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EURGBP maintains a bullish bias despite the minor correction from the July 21 high of 0.8994. The uptrend that took place from the 0.8300 handle from April 18 is still intact.

Strong support was found at 0.8760. It was previously a resistance level which was broken on June 9 and consequently turned to support, which was tested several times until July 17 when the market rallied to 0.8994.

There was a bullish crossover of the 50-day moving average with the 200-day MA on June 28. This gives a technically bullish picture for EURGBP but strong resistance could limit upside moves at the October 2016 high of 0.9261. This may provide a challenge for the market as it is the highest level since 2009.

Meanwhile, RSI is in bullish territory above 50, although it appears to have lost momentum. This could suggest some consolidation in the market in the near term, as long as support at 0.8760 holds. A break below this would target a support zone between 0.8625 to 0.8635, which is defined by the 200-day MA and the June 9 low. A further decline would open the way towards the key 0.8400 area and April 18 low of 0.8312.

In the bigger picture, the current pull back from 0.8994 could be seen as a corrective move of the recent uptrend. There are no clear signs of a reversal in the trend yet and EURGBP maintains a bullish outlook as long as it is located above 0.8760.

During the Asian session, forex markets didn't have much to react to in the absence of important economic releases. Hence, yesterday's events along with the upcoming two-day US Federal Open Market Committee meeting that starts today have been commanding most of the moves today.

The US dollar weakened against most currencies as investors await the news from the two-day FOMC meeting on interest rate policy that starts later today. Many investors expect the Federal Reserve to announce that it will begin reducing its balance sheet at its September meeting, though the probability of another interest rate hike this year has fallen below 50%. Fed Fund futures show investors are pricing the highest chance of another rate hike for December and that is well below 40%. This suggest traders are waiting for data to confirm the so far hawkish-perceived view of the Fed before they price in any upside potential for the greenback. At 93.87, the dollar index approached the lowest level since June 2016. Dollar/yen fell to 110.88.

During the first session of the day, the euro recovered yesterday's losses following the soft PMI readings for July. Looking ahead, traders will be focusing on the Ifo Business Climate index for July, hoping to gauge the outlook for the eurozone economy. With the PMI falling short of expectations and investor confidence weakening according to the ZEW Institute, today's German Ifo report may add further pressure to the euro. Economists are expecting a reading of 114.9, a slowdown from 115.1 in June. Euro/dollar was last trading at 1.1665, up 0.20% on the day.

Sterling also firmed up during Asian trading. Pound/dollar is up for the third consecutive day to last trade at 1.3033. The UK has started its post-Brexit trade talks with the US in Washington.

Most Asian currencies gained against the US dollar during the Asian session. The aussie was up 0.20%, recovering most of Friday's losses. Aussie traders will be focusing on two key events this week, June quarterly inflation data and a speech by Reserve Bank of Australia Governor Philip Lowe, both on Wednesday.

Oil extended gains above $46 a barrel following the decision by Saudi Arabia to cut crude exports in August to help ease a global supply glut. WTI was last trading at $46.55 a barrel (up 0.45%) and Brent was at $48.81 a barrel (up 0.43%).

Gold prices inched higher after hitting a one-month high in the last session yesterday. Political uncertainty in the US along with the upcoming FOMC meeting supported the increase in the price of the precious metal. Gold was last trading at $1,256.67 an ounce.

The yellow metal continues to move in range between the 23.6% and the 50% retracement levels, is trading at the half of this sideways movement. Is pressuring the outside sliding parallel line (SL), a valid breakout above this line will confirm a larger increase.

Technically should climb much higher on the Daily chart after the breakout above the upper median line (UML) of the major descending pitchfork and outside the minor descending pitchfork’s body. We may have a buying opportunity if will stabilize above the SL and if will come down to retest the warning line (WL1).

Price is trading in the red on the short term and is expected to drop much below the 110.00 psychological level if will have enough direction energy to take out the support from 110.61 previous low.

