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For the 24 hours to 23:00 GMT, the USD declined 0.46% against the CAD and closed at 1.2538 on Friday.

The Canadian Dollar gained ground, after Canada's retail sales rose more-than-anticipated by 0.6% MoM in May, climbing for the third straight month. Retail sales had recorded a revised rise of 0.7% in the previous month, while markets were expecting for a gain of 0.3%.

On the other hand, the nation's consumer price index (CPI) rose less-than-expected by 1.0% on an annual basis in June, advancing at its weakest pace since October 2015 and undershooting market expectations for an advance of 1.1%. In the previous month, the CPI had recorded a rise of 1.3%. In the Asian session, at GMT0300, the pair is trading at 1.2545, with the USD trading 0.06% higher against the CAD from Friday's close.

The pair is expected to find support at 1.2508, and a fall through could take it to the next support level of 1.2472. The pair is expected to find its first resistance at 1.2595, and a rise through could take it to the next resistance level of 1.2646.

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

Key Points:

• Euro continues to rally following hawkish ECB statement.
• Minor support at 1.1588 remains in place.
• Watch for a continued move towards 1.18 in the week ahead.

The Euro continued to rally strongly last week and currently shows no sign of topping or a loss of momentum. Much of the bullishness came late in the week when the ECB’s Mario Draghi suggested that Eurozone growth and employment continues to strengthen and hinted that the bank could review QE in the near future. Subsequently, the EURUSD rallied strongly to close the week out around the 1.1661 mark but it remains to be seen if the currency can retain this directional bias in the week ahead.

The Euro remained strongly predisposed to the upside throughout most of last week as the pair continued to rally without a top or slowdown in sight. The primary trend driver was some statements from the ECB’s venerable Chairman, Mario Draghi, who suggested that EU growth and employment remained bright spots. In addition, he hinted that the central bank may review their QE and asset purchase program in the near term. This sent the Euro Dollar rallying sharply as speculation continues to grow that the ECB could potentially consider tapering or reducing their stimulus programs during September’s meeting. Subsequently, the Euro shot sharply higher and continued to rally late into the week, finishing around the 1.1661 mark.

Looking ahead, it’s set to be another volatile week for the EURUSD with the EU Services PMI and U.S. FOMC decision due for release. The Services PMI will be a relatively interesting figure to watch given the renewed upside risks for the Eurozone economy. The official estimate has the indicator coming in around the 54.3 mark, which would again represent growth, and further support the Euro. However, the primary event for the coming week is likely to be the U.S. FOMC decision which is likely to determine the pair’s near term fundamental trend. Most economists are predicting that the central bank will sit pat at 1.25% but watch for any jawboning in the statements following the event as volatility could ensure.

From a technical perspective, the Euro Dollar continues to roar higher and there appears to be little sign, at this stage, of a top forming. Subsequently, our initial bias for the week ahead remains bullish as long as minor support at 1.1582 remains intact. However, it should be noted that the RSI Oscillator is currently strongly overbought and may need a period of moderation in due course. Regardless, the medium term view still remains strongly bullish for the Euro and we might just see the 1.18 handle yet.Support is currently in place for the pair at 1.1478, 1.1381, and 1.1313. Resistance exists on the upside at 1.1713 1.1872, and 1.1977.

Ultimately, the coming week is likely to only bring with it increased opportunities for the Euro Dollar as it seems relatively likely that we could see a move towards the 1.18 handle. However, there could be plenty of volatility around as the Fed gets ready to meet to, potentially, jawbone the market. Subsequently, watch your positioning as Janet Yellen has been fairly apt at moving the market with her rhetoric of late.

Key Points:

• After another bullish week, the AUDUSD may need to cool-off.
• The Fundamental outlook is somewhat bearish moving forward.
• Technical bias is mixed.

