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Currency pair USD/JPY

The USD/JPY has broken above the resistance trend lines (dotted) after completing wave 3 (orange). The bullish price action could still be part of a wave 4 (orange) as long as price stays below the 61.8% Fibonacci level.

The USD/JPY could be building an ABC (purple) correction within wave 4 (orange). The resistance top (red) at 112.50 is a key resistance level for wave 4.

Currency pair EUR/USD

The EUR/USD continued the uptrend and managed to reach 1.17. The new higher high is most likely completing the wave 3 (orange) and starting a wave 4 (orange) correction. Price could use the Fibonacci levels of wave 4 vs 3 as potential bounce spots.

The EUR/USD could be building an ABC (grey) correction within wave 4 (orange).

Currency pair GBP/USD

The GBP/USD respected the 78.6% Fibonacci level of the WXY (purple) pattern. A break below the small channel (blue) would indicate the potential for price to retrace lower towards the 61.8% Fibonacci target of wave Y vs W.

The GBP/USD completed multiple ABC (green) corrections within wave X (purple). Price is now at a new bounce or break spot at the bottom of the channel.

USD/CHF - 0.9532

Most recent candlesticks pattern : N/A

Trend                                    : Near term down

Tenkan-Sen level                  : 0.9529

Kijun-Sen level                    : 0.9496

Ichimoku cloud top                 : 0.9479

Ichimoku cloud bottom              : 0.9466

Original strategy :

Sell at 0.9555, target: 0.9455, Stop: 0.9590

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 0.9570, target: 0.9470, Stop: 0.9605

Position : -

Target :  -

Stop : -

As the greenback has maintained a firm undertone after staging a strong rebound from 0.9438 late last week, suggesting near term upside risks remains for this corrective bounce to extend gain to 0.9550-55, however, reckon upside would be limited to 0.9570-75 (50% Fibonacci retracement of 0.9701-0.9438) and bring retreat later, below the Kijun-Sen (now at 0.9496) would suggest an intra-day top is possibly formed but break of 0.9450-55 is needed to signal the rebound from 0.9438 has ended, bring retest of this level first.

In view of this, we are looking to sell dollar on further subsequent recovery as 0.9570 should limit upside and bring another decline. Above 0.9600-05 (61.8% Fibonacci retracement of 0.9701-0.9438) would suggest a temporary low is formed instead, bring a stronger rebound towards resistance at 0.9622.

Daily Pivots: (S1) 144.82; (P) 145.35; (R1) 146.25; More

Intraday bias in GBP/JPY remains neutral for the moment. With 146.27 minor resistance intact, further decline is still mildly in favor. On the downside, below 144.01 will extend the fall from 147.76 and target 138.65 support and below. But we'd expect strong support from 135.58 to contain downside and bring rebound. On the upside, above 146.27 minor resistance will turn bias back to the upside for 147.76 instead.

In the bigger picture, rise from medium term bottom at 122.36 is expected to continue to 38.2% retracement of 196.85 to 122.36 at 150.43. Decisive break there will carry long term bullish implications and pave the way to 61.8% retracement at 167.78. In case the sideway pattern from 148.42 extends, we'd be looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside.

Global Markets:

• Asian stock markets: Nikkei gained 0.50 %, Shanghai Composite fell 0.40 %, Hang Seng rose 0.05 %, ASX 200 rallied 0.95 %
• Commodities: Gold at $1247 (-0.40 %), Silver at $16.38 (-1.00 %), WTI Oil at $48.40 (+1.00 %), Brent Oil at $50.60 (+0.80 %)
• Rates: US 10-year yield at 2.32, UK 10-year yield at 1.26, German 10-year yield at 0.57

News & Data:

• Australia CPI q/q 0.2 % vs 0.4 % expected
• Australia CPI y/y 1.9 % vs 2.2 % expected
• Australia Trimmed Mean CPI q/q 0.5 % vs 0.5 % expected
• Australia Trimmed Mean CPI y/y 1.8 % vs 1.8 % expected
• New Zealand Trade Balance m/m NZ$242mln vs NZ$100mln expected
• New Zealand Trade Balance y/y -NZ$3.66bln vs -NZ$3.7bln expected
• New Zealand Exports NZ$4.7bln vs NZ$4.6bln expected
• New Zealand Imports NZ$4.46bln vs NZ$4.39bln expected
• Asia stocks, dollar steady as investors await Fed clues – RTRS

Markets Update:

The US Dollar is strengthening a bit ahead of the Fed interest rate decision tonight. The market is not expecting any changes from the Fed, and it is unlikely that there will be any surprises. Therefore, the Fed meeting should be an USD-neutral event.