Should extend the sell-off after the failure to reach and retest the 38.2% retracement level and the broken downtrend line. Is moving sideways on the Daily chart, so is somehow expected to approach the 50% retracement level again, where he could find support again. The Yen dominates the currency market on the short term as the Nikkei failed to stay above the 20058 static resistance.

Price increased in the morning and looks motivated to approach and reach new highs in the upcoming days. USD drops further versus all its rivals ahead the US data, another disappointment in the afternoon will send the EUR/USD much above the 1.1683 previous high.

USDX is trading in the red and is very close to hit the 0.9383 yesterday’s low, a further drop is favored because is under massive selling pressure on the Daily chart. The index should drop further because we don’t have any reversal sign at this moment, will increase a little in the afternoon only if the United States data will impress.

The main event will be the release of the CB Consumer Confidence, which could drop from 118.9 to 116.5 points.

Price increased a little and tries to approach the 1.1700 psychological level, but he needs to take out the minor resistance from 1.1683. Resistance can be found at the seventh warning line (WL7) of the former descending pitchfork, while the major static resistance is at the 1.1712 level. Is strongly bullish after the impressive breakout above the WL6 and could be attracted also by the upper median line (uml) of the ascending pitchfork.

Sunrise Market Commentary

• Rates: Subdued trading ahead of FOMC?
  Risks for today's eco data are mainly tilted to the downside of expectations, but the figures will probably pass unnoticed ahead of tomorrow's FOMC meeting. The start of the US refinancing operation could cause marginal underperformance versus the German Bunds. Overall, we expect trading to remain confined to small range and to occur in low volumes.
• Currencies: dollar holding near recent lows
  The dollar decline slowed yesterdady but the overall picture for the US currency didn't improve. Today's eco data will probably only be of intraday significance. Even so, disappointing US data might still push EUR/USD closer to the key 1.1714/35 resistance as markets look forward to the FOMC policy decision.

The Sunrise Headlines

• Asia Pacific traders largely adopted a wait-and-see approach after a muted start to the week on Wall Street ahead of Wednesday's Fed meeting and awaiting some earnings releases from big-name tech companies.
• The July preliminary US manufacturing PMI was, at 53.2, higher than the expected 52.3 and the previous 52.0., The services PMI stabilised, as expected.
• Sales of US Existing Home sales declined by 1.8% in June after a rise of 1.1% in May (consensus of -0.9%). Tight supply and high prices constrained housing activity despite strong demand.
• President Trump made a plea to the US Senate Republicans to “do the right thing” and vote today to open a debate on an overhaul of Obamacare. It remains unclear whether McConnell will have enough votes to open the debate.
• The Bank of Japan minutes showed policymakers discussed how much information to disclose on a possible exit from QE, but close the discussion as the BoJ is still far of its 2% inflation goal.
• Brent oil extended its gains to around $48.90 a barrel as Saudi Arabia promised deep cuts to crude exports next month to ease the global glut. In addition, some signals are emerging that US shale producers are tapping the brakes on drilling.
• The main items on the eco-calendar today are the US consumer confidence (July) and the Richmond Fed manufacturing index (July) and German July IFO business confidence.

Currencies: Dollar Holding Near Recent Lows

USD holding near recent lows

Dominant FX trends that ruled trading recently halted yesterday. The dollar decline slowed and so did the rise of the euro. The pause in the euro rally was ‘justified' by softer than expected EMU PMI's. There was no high profile news to inspire a directional USD move. EUR/USD stabilized in the mid 1.16 area and closed the session at 1.1642. USD/JPY dropped temporary below 111, but closed the session at 111.10.

Overnight, Asian equities are trading mixed, in line with WS. ECB's Mersch said he saw upward risks to EMU growth and that he's more assured about a return of inflation to the target. At the same time he reiterated that policy accommodation remains needed. EUR/USD rebounded to the 1.1660 area on the Mersch headlines. USD/JPY stabilizes near 111.