The AUD had yet another strong rally last week which left many traders scratching their heads given that there was little to explain the aggressive move. Nevertheless, the week's performance isn't entirely without explanation which might be worth delving into before we take a look at what is next on the agenda. Additionally, it might pay to examine what is going on technically as this is likely to have an impact on the pair moving forward.

Starting with last week, the Aussie Dollar continued to post record gains, smashing through its 2-year high to close the week out at the 0.7912 handle. Whilst many other majors posted strong gains over the past 7 days, what saw the AUDUSD stand out was the fact that almost all of its overall upsides accrued on Tuesday. Whilst some of this is undoubtedly due to the weaker USD, the majority of the sentiment swing reflects the pricing in of rather hawkish meeting minutes from the RBA. Indeed, contrary to the broader market trend, the pair actually spent the remainder of the week moderating away some of this surprise upswing, despite the generally on-target Australian Unemployment rate outcome of 5.6% and the dip in the US Philadelphia Federal Manufacturing index to 19.5.

As for what lies ahead, Wednesday is poised to be a highly volatile session for the Aussie Dollar as important economic news is due out for both sides of the quote. On the AUD side of things, the CPI data is set to be posted and is expected to show a y/y increase to 2.2%. Obviously, if this forecast is achieved it will help the pair to recover some of the losses incurred late last week, maybe even seeing the 0.7950 handle challenged again. However, also due out during the session is the FOMC's Interest rate decision which could be highly disruptive if the Fed opts to defy expectations and lift rates once again. Nevertheless, we are also expecting a large uptick in the US GDP figure to 2.6% on Friday which could undo any bullishness seen earlier in the week.

On the technical front, it's a bit of a mixed bag for the AUD which could see the pair enter a near-term ranging phase unless a major fundamental upset is seen. On the one hand, the EMA bias and the parabolic SAR are rather buoyant and should help to recruit the bulls as the week opens. On the other hand, we can't escape the fact that the pair is highly overbought and it is well and truly above its 2-year high which could see traders spook ahead of the FOMC meeting. If this is the case, we expect near-term losses to be limited as the 2016 high could act as a support moving forward. More precisely, support should be strongest around the 0.7890, 0.7836, and 0.7778 levels. In contrast, resistance should be clear at the 0.7956, 0.7984, and 0.8035 levels.

Overall, our outlook is rather mixed going forward and we are likely to be relying on the fundamentals more than the technicals to inform price action in the week to come. As mentioned, the FOMC and the US GDP data are likely to be the key things to watch for and both of these are likely to put pressure on the AUDUSD.

Market Movers Today

Today, focus will be on global PMI figures for July. In the euro area, we look for a slight ly weaker manufacturing PMI although it should stay at a high level, signalling continued robust GDP growth. The service PMI should also be a bit weaker but still point s to ongoing solid demand from consumers.

In the US, we estimate PMI manufacturing rose slightly as it has been much weaker than ISM and regional PMIs recent ly. Still, the level is likely to stay lower than the peak earlier this year.

OPEC is due to meet today to discuss the oil output cut deal amid higher production in Nigeria and Libya.

Jared Kushner, Senior Adviser to President Trump and married to Ivanka Turmp is due to appear before the Senate Intelligence Commit tee in connect ion with the Russian probe today. However, the hearing will not be public, so there will be no headlines.

The main event this week is the FOMC meeting on Wednesday. We do not expect any policy changes (and no announcement on quantitative tightening yet ) at this meeting, although risks are skewed towards a slightly more dovish statement given inflation continues to disappoint .

Focus will also be on German Ifo expectations, Q2 GDP growth figures in the UK, US and France as well as German HICP inflation. In Scandi markets, the key data releases will be Norwegian unemployment and Swedish GDP growth in Q2.

Selected Market News

On Friday, Der Spiegel wrote that German car companies have run a secret cartel since the1990s. The EU Commission is looking into the claim, which could lead potentially to high fines to the companies (10% of global turnover).

