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Daily Pivots: (S1) 1.1380; (P) 1.1399 (R1) 1.1417; More.....

Range trading in EUR/USD continues below 1.1444 short term top and intraday bias stays neutral. Another fall cannot be ruled out. But downside should be contained by 1.1291 resistance turned support to bring rise resumption. Break of 1.1444 will extend the rally from 1.0339 low to 1.1615 resistance next. Meanwhile, break of 1.1291 will turn focus back to 1.1118 support instead.

In the bigger picture, the firm break of 1.1298 resistance further affirm medium term reversal. That is an important bottom was formed at 1.0339 on bullish convergence condition in weekly MACD. Further rise would be seen to 55 month EMA (now at 1.1763). Sustained break there will pave the way to 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516 next. This will now remain the favored case as long as 1.1118 support holds.

Sterling has turned lower after a speech by Bank of England Deputy Governor Ben Broadbent.

GBP is down -0.21% at £1.2861

Of late, sterling had found support on rhetoric from Bank of England (BoE) policymakers have hinted at a possible rate rise.

Mr. Broadbent did not mention monetary policy in his speech to the Scottish Council for Development and Industry, in Aberdeen, but was cautious on Brexit's impact on trade.

Mr. Broadbent said "a significant curtailment of trade with Europe would force the U.K to shift away from producing the things it's been relatively good at."

The market is paring back its bets on a rate hike actually happening at all this year

GBP/USD trades down -0.2% at £1.2855, down from £1.2917 before the speech. EUR/GBP is at €0.8865 vs. €0.8834 beforehand.

The CAC index has inched higher in the Monday session. Currently, the index is currently trading at 5156.30 and is down 0.27% on the day. On the release front, Eurozone Sentix Investor Confidence edged up to 28.4, above the estimate of 28.1. There are no French events on the schedule. On Wednesday, the Eurozone releases Industrial Production and Fed chair Janet Yellen will testify before the House Financial Services Committee.

French president Emmanuel Macron ran on a campaign of political and economic change, and the French government has acted quickly, promising to lower its budget deficit to the 3 percent of GDP. The 3 percent rule is required by the EU, but Brussels has chosen to turn a blind eye to the many members who run deficits above 3 percent. This move sends a message to the ECB that France is serious about economic reform. The French government is also eager to take advantage of Britain's departure from the European Union. The government wants to project a "finance-friendly" image, which is critical in France's efforts to lure financial sector jobs which are being relocated from London to the continent. On Tuesday, Prime Minister Edouard Philippe told a banking conference in Paris that he wants the city to become Europe's main financial hub after Brexit. This will be a tall order, as Frankfurt will likely be the most attractive choice for German and other companies that are downsizing their operations in London. Still, Philippe's comments underscore that France is looking for a bigger role on the international scene, and Brexit is a unique economic and political opportunity for Macron.

There was good news on the US employment front, as Nonfarm Payrolls rebounded in June, climbing to 222 thousand, its second highest gain in 2017. Although the markets reacted positively to the solid Nonfarm Payrolls report, expectations of a third rate hike in 2017 are tepid. A rate increase in September is very unlikely, with the odds pegged at just 13%, according to the CME Group. As for December, the likelihood of a rate hike is 50%, so the markets will need plenty of convincing that the Fed plans to make a move. What factors will raise the odds of a rate increase? First, second quarter growth will have to improve, after a weak performance in the first quarter, in which GDP rose just 1.4%. Second, stronger inflation levels would boost speculation of a rate hike. Currently, inflation is well below the Fed's target of 2%, and although Janet Yellen recently stated that the factors weighing on inflation were temporary, investors aren't convinced. Third, the Fed has outlined plans to reduce its bloated balance sheet, but has avoided providing any specifics. If the Fed started to lower the balance sheet in September, such a move would mark a vote of confidence in the economy and raise speculation of a rate hike to follow in December.