The Australian Dollar came a bit under pressure overnight, following weaker than expected CPI data. However, losses were limited as the trimmed mean and weighted CPI arrived in line with expectations. AUD/USD traded as low as 0.7890 and strong support is seen between 0.7830 and 0.7840.

NZD/USD is approaching support at 0.74. A break below would suggest that the pair will test support at 0.7340 soon. NZD/USD is heavily overbought in the short-term, and it is likely that there will be retracement before the uptrend continues.

USD/JPY managed to recover as well, amid the broad USD strength and rising equity markets. However, it would need a clear break above 112.50 resistance to confirm the recent low and pave the way for a rally towards 114.

Upcoming Events:

• 09:30 BST – UK GDP
• 15:00 BST – US New Home Sales
• 19:00 BST – Fed Interest Rate Decision

GBP/USD - 1.3015

Most recent candlesticks pattern   : N/A

Trend                                 : Near term up

Tenkan-Sen level                 : 1.3016

Kijun-Sen level                    : 1.3042

Ichimoku cloud top              : 1.3025

Ichimoku cloud bottom        : 1.3009

Original strategy :

Sell at 1.3100, Target: 1.2980, Stop: 1.3135

Position : - 

Target :  -

Stop : -

New strategy  :

Sell at 1.3100, Target: 1.2980, Stop: 1.3135

Position : -

Target :  -

Stop : -

Although cable has retreated after rising to 1.3084 yesterday, break of 1.2980-85 is needed to signal top is formed, bring further fall to 1.2950-55 but only below there would confirm the rebound from 1.2933 has ended, then another test of this support would follow, once this level is penetrated, this would add credence to our view that early fall from 1.3126 top has resumed for further weakness to previous support at 1.2912 which is likely to hold on first testing. 

In view of this, would not chase this fall here and we are looking to sell cable on subsequent recovery as 1.3100-10 should limit upside. A firm break above 1.3100 would abort and suggest the fall from 1.3127 has ended instead, bring retest of this level but only break there would shift risk back to upside for further gain to 1.3150-60.

For the 24 hours to 23:00 GMT, the AUD rose 0.19% against the USD and closed at 0.7940.

LME Copper prices jumped 2.5% or $150.0/MT to $6150.0/MT. Aluminium prices rose 0.3% or $6.5/MT to $1896.5/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7913, with the AUD trading 0.34% lower against the USD from yesterday’s close.

Earlier in the session, the Reserve Bank of Australia (RBA) Governor, Philip Lowe, diminished the odds of an interest rate hike, stating that interest rates will stay lower for longer amid subdued wage growth and high household debt.

In economic news, data showed that Australia’s consumer price index rose less-than-anticipated by 0.2% on a quarterly basis in the second quarter of 2017, compared to an advance of 0.5% in the previous quarter, while markets had expected the index to climb 0.4%.

The pair is expected to find support at 0.7881, and a fall through could take it to the next support level of 0.7848. The pair is expected to find its first resistance at 0.7958, and a rise through could take it to the next resistance level of 0.8002.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

EUR/USD - 1.1636

Most recent candlesticks pattern   : N/A

Trend                      : Near term up

Tenkan-Sen level              : 1.1637

Kijun-Sen level                  : 1.1666

Ichimoku cloud top             : 1.1654

Ichimoku cloud bottom      : 1.1649

Original strategy  :

Sell at 1.1680, Target: 1.1580, Stop: 1.1715

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.1680, Target: 1.1580, Stop: 1.1715

Position : -

Target :  -

Stop : -

Although the single currency moved higher to 1.1712 yesterday, the subsequent retreat suggests consolidation below this level would be seen and as long as 1.1712 holds, mild downside bias is seen for test of 1.1617-20 support, break there would signal a temporary top is formed, bring retracement of recent rise towards previous resistance at 1.1583 but price should stay above 1.1550, bring another rally later.