Today's eco calendar contains German IFO, US consumer confidence and Richmond Fed manufacturing. The IFO reached a multi-year top in June. A small decline from 115.1 to 114.9 is expected in July. We see downside risks given yesterday's PMI's. US consumer confidence (Conference Board) is expected to have weakened in July (116 from 118.9). Based on the more timely measures of confidence, we expect confidence to have weakened, maybe even more than the consensus forecasts.

Yesterday's unexpected easing of the EMU PMI's provided a good reason to slow the recent ascent of the euro. However, it's far from sure that a softer Ifo will have a similar impact. The euro still enjoys a solid bit and the overall picture for the dollar remains fragile. Soft US consumer confidence even might push the dollar back to the recent lows going into tomorrow's Fed policy decision. Even a test of the key EUR/USD 1.1714/35 resistance might be on the cards. On the US political scene, a new vote on the healthcare bill is a wild card. Any (unexpected) progress on the issue might be slightly supportive for the dollar. Even so, (FX) markets will maintain some kind of wait-and-see modus going into tomorrow's FOMC decision. There is already quite some negative news discounted for the dollar after the recent setback, but we still see no trigger for a positive U-turn on the US dollar. For that to happen, the dollar needs really positive news. Good data might help to build a floor for the dollar, but might only come later this week (US GDP) and/or next week. For now, there is no reason to front-run on a positive reversal for the dollar.

USD: technical picture worsens further

EUR/USD rebounded above the 1.1300/66 resistance at the end of June. Recent data were not good enough to trigger a sustained USD rebound. Finally EUR/USD broke beyond the 1.1489/1.15 resistance, paving the way to the LT-correction tops at 1.1616/1.1714. A sustained break would end the long consolidation that followed the sharp decline of EUR/USD in 2014/early 2015. Such a key area is not easy to break. We don't preposition for a break, but the pressure is mounting. Return action below 1.13 would be a first indication of a loss in upside momentum.

USD/JPY rebounded in the 108.13/114.37 range after the June 14 Fed meeting. The pair regained interim resistance at 112.13, but follow-through gains remained modest. USD/JPY 114.37 resistance was tested, but rejected. The pair is currently drifting lower in the broader consolidation pattern between 114.50 and 108.83/13. A test of the downside becomes more likely. A break below would probably be sign of a further deterioration on the global USD sentiment

EUR/USD: top MT consolidation pattern under heavy strain

EUR/GBP

EUR/GBP rally eases, but holding north of 0.89

Yesterday, sterling staged a technical rebound against the dollar and the euro, after Brexit bickering weighed on the UK currency last week. The eco news was intrinsically negative for sterling, but ignored. EUR/GBP closed the session at 0.8935. Cable returned north of 1.30.

Today, the CBI Trades orders will be published. A modest decline from 16 to 12 is expected. The series is timely in nature, but has limited market moving potential. A speech of UK Chief economist Haldane is a wildcard. End June, he indicated that the BoE should seriously look at the possibility of raising interest rates. Will he reiterate this view after recent softer than expected UK eco data? If he would turn more cautious on a rate hike, markets might consider that the BoE is returning to wait-and-see modus, a sterling nagative.

From a technical point of view, EUR/GBP broke above the 0.8854/66 resistance (2017 top) to set a new correction top north of 0.89, but the rally slowed at the end of last week A break below 0.8720 would suggest that upside momentum is easing. For now, we don't see a trigger for a sustained rebound of sterling against the euro. We still look to buy EUR/GBP on more pronounced dips. For that to happen, EUR/GBP probably needs some help from a correction in EUR/USD.

EUR/GBP: consolidation near recent top

Download entire Sunrise Market Commentary

The markets were seen trading subdued yesterday with thelack of any tier-one data. Economic data, for the most part, was to do with flash manufacturing and services PMI numbers out of the Eurozone and the US.