In France, Emmanuel Macron's approval rating has fallen 10 percent age point s t o 54%, the second biggest fall so soon after an elect ion on record, underlying that it may not be so easy for him to win popular support for his plans to reform France.

On Saturday, Poland's upper house passed the controversial law, which put s t he juridical syst em under polit ical cont rol, with 55 votes out of 100. The EU is threatening Poland with Article 7 (losing voting rights) and demonstrations in Poland in front of the Polish parliament continue.

Ahead of European and US PMIs later today, Japanese PMI manufacturing fell to 52.2 in July from 52.4, the lowest since November 2016.

The ‘summer mode' in the primary market means lower-than-normal activity; however, today, Belgium will be in the market with a tap in the 23s, the 27s and the 47s. On Friday , Italy will be coming to the market with its usual month-end tap in 5Y and 10Y.

A snapshot view of large speculative positioning from the weekly COTS report and analysis of related markets.

The Canadian and Australian Dollar saw the largest increase in long bets at 13.9k and 13.1k respectively.

CAD saw the largest net change of 16.6k contracts which pushed it to net long for the first time since March. This makes the 8th consecutive week that net change has been positive which was helped by 9 weeks of short covering.

AUD gross shorts fell to their lowest level since Feb 2012 whilst longs moved to their highest since April '17. This also puts net long exposure to its highest since April.

Yen net positioning is now its most bearish since Jan 2014 as gross shorts moved to their highest levels since July 2007.

EUR: The Euro is considering a break of the 2015 high and make a run for 1.20. The week closed near the high of the week to suggest continued bullish sentiment, yet as we are just beneath key resistance, we may find this level holds for now as profit taking take hold. Yet as we closed so close to the resistance level, we think the markets clearly want this level to break sooner than later. We remain above a bullish trendline and gross longs continue to trend higher whilst short interest remains subdued, which means Euro will remain on our bullish watchlist as we seek to buy any dips.

JPY: Traders continue to pile into short positions despite the rising Yen. The two weeks of gains has removed the potential for a double top, although this could form into a triple top of triangle pattern. The lack of bearish interest suggests the rally may fizzle out, although if they are proven to be on the wrong side of the market then there are a lot of shorts to cover which could propel prices higher. For now, our bias is for limited upside on the Yen so we will monitor for signs of weakness. A break of 9,192 invalidates the bearish bias and short-covering could be expected.

AUD: The Australian Dollar stopped within pips of the 80c mark before RBA's assistant governor, Guy Debelle jawboned the currency. A rising currency is causing issues for the RBA as it dents their exports and growth figures, so we may find Tuesday's monetary policy meeting has a dovish twist. Up until Friday's speech, traders continued to pile into longs as shorts were reduced, which is the ideal scenario for a healthy bullish trend. Yet now the EBA has begun verbal interventions once more we may find longs are reconsidering the situation which may see AUD capped below 80c this week. We do not see an immediate threat to the bullish trend which may help it remain above 78c, yet we'll have a firmer idea on Tuesday how dedicated they are to keeping a cap on prices. If there is no dovish twist then 80c could indeed break to the upside this week.

CAD: Where we question AUD's ability to break 80c this week, we have more confidence in CAD's ability to break this milestone. Traders switched to net long for the first time since March as gross longs rise and short continue to be covered. Technically the trend appears strong and sentiment also pushed higher. This makes CAD longs a preferred currency of choice in the week/s ahead as we seek potential opportunities against weaker pairs. Once or if 80c is broken, the 2015 highs of 0.84 are the next milestone which also coincides with a 100% projection.

NZD: The Kiwi Dollar continues to fly higher against RBNZ's will. Commodity currencies remain well supported since the USD has been dragged over by flailing Whitehouse policies and soft US data. The positive carry NZD offers only makes the temptation to long the currency even greater. Technically this remains in our bullish watchlist to buy any pullbacks and we could see a break of the 2016 high this week as it moved towards 77c.