The AUD/NZD went exactly as planned rejecting from the POC zone. Our previous AUD/NZD analysis showed a strong support which was respected and the pair proceeds with uptrend. The pair is above W H3 and D H5 which suggests strong uptrend. If we see a retracement, pay attention to POC 1.0465-85 (50.0, ATR pivot, W H3, D H5/H4, EMA89, inner trend line). As you can see this is the cluster of support so now moment buyers might be waiting for another chance to push the price higher. If the price breaks and closes above 1.0550, we might see 1.0600 - W H5 level.

Daily Pivots: (S1) 1.2853; (P) 1.2881; (R1) 1.2907; More...

GBP/USD's corrective pull back from 1.3029 extends lower today and hits 1.2840. But it quickly recovers after hitting 1.2849 support. Intraday bias remains neutral first. We'd still expect downside to be contained by 1.2849 support to bring rise resumption. Above 1.2926 minor resistance should turn bias back to the upside for 1.3047 resistance. Break will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168 next. However, sustained break of 1.2849 will dampen our near term bullish view and turn focus back to 1.2588 support.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is now in favor, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

The financial markets lack a general theme today. DOW opens flat and is set to extend recent range trading. European indices are trading mixed at the time of writing with FTSE and CAC in red. The strong rebound in Nikkei earlier today had no follow through in other markets. Gold is struggling in tight range between 1210/5 while WTI crude oil is bounded between 44/45. In the currency markets, Sterling dips notably as markets are disappointed by the lack of hints on monetary policy from BoE deputy. New Zealand Dollar remains the weakest for today, followed by Swiss Franc and Yen. Technical development in Sterling will be closely watched in the US session. Key levels are 1.2849 in GBP/USD, 0.8879 in EUR/GBP and 146.03 in GBP/JPY.

BoE Broadbent gave no hints on monetary policy

BoE Deputy Governor Ben Broadbent warned of risks of trade after Brexit. He noted that "a significant curtailment of trade with Europe would force the U.K. to shift away from producing the things it's been relatively good at, and therefore tends to export to the EU, and towards the things it currently imports and is relatively less good at." In particular, he cited the example of moving away from services exports that could hurt income and raise costs of food and machinery. While Broadbent didn't touch on monetary policies directly, his cautious tone argues that the is unlikely to vote for a rate hike in the next MPC meeting in August.

Released from UK, BRC retail sales monitor rose 1.2% yoy in June.

Australia firm on business conditions, Kiwi tumbles

Australia NAB business confidence rose 1 point to 9 in June. Business conditions gauge improved 4 points to 15. Most industrial performed well with strongest gains in wholesale, construction and manufacturing. On the other hand, mining was the worst performer due to falling commodity prices. The business conditions index is indicate back at pre-financial crisis level.

But confidence lagged behind and recorded slower rise in recent months. NAB noted that "we continue to be pleasantly surprised by just how upbeat the business sector is, given the context of a fairly beleaguered household sector that has been weighed down by limited wages growth and record levels of debt". However, it also warned that long term outlook could easily "underperform the RBA's upbeat expectations as important growth drivers (LNG exports, commodity prices and housing construction) begin to fade". Also from Australia, home loans rose 1.0% in May.

New Zealand dollar tumbles today as government data showed retail spending on credit and debit cards was unchanged in June. Some economists pointed out that's an import miss as there was expectations of a boost from the British and Irish Lions' rugby tour.

Elsewhere, Japan M2 rose 3.9% yoy in June, machine tools orders rose 31.1% in June. Canada housing starts rose to 213k in June. .

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.2853; (P) 1.2881; (R1) 1.2907; More...

GBP/USD's corrective pull back from 1.3029 extends lower today and hits 1.2840. But it quickly recovers after hitting 1.2849 support. Intraday bias remains neutral first. We'd still expect downside to be contained by 1.2849 support to bring rise resumption. Above 1.2926 minor resistance should turn bias back to the upside for 1.3047 resistance. Break will target 61.8% projection of 1.2108 to 1.3047 from 1.2588 at 1.3168 next. However, sustained break of 1.2849 will dampen our near term bullish view and turn focus back to 1.2588 support.