In the Eurozone, the flash PMI's were broadly weaker than expected, while in the US flash manufacturing showed signs of another increase, while services PMI was as expected. The US existing home sales data was also slightly below expectations, rising just 5.53 million compared to expectations of 5.59 million.

Looking ahead, it is likely to be another slow day. The German import prices data will be coming out followed by the US Richmond Fed manufacturing index data. The conference board's consumer confidence data is expected to slip to 116.2, compared to 118.9 previously.

EURUSD intraday analysis

EURUSD (1.1660): The EURUSD slipped to test the support at 1.1635 yesterday and price action has been since rising higher following the bounce off the support. We could expect to see some consolidation above 1.1635 in the near term, and further gains can come only on a breakout above the previous high. Failure to break past the previous highs near 1.1685 could signal a near term retracement. Below 1.1635, EURUSD could be seen testing the next lower support at 1.1475.

GBPUSD intraday analysis

GBPUSD (1.3030): The British pound posted a modest rally which saw price action testing the resistance level at 1.3025. As long as this resistance level holds, GBPUSD could be seen pushing lower in the near term. With the broader price action seen consolidating within the rising wedge pattern, the bias is to the downside, unless we get to see a convincing close above 1.3025. On the 4-hour chart, price action has been rather volatile with GBPUSD seen briefly breaking above 1.3025 but only to close back below this level. Support is seen at 1.2818 which could be tested in the near term if there is a reversal at 1.3025.

USDJPY intraday analysis

USDJPY (110.98): The USDJPY closed with a doji candlestick pattern yesterday. This comes near the identified support level at 101.80. A higher close is required to establish the upside bias in USDJPY, or we could expect to see further declines in the near term. On the 4-hour chart following yesterday's brief drop below 110.81, the current higher low that is forming could signal a reversal of the trend. Still, USDJPY needs to break above 111.08 in order to signal a move to the upside. Short-term resistance is seen at 111.78 followed by a move towards 113.05.

Markets were focused on Washington D.C., where Jared Kushner answered questions before a Senate Committee on his dealings with Russian contacts during his father-in-law’s Presidential Campaign. Kushner confirmed having 4 meetings with Russians during the presidential campaign and the transition, but described the encounters as 'unmemorable'. Donald Trump Jr. and former Trump campaign Chairman Paul Manafort will testify before a Senate Committee on Wednesday. Data released on Monday indicated that the Eurozone is experiencing a mild slowdown but the Eurozone economy was still growing at a relatively good pace. A good guide to economic growth was Monday’s Markit’s Euro Zone Flash Composite Purchasing Managers’ Index (Jul). Although the latest release fell to 55.8 from June’s 56.3 it is still well above the 50 level that separates growth from contraction. The release underlines strong job creation, business optimism and a strong pace of commercial activity for the Eurozone economy.

EURUSD continued its strong run climbing to a new 23 month high of 1.16836 on Monday. EUR is the best performing G10 currency in 2017 being up 10% to date. Currently, EURUSD is trading around 1.1655.

GBPUSD rose 0.3% on Monday to reach a high of 1.30568 – a level not seen for over a week. Currently, GBPUSD is trading around 1.3030.

USD showed a gain against JPY of 0.5% on the day, after climbing off an early low of 110.616 and USDJPY is currently trading around 111.10.

AUDUSD rose 0.4%, trading up to 0.79668 on Monday, before giving back all its early gains as the markets await a speech by Reserve Bank of Australia Governor Philip Lowe on Wednesday. AUDUSD is currently trading around 0.7935.

Gold hit its highest level in more than a month on Monday to trade at $1,258.69. Currently, Gold is trading around $1,256.

Oil rose 1.8% on the day to $46.49pb as Saudi Arabia commented that 'it would make deep cuts to its crude exports in August and encourage better compliance with supply reductions from other producers'. WTI continued edging higher overnight and is currently trading around $46.68pb.