STOCKS

Dow (21580.07, -0.15%) bounced back sharply from 21500 but could be trading in the 21500-21750 region for a few more sessions before deciding its further direction. While support near 21500 holds, near term looks bullish.

Dax (12240.06, -1.66%) broke below 12400 to test our initial targets of 12300-12200. Bears look more powerful just now and could push the index towards 12000-11870 levels soon.

Shanghai (3252.69, +0.45%) has been rising as expected and may test resistance near 3270 from where a small dip is possible towards 3220 or lower in the near term. A break above 3270, if seen could take the index to levels near 3280-3295 which is an important resistance to keep an eye on.

Nikkei (19927.29, -0.86%) has broken below the immediate channel support and if that sustains, we could see a fall towards 19800-19700 levels in the near term. While Dollar-Yen continues to fall towards 110 or lower, Nikkei could also see fresh dips in the near term.

Nifty (9915.25, +0.42%) is likely to move higher towards 10000-10050 levels soon limiting its downside to 9800 just now. Near term looks bullish.

COMMODITIES

Ahead of the OPEC meet in Russia today, both Brent (48.21) and WTI (45.86) have corrected sharply as they test their respective supports of 48 and 46. The upside chances still remain open as long as Brent trades above 48.00-47.65 and WTI trades above 46.00-45.50.

Gold (1254) broke above the resistance of 1245 to register a high of 1257 this morning but it may find it difficult to rise above the resistance of 1260 on the very first attempt. Silver (16.4560) made an unsuccessful attempt to stay above the resistance of 16.50 but the failure to sustain the higher levels may keep it in the range of 16.20-16.50 for a few sessions more.

Copper (2.725) remains muted and rangebound in 2.66-78. While the resistance of 2.78-80 may not be overcome right now, it may keep trading sideways in the range of 2.55-80 for the next few days.

FOREX

OPEC meet today and Fed meet on Wednesday, 26th Jul'17 are going to set the market mood this week.

Euro (1.1670) is trading close to the final horizontal resistance of 1.1712 and there are equal chances of rising above it or failure near 1.17. At this point, we wait and watch. Naturally, Dollar Index (93.92) remains very weak and the downside target of 93.00 remains unchanged.

On the other hand, Dollar Yen (110.96) has already achieved our downside target of 111.00 and a minor recovery is visible from 110.73. As discussed last week, a strong bounce is a possibility from the 111.00-110.50 region and that warrants caution for the bears at the current levels.

Aussie (0.7921) is in a pause mode as expected and it may trade sideways in the range of 78.50-80.00 for a couple of sessions more before attempting a fresh high above 0.80.

Dollar-Rupee (64.32) has closed below 64.35 for the first time in the last 6 weeks. The charts themselves suggest greater chances of further downside towards 64.10 in case the immediate Support at 64.28 breaks. Whether further decline below 64.10 is seen or not might be dependent on the Euro breaking above 1.1713. We need to wait and watch on that.

INTEREST RATES

The US yields could come down a little more before rising again. The 30YR (2.81%) could come off towards 2.75% before pausing to see a corrective upmove. The 10YR (2.23%) and the 5Yr (1.80%) also have some room on the downside towards 2.18% and 1.70% respectively.

The US-Japan 10YR (2.16%) yield spread has fallen sharply and is testing immediate support just below current levels. If the support holds, the spread could bounce back in the next couple of sessions and could pull up Nikkei and Dollar Yen with itself.

The UK yields are also trading low and could move down in the near term. the 10Yr (1.17%), and the 20Yr (1.71%) could test 1.10% and 1.62% respectively. Near term looks bearish.

The Japanese yields are trading just above immediate supports and could bounce back in the coming sessions. Near term looks bullish.

EUR/USD strongly bullish

Price rallies and seems unstoppable on the Daily chart, is located above the 1.1660 level and could hit fresh new highs in the upcoming days. Is strongly bullish as the USD is weakened by the USDX’s impressive sell-off.