In the bigger picture, overall, price actions from 1.1946 medium term low are seen as a corrective pattern that is still in progress. While further upside is now in favor, overall outlook remains bearish as long as 1.3444 key resistance holds. Larger down trend from 1.7190 is expected to resume later after the correction completes. And break of 1.2588 will indicate that such down trend is resuming.

Economic Indicators Update

The DAX index has inched higher in the Tuesday session, as the index is up 0.20% on the day. Currently, the DAX is at 12,468.00. On the release front, there are no eurozone or German releases. On Wednesday, Germany releases WPI and the Eurozone publishes Industrial Production. In the US, Federal Reserve Chair Janet Yellen will testify before the House Financial Services Committee.

The German economy has looked solid in 2017, buoyed by strong consumer spending as well as an increased demand for German products, notably machinery. The manufacturing sector continues to expand, and Industrial Production improved to 1.2% in May, crushing the forecast of 0.2%. A strong export sector has led to an improved trade balance, and the trade surplus climbed to EUR 20.3 billion in May, which was the second highest surplus this year. The IMF has upgraded its forecast for the German growth to 1.8 percent in 2017, up from its estimate of 1.6 percent in April. Other eurozone members are not enjoying the same fiscal stability, and the question of the fiscal stance of the eurozone as a whole was a key topic as eurozone finance ministers met in Brussels on Monday. Germany has opposed attempts to define the bloc's fiscal stance as expansionary, and at the Monday meeting, the finance ministers agreed to aim for a"broadly neutral" stance. The European Commission wants to see Germany divert more resources to investment and public spending, given that the country is enjoying high growth.

Last week's US employment numbers were a mixed bag. Nonfarm Payrolls rebounded in June, climbing to 222 thousand. This easily beat the estimate of 175 thousand and marked a 4-month high. However, wage growth remained stuck at 0.2%, shy of the forecast of 0.3%. Weak wage growth has remained soft throughout the first half of 2017, which is somewhat puzzling, as the labor market remains extremely tight, with an unemployment rate of 4.4%. As well, there are widespread reports of a lack of qualified workers, but this hasn't translated into higher wages.

The markets reacted positively to the solid Nonfarm Payrolls report, but there expectations of a third rate hike in 2017 remain lukewarm. A rate increase in September is very unlikely, with the odds pegged at just 13%, according to the CME Group. As for December, the likelihood of a rate hike is 50%, so the markets will need plenty of convincing that the Fed plans to make a move. What factors will raise the odds of a rate increase? First, second quarter growth will have to improve, after a weak performance in the first quarter, in which GDP rose just 1.4%. Second, stronger inflation levels would boost speculation of a rate hike. Currently, inflation is well below the Fed's target of 2%, and although Janet Yellen recently stated that the factors weighing on inflation were temporary, investors aren't convinced. Third, the Fed has outlined plans to reduce its bloated balance sheet, but has avoided providing any specifics. If the Fed started to lower the balance sheet in September, such a move would mark a vote of confidence in the economy and raise speculation of a rate hike to follow in December.

NZDUSD: The pair continues to face downside pressure selling on Tuesday and leaving risk lower in the days ahead. Support lies at the 0.7200 level. Further down, the 0.7150 level comes in as the next downside target. Its daily RSI is bearish and pointing lower suggesting more weakness. Conversely, resistance resides at the 0.7250 level where a break will aim at the 0.7300 level. A break of here will have to occur to create scope for a run at the 0.7350 level. Further out, resistance stands at the 0.7400 level. All in all, NZDUSD faces further downside pressure.

GBP/USD slips lower

The currency pair is trading in the red right now and most likely will resume the minor retreat after the failure to climb above the 1.3047 previous high. Looks exhausted on the short term and could come down to test and retest some important support level. The greenback will drive the rate down if the USDX will have enough energy to stay above the 96.00 psychological level and to resume the minor rebound.

Price is driven by the technical factors right now, we have a poor economic calendar today, however, the United States figures could bring some action in the afternoon.