At 11:00 BST the CESifo Group will release German IFO data. IFO Expectations (Jul) are forecast to be slightly lower at 106.5 from the previous reading of 106.8. As an indicator of current conditions and business expectations of 7,000 Business Leaders, the release may provide the markets with a better indication as to the state of the German economy and, in turn, the wider Eurozone economy. A higher number will indicate a more positive view of conditions and is therefore likely to be bullish for EUR, with the converse being true for a lower release.

Fed Policy makers begin their meeting today with a decision due on Wednesday.

At 17:00, Bank of England Chief Economist Andy Haldane will be speaking in London at the Finance Foundation Annual Lecture.

The Oil markets are attempting to extend their gains during early trading on Tuesday after OPEC and Non-OPEC members displayed optimism over the current production cut deal and seemed confident that the path they were treading would eventually rebalance the markets. Gains were also supported by Saudi Arabia pledging to make deeper cuts to its crude exports in August, and Nigeria agreeing to cap production output at 1.8 million barrels a day.

While OPEC's optimism and public pledge of commitment towards tackling the ongoing oversupply of Oil in the market may continue to support its valuation in the short term, investors should keep in mind that no deeper cuts were made at this point in time. While this was not expected to be the outcome to the meeting in Saint Petersburg, the unexpected outcome would have likely encouraged the material bounce higher in price that Oil producers are looking to eventually achieve.

The OPEC meeting in St. Petersburg was simply a renewal of commitment by OPEC and non-OPEC members to respect their current production cut deal.

All in all, oversupply will continue to dominate price action in the Oil markets for the foreseeable future and the markets will likely remain anxious over higher production volumes from other producers. The recent threat that an OPEC member such as Ecuador could have been considering leaving the production cut deal does also indicate the element of stress that the production cut agreement is putting on those taking part

EUR/JPY - 129.36

Recent wave: wave v of (C) ended at 94.12 and major correction in wave A has ended at 149.79

Trend: Near term up

New strategy :

Stand aside

Position: -
Target:  -
Stop:-

Euro’s retreat after meeting resistance at 130.51 late last week has retained our view that further consolidation below recent high of 130.77 would be seen and near term downside risk is for a test of 128.57 support, however, break of support at 128.49 is needed to retain bearishness and bring retracement of recent upmove to 128.00, then towards previous support at 127.44.

On the upside, whilst recovery to 129.60-70 cannot be ruled out, reckon 130.00 would limit upside and resistance at 130.51 should hold, bring another decline later. Only a break of 130.51 would signal the retreat from 130.77 has ended, bring retest of this level, break there would confirm recent upmove has resumed for headway to 131.00-10, then towards 131.50, however, loss of upward momentum should prevent sharp move beyond latter level and reckon 132.00 would hold from here, risk from there is seen for a retreat later.

Our latest preferred count is that wave (ii) is ABC-X-ABC which ended at 123.33 and wave (iii) is unfolding with wave iii ended at 100.77, followed by wave iv at 111.57 and wave v as well as the wave (iii) has ended at 97.04, followed by wave (iv) at 111.43 and wave (v) has ended at 94.12 which is also the end of the larger degree v, this also implied the major wave (C) has also ended there, hence major correction has commenced from there with (A) leg unfolding in its lower degree wave c which has possibly ended at 145.69. Under this count, A-B-C wave (B) has commenced with A leg ended at 136.23, wave B at 143.79 and wave C has possibly ended at 149.79.

Our larger degree count is that the decline from 139.26 is wave (C) and is sub-divided into a diagonal triangle i-ii-iii-iv-v with wave i - 105.44, wave ii- 123.33, wave iii - 97.03, wave iv - 111.43, followed by the final wave v as well as the end of wave (C) at 94.12, this also mark the bottom of larger degree wave B. Under this count, major rise in wave C has commenced as an impulsive wave with minor wave III ended at 145.69, wave V is still in progress for further gain to 150.00. Having said that, this so-called wave V could well be the first leg of larger degree 5-waver wave C and this wave C should bring at least a retest of wave A top at 169.97 (July 2008).