In view of this, we are looking to turn short on recovery but one should exit on such fall. Above said resistance at 1.1712-14 would signal the rise from 1.0340 low is still in progress and may extend headway towards 1.1750, then 1.1775-80. 

For the 24 hours to 23:00 GMT, the EUR slightly rose against the USD and closed at 1.1646, following upbeat Ifo report from Germany.

Data indicated that Germany's Ifo business climate index unexpectedly jumped to a record high level of 116.0 in July, suggesting that firms are much more optimistic about the present economic condition in the Euro-bloc's largest economy. The index had registered a revised level of 115.2 in the previous month, while markets were expecting for a drop to a level of 114.9. Further, the nation's Ifo business expectations index surprisingly advanced to a level of 107.3 in July, defying market consensus for a fall to a level of 106.5 and following a reading of 106.8 in the prior month. Additionally, the nation's Ifo current assessment index registered an unexpected rise to a level of 125.4 in July, confounding market expectations of a decline to a level of 123.8. In the prior month, the index had recorded a revised reading of 124.2.

Macroeconomic data released in the US revealed that the CB consumer confidence index surprised with an unexpected rise to a level of 121.1 in July, hovering at a 4-month high level as consumer sentiment was boosted by greater optimism over the state of the nation's labour market. In the preceding month, the index had recorded a revised level of 117.3, while investors had envisaged for it to ease to a level of 116.5. Moreover, the nation's Richmond Fed manufacturing index unexpectedly advanced to a level of 14.0 in July, compared to market anticipation of a fall to a level of 7.0. In the prior month, the index had recorded a revised level of 11.0. Meanwhile, the nation's housing price index advanced less-than-expected by 0.4% on a monthly basis in May, compared to a revised rise of 0.6% in the prior month.

In the Asian session, at GMT0300, the pair is trading at 1.1651, with the EUR trading a tad higher against the USD from yesterday's close.

The pair is expected to find support at 1.1622, and a fall through could take it to the next support level of 1.1593. The pair is expected to find its first resistance at 1.1696, and a rise through could take it to the next resistance level of 1.1741.

With no crucial macroeconomic releases in the Euro-zone today, investors will anxiously await the Federal Reserve's (Fed) monetary policy announcement, due later in the day, to get cues on its balance sheet reduction plan. Also, the US new home sales for June and MBA mortgage applications data will be eyed by traders.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

Daily Pivots: (S1) 129.51; (P) 130.04; (R1) 130.84; More...

EUR/JPY is still bounded in range below 130.76 and intraday bias remains neutral. More consolidations could be seen. But downside should be contained by 127.43 cluster support (38.2% retracement of 122.39 to 130.76 at 127.56) and bring rebound. Above 130.76 will extend the larger rally to next key fibonacci level at 134.20.

In the bigger picture, the down trend from 149.76 (2014 high) is completed at 109.03 (2016 low). Current rally from 109.03 should be at the same degree as the fall from 149.76 to 109.03. Further rise is expected to 61.8% retracement of 149.76 to 109.03 at 134.20. Sustained break there will pave the way to key long term resistance zone at 141.04/149.76. Medium term outlook will remain bullish as long as 124.08 resistance turned support holds.

For the 24 hours to 23:00 GMT, the GBP marginally rose against the USD and closed at 1.3030.

On the data front, Britain's CBI industrial trends total orders dropped more-than-expected to a level of 10.0 in July, compared to a level of 16.0 in the prior month. Market participants were anticipating it to ease to a level of 12.0.

In the Asian session, at GMT0300, the pair is trading at 1.3030, with the GBP trading flat against the USD from yesterday's close.

The pair is expected to find support at 1.2997, and a fall through could take it to the next support level of 1.2965. The pair is expected to find its first resistance at 1.3073, and a rise through could take it to the next resistance level of 1.3117.

Trading trend in the Pound today will be determined by the release of Britain's flash 2Q GDP numbers and BBA mortgage applications data for June, both slated to release in a few hours.

The currency pair is trading below its 20 Hr moving average and showing convergence with its 50 Hr moving average.