You can see that is trading within an ascending channel on the daily chart, but failed to reach the upside line of this pattern, signalling an overbought. Has also failed to approach and reach the upper median line (UML) of the major descending pitchfork (this represents a major dynamic resistance). Is expected to reach and retest the 1.2798 static support and also the first warning line (wl1) of the minor ascending pitchfork, a valid breakdown below these levels will confirm a larger drop.

The upside movement will resume only if the rate will take out the major resistance from the UML, this scenario will take shape only if the USDX will drop below the 95.45 previous low.

EUR/CHF strongly bullish

Price increased significantly in the last period and looks determined to hit fresh new highs, is attracted by an important confluence area on the short term. The Euro could receive a helping hand from the Italian Industrial Production, which is expected to increase by 0.5% in May, more after the 0.4% drop in the previous reading period.

Price extends the latest gains, has managed to break above the first warning line (WL1) of the major descending pitchfork, signalling a further increase. Maintains a bullish perspective as long as is trading within the minor ascending pitchfork's body. Is attracted by the confluence area formed at the intersection between the upper median line (UML) of the ascending pitchfork with the median line (ml) of the minor ascending pitchfork, where he could find strong resistance again. A breakout above the mentioned resistance levels will attract more buyers on the short term.

EUR/GBP still sideways

EUR/GBP continues to move sideways on the short term, is trapped below a strong dynamic resistance, but I hope that we'll have a clear direction very soon. Price needs a bullish spark to be able to breakout from the minor range, is trading near the 0.8850 psychological level, a further increase is favored on the Daily chart.

Is located right below the second warning line (wl2) of the former minor descending pitchfork and above above the 100% Fibonacci level, only a valid breakout above the wl2 will confirm a further increase. The next major upside target will be at the UML. Another leg down will appear if will breakdown below the ML again.

USD/CAD increases ahead US and Canadian data

The currency pair edges higher and resumed the yesterday's minor bullish candle, remains to see how this bounce back will be because is still under massive selling pressure on the Daily chart. Price increases as the dollar index stays higher, near the 96.10 level, a USDX's further increase will force the greenback to appreciate versus all its rivals. The fundamental events could bring life on the currency market, the CMHC will publish the Canadian Housing Starts indicator, which is expected to increase from 195K to 200K in June. On the other hand, the US is to release the JOLTS Job Openings, which could decrease from 6.04M to 5.98M in May and the Final Wholesale Inventories, the economic indicator could increase by 0.3% in May.

We'll see how the USD will react later after the data will be released, a disappointment will send the USD/CAD lower again.

Price managed to bounce back on the Daily chart and now is pressuring the second warning line (wl2) of the ascending pitchfork. We'll have a larger rebound only if will stay above the median line (ML) of the major descending pitchfork and if will make an accumulation move.

NZD/USD plunged aggressively

The Kiwi dropped sharply against the USD today and erased the last weeks gains, could drop much deeper if the dollar index will have enough energy to stay above the 96.00 psychological level and to resume the minor throwback. Has dropped more than 50 pips today and looks unstoppable on the short term.

You can see that has extended the minor corrective phase and is very close to hit the second warning line (WL2) of the former major descending pitchfork. The current retreat was somehow expected after the impressive rally, could find support at the WL2 and lower at the fourth warning line (wl4) of the former ascending pitchfork. Actually, could be attracted by the confluence area formed between the mentioned dynamic support levels.

We'll have a larger drop if the rate will breakdown through the mentioned confluence area, but a rejection from the confluence zone will bring us a good buying opportunity. The perspective remains bullish as long as the wl4 remains intact.

GOLD trading in the red

The yellow metal remains under massive selling pressure as the USD tries to rebound and to recover after the last week's drop. Will decreased further if the USDX will have enough energy to increase further.

Price is challenging the 50% retracement level, a valid breakdown below this level will open the door for more declines. The perspective is bearish on the short term as long as is trading within the descending pitchfork's body. Could drop much below the $1200 per ounce if the USD will receive support from the US economy. A minor bounce back will come only if the 50% support will hold for now.