent sharp move beyond 1.2165.

On the downside, expect pullback to be limited to 1.1590-00 and bring another rise. Below 1.1540-45 would defer and risk test of 1.1490 (previous resistance turned support), a daily close below there would signal a temporary top is formed instead, bring retracement of recent rally to 1.1435, then 1.1390-00, however, still reckon downside would be limited to 1.1350 and price should stay above support at 1.1312.

Recommendation: Buy at 1.1590 for 1.1790 with stop below 1.1490.

On the weekly chart, although the single currency recovered after finding support at 1.1662 late last week and a candlestick with a long lower shadow was formed, as long as resistance at 1.1847 holds, risk of another corrective fall to 1.1613 support cannot be ruled out but break there is needed to suggest a temporary top is formed, bring retracement of recent upmove to the Tenkan-Sen (now at 1.1541) and later towards 1.1435, having said that ,downside should be limited to 1.1370 and support at 1.1312 should remain intact, bring rebound later.

On the upside, expect recovery to be limited to 1.0790-00 and resistance at 1.1847 should hold, bring further consolidation. A weekly close above 1.1847 would signal the pullback from 1.1910 has ended, bring retest of this recent higher break there would confirm the major rise from 1.0340 low has resumed and may extend gain to 1.1950, then 1.1200, however, weakening of near term upward momentum would prevent sharp move beyond 1.2160-70 and reckon 1.2220-30 would hold, price should falter below 1.2300-10, bring another retreat later.

Daily Pivots: (S1) 0.9098; (P) 0.9123; (R1) 0.9157; More

With 0.9007 support intact, further rise is expected in EUR/GBP for 0.9304 high. At this point, there is no clear sign of up trend resumption yet. Hence, we'll be cautious on strong resistance from 0.9304 to limit upside and bring another fall. On the downside, considering bearish divergence condition in 4 hour MACD, break of 0.9007 support will indicate short term topping. Intraday bias will then be turned back to the downside for 0.8742/8948 support zone.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. It's uncertain whether it is finished yet. But in case of another fall, we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside and bring rebound. Whole up trend from 0.6935 is expected to resume after consolidation from 0.9304 completes.

Daily Pivots: (S1) 1.4788; (P) 1.4834; (R1) 1.4874; More...

Intraday bias in EUR/AUD remains neutral for the moment. Consolidation pattern from 1.5226 is possibly still in progress. Below 1.4732 will bring another fall. But we'd expect 1.4421 cluster support (50% retracement of 1.3624 to 1.5226 at 1.4427) to hold and bring rebound. On the upside, above 1.5019 will target a test on 1.5226 high instead.

In the bigger picture, we're holding on to the view that corrective decline from 1.6587 medium term has completed at 1.3624. Rise from 1.3624 is expected to extend to retest 1.6587. The corrective structure of the fall from 1.5226 is affirming this view. Above 1.5226 will target a test on 1.6587 key resistance. However, break of 1.4421 will dampen our view and would drag EUR/AUD lower to retest key support zone around 1.3624.

The USD/CAD fell significantly in the wake of reports on Friday showing that the yearly growth of consumer inflation in Canada rose as much as anticipated in July. As the 5 minute chart shows, after the release the Canadian Dollar appreciated against the Greenback by 42 base points to start trading far below the 1.2612 mark until Monday morning.

Statistics Canada reported that its Consumer Price Index gained 1.2% on an annual basis, while being flat month-over-month in July, with both readings matching analysts' forecasts. The Canadian economic growth is likely to gain momentum in the upcoming quarter, with inflation capable of reaching the Bank of Canada's 2% target, which would prompt the central bank to deliver one more rate hike this fall.

The USD/CAD made another bearish swing during previous week as the Canadian CPI data was better than the previous reading. The CPI is the most important inflation-related release due to its earliness and broad scope. At this point the pair is having a retracement due to the bullish divergence formed at bottom. If the pair retraces to POC 1.2635-1.2652 (ATR high, EMA89, D H4, W H3, 61.8, historical sellers) we could see a rejection towards 1.2615 and 1.2588. But if the pair doesn;t retrace to POC we could see a trend line break. Break below 1.2588 should spur a continuation towards 1.2540 and 1.2520.

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

D H4 - Daily Camarilla Pivot (Very Strong Daily Resistance)

D L3 – Daily Camarilla Pivot (Daily Support)

D L4 – Daily H4 Camarilla (Very Strong Daily Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

Key Highlights

• The Euro stayed above the 1.1650 support against the US Dollar, but failed near 1.1770-1.1780.
• There are two important bearish trend lines with resistance near 1.1770 and 1.1780 forming on the 4-hours chart of EUR/USD.
• Greece current account for June 2017 posted a trade surplus of €0.842B, better than the last €-0.582B.
• Today, the Chicago Fed National Activity Index (CFNAI) for July 2017 will be released, which is forecasted to decline from 0.13 to 0.10.

EUR/USD Technical Analysis

The Euro remained elevated this past week above 1.1650 against the US Dollar. However, buyers are finding it hard to take EUR/USD above a major resistance near 1.1770-1.1780.

Looking at the 4-hours chart, there are two important bearish trend lines forming with resistance near 1.1770 and 1.1780. The 100 simple moving average (H4) and the 61.8% Fib retracement level of the last decline from the 1.1847 high to 1.1662 low are also around 1.1780.

As long as there is no close above the 100 SMA (H4) and 1.1780, the pair might struggle in the near term. A proper break could easily take the pair above 1.1800 towards 1.1850.

On the downside, there are two key supports at 1.1680 and 1.1660. These might continue to hold losses in EUR/USD below 1.1650.

To sum up, the pair is trading below a major support at 1.1650 and crucial resistance at 1.1780. Eventually, it may break either support or resistance for the next move.

Greece Current Account

Recently in the Euro Zone, Greece’s current account report for June 2017 was released by the Bank of Greece. The market was looking for a minor trade surplus compared with the same month a year ago.

The actual result was in line with the forecast, as there was a trade surplus of €0.842B, better than the last €-0.582B.

The report pointed out that:

A year-on-year rise of €137 million in the deficit of the balance of goods was mostly attributable to an increase in the deficit of the non-oil balance of goods. It should be noted that non-oil exports of goods rose by 15.3% and oil exports by 17.5% at constant prices.

Overall, the EUR/USD pair may decline a few pips in the short term, but 1.1660 support might prevent losses.