The index has fallen below the 94.00 psychological level and most likely will resume the bearish momentum, could approach the 92.49 major static support in the upcoming period, a further drop will force the USD to depreciate further versus its rivals.

Remains to see how will react when will touch the 1.1700psychologica level, could find temporary resistance at this static obstacle, but a valid breakout will attract more buyers.

EUR/USD edged higher in the last day’s and touched the 1.1682 level should climb higher in the upcoming days because the dollar is under massive selling pressure. The next major upside target is at the 1.1712 level, will approach this level because we don’t have any exhaustion sign, another important leg lower will come if the rate will drop and will stabilize below the median line (ml) of the ascending pitchfork.

Could also be attracted by the upper median line (uml) of the ascending pitchfork and by the seventh warning line (wl7) of the former descending pitchfork, could find resistance at this levels.

The outlook will remain bullish as long as is trading within the ascending pitchfork’s body, right now will be better to stay away because we don’t have any trading opportunity.

We may have some action tomorrow because the US and the Euro-zone are to release significant reports, the fundamental factors could take action the lead and could drive the rate, remains to see the direction.

GBP/USD setting up for further increase

Price surged on Friday and managed to stay above a broken major dynamic resistance, the short retreat was somehow expected after the impressive bullish rally.

Continues to move within the ascending channel, so the perspective is bullish in the upcoming period despite the minor retreat. GBP/USD decreased a little in the previous week after the failure to reach the upside line of the ascending channel .

Has come down to retest the upper median line (UML) of the major descending pitchfork, we may have a buying opportunity if will retest the warning line (wl1) as well. The sentiment will change if the rate will stabilize outside the descending pitchfork’s body.

USD/JPY on the way down

USD/JPY decreased sharply on Friday, signalling that the bears are if full control on the short term, should drop much deeper if the USDX will touch fresh new lows.

Has broken below the black downtrend line and below the 38.2% retracement level and looks determined to drop much below the 111.00 psychological level. Is moving somehow sideways between the 23.6% and the 50% retracement level, could approach the 50% level and the first warning line (wl1) these days. We’ll have a selling opportunity if will come back to test and retest the broken levels.

EURUSD - With the pair holding on to its upside pressure, more strength is expected in the new week. Resistance comes in at 1.1700 level with a cut through here opening the door for more upside towards the 1.1750 level. Further up, resistance lies at the 1.1800 level where a break will expose the 1.1850 level. Its daily RSI is bullish and pointing higher suggesting further strength. Conversely, support lies at the 1.1600 level where a violation will aim at the 1.1550 level. A break of here will aim at the 1.1500 level. All in all, EURUSD faces further upside pressure.

GOLD - With the commodity continuing to retain its recovery risk, more strength is expected in the new week. On the downside, support comes in at the 1,250.00 level where a break will turn attention to the 1,240.00 level. Further down, a cut through here will open the door for a move lower towards the 1,230.00 level. Below here if seen could trigger further downside pressure targeting the 1,220.00 level. Conversely, resistance resides at the 1,260.00 level where a break will aim at the 1,270.00 level. A turn above there will expose the 1,280.00 level. Further out, resistance stands at the 1,290.00 level. All in all, GOLD looks to recover further higher.

Good morning traders,

How was your weekend? I hope it was as productive as mine

But as always, we're back on Monday morning ready and raring to go with another look at the EUR/USD chart.

After EUR/USD broke out of its channel last week, price has continued higher all the way to now sit just 30 pips away from the daily range top.

EUR/USD Daily:

What a rally!

After breaking out of the channel, the move has been swift and with a ton of momentum behind it. Anyone selling the top of that channel would have had their stops just above, which exaggerated the speed of the move up to the next resistance level that we're at now.

There was a nice little breakout and retest of channel resistance though.

EUR/USD Daily 2:

Even when markets have momentum behind them, they still almost always trade in a technical manner and this is just another textbook example.