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Global Markets:

• Asian stock markets: Nikkei up 0.05 %, Shanghai Composite rose 0.50 %, Hang Seng rallied 0.40 %, ASX 200 gained 0.10 %
• Commodities: Gold at $1256 (+0.05 %), Silver at $16.66 (+0.10 %), WTI Oil at $43.50 (+1.10 %), Brent Oil at $46.25 (+1.05 %)
• Rates: US 10-year yield at 2.16, UK 10-year yield at 1.04, German 10-year yield at 0.26

News & Data

• Japan Corporate Services Price Index 0.7 % vs 0.7 % expected
• Asia stocks edge up on optimism over global growth, oil rebounds – RTRS
• Oil climbs on weaker dollar, but rise in U.S. drilling drags – RTRS

CFTC Positioning Data:

• EUR long 45K vs 79K long last week
• GBP short 38K vs 39K short last week
• JPY short 50K vs 51K short last week
• CHF short 3K vs 14K short last week
• CAD short 82K vs 88K short
• AUD long 15k vs short 1K last week
• NZD long 21K vs 1K short last week

Markets Update:

Markets had a quiet start into the new trading week, amid a lack of data and events overnight. EUR/USD opened around 1.12 and fell to 1.1185, while GBP/USD consolidated in a 1.2730-50 range. USD/JPY traded in a 111.15-35 range, while AUD/USD rose from 0.7560 to 0.7580.

Asian stock indices are mostly up on the day, led by the Shanghai Composite. Oil prices rallied overnight, which could support equities, if it can sustain momentum. Heavy resistance is seen ahead of $44 in WTI and around $46.50 in Brent.

Volatility should increase again this week, with a fair number of data releases to look forward too. Today, the main event will be the German IFO numbers, an indicator for business climate and business outlook.

Upcoming Events:

• 09:00 BST – German IFO Business Climate
• 13:30 BST – US Durable Goods Orders
• 23:45 BST – New Zealand Trade Balance

The Week Ahead:

Tuesday, June 27th

• 07:45 BST – French CPI
• 15:00 BST – US CB Consumer Confidence
• 15:00 BST – US Richmond Manufacturing Index

Wednesday, June 28th

• 07:45 BST – French Consumer Confidence
• 10:00 BST – Italian CPI
• 15:00 BST – US Pending Home Sales
• 15:30 BST – US Crude Oil Inventories

Thursday, June 29th

• 00:50 BST – Japan Retail Sales
• 02:00 BST – Australia HIA New Home Sales
• 02:00 BST – New Zealand ANZ Business Confidence
• 10:00 BST – Euro Zone Consumer Confidence
• 13:00 BST – German CPI
• 13:30 BST – US GDP
• 13:30 BST – US Initial Jobless Claims
• 23:45 BST – New Zealand Building Consents

Friday, June 30st

• 00:30 BST – Japan CPI
• 00:30 BST – Japan Household Spending
• 00:30 BST – Japan Unemployment Rate
• 00:50 BST – Japan Industrial Production
• 02:00 BST – China Manufacturing PMI
• 02:00 BST – China Non-Manufacturing PMI
• 02:30 BST – Australia Private Sector Credit
• 06:00 BST – Japan Housing Starts
• 07:00 BST – German Retail Sales
• 08:55 BST – German Unemployment Rate
• 09:30 BST – UK GDP
• 10:00 BST – Euro Zone CPI
• 13:30 BST – Canadian GDP
• 13:30 BST – US Personal Income
• 13:30 BST – US Personal Spending
• 14:45 BST – US Chicago PMI
• 15:00 BST – US Michigan Consumer Sentiment

EURUSD - With the pair seeing rejecting lower prices to close higher the past week, further bullishness is likely. Resistance comes in at 1.1200 level with a cut through here opening the door for more upside towards the 1.1250 level. Further up, resistance lies at the 1.1300 level where a break will expose the 1.1350 level. Its weekly RSI is bullish and pointing higher suggesting more strength. Conversely, support lies at the 1.1100 level where a violation will aim at the 1.1050 level. A break of here will aim at the 1.1000 level. All in all, EURUSD faces further upside threats on price rejection.

EUR/USD stayed in consolidation below 1.1295 last week and outlook is unchanged. Initial bias remains neutral this week first. With 1.1109 support intact, there is no indication of reversal yet. Decisive break of 1.1298 key resistance will carry larger bullish implication and target 1.1615 resistance next. On the downside, break of 1.1109 support will indicate short term topping and rejection from 1.1298. In such case, intraday bias will be turned to the downside for 1.0838 support.

In the bigger picture, the case for medium term reversal continues to build up with EUR/USD staying far above 55 week EMA (now at 1.0941). Also, bullish convergence condition is seen in weekly MACD. Focus will now be on 1.1298 key resistance. Rejection from there will maintain medium term bearishness and would extend the whole down trend from 1.6039 (2008 high). However, firm break of 1.1298 will indicate reversal. In such case, further rally would be seen back to 1.2042 support turned resistance next.

In the long term picture, the case for completion of down trend from 1.6039 (2008 high), and long term bottoming at 1.0339, is starting to build up. Decisive break of 1.1298 will bring rise back to 1.2042 as first resistance. And in that case, we should at least see rally back to 38.2% retracement of 1.6039 to 1.0339 at 1.2516.

USD/JPY edged higher to 111.78 last week but turned sideway since then. Initial bias stays neutral this week first. Further rise is mildly in favor with 110.63 minor support intact. Above 111.78 will target channel resistance (now at 112.87). Sustained break there will suggest that whole pull back from 118.65 has completed at 108.12 already. In such case, further rise should be seen to 114.36 resistance for confirmation. However, break of 110.63 will turn bias back to the downside for 108.81 instead.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. It's uncertain whether it's completed yet. But in case of another fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77 to bring rebound. Overall, rise from 75.56 is still expected to resume later after the correction from 125.85 completes.

In the long term picture, the rise from 75.56 long term bottom to 125.85 medium term top is viewed as an impulsive move. Price actions from 125.85 are seen as a corrective move which could still extend. But, up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.

GBP/USD dropped to 1.2588 last week and breached 1.2614 key support level but recovered. Upside of rebound was limited below 1.2813 resistance and outlook is unchanged. Initial bias remains neutral this week first. At this point, we still favor the case that consolidation pattern from 1.1946 has completed at 1.3047 already. Sustained break of 1.2614 should confirm our bearish view and target a test on 1.1946 low next. However, break of 1.2813 resistance will dampen our view and turn bias back to the upside for 1.3047 and above.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. Price actions from 1.1946 medium term low are seen as a consolidation pattern, which could have completed at 1.3047 after hitting 55 week EMA. Break of 1.1946 low will target 61.8% projection of 1.5016 to 1.1946 from 1.3047 at 1.1150 next. In case the consolidation from 1.1946 extends, outlook will stay remain bearish as long as 1.3444 resistance holds.

In the longer term picture, no change in the view that down trend from 2.1161 is still in progress. On resumption, such decline would extend deeper to 100% projection of 2.1161 to 1.3503 from 1.7190 at 0.9532.

USD/CHF stays in corrective price actions above 0.9613 last week and outlook is unchanged. Initial bias remains neutral this week first. As long as 0.9807 resistance holds, further fall is expected. Break of 0.9613 will resume the decline from 1.0342 and target 0.9548 support and below. We'd start to look for bottoming signal again as it approaches 0.9443 key support level. On the upside, firm break of 0.9807 will indicate near term reversal and turn outlook bullish for 1.0099 resistance next.

In the bigger picture, USD/CHF is still bounded in medium term range of 0.9443/1.0342 for the moment. Consolidative trading would likely continue and medium term outlook remains neutral. Break of 1.0342 key resistance is needed to confirm underlying bullish momentum in the pair. Meanwhile, downside attempts should be contained by 0.9443 key support level. However, sustained break of 0.9443 will carry larger bearish implication and target 0.9 handle.

AUD/USD turned into consolidation below 0.7635 last week. Initial bias remains neutral this week first. As long as 0.7523 minor support holds, further rise is in favor. Break of 0.7635 will extend the rise from 0.7328 to 0.7748 resistance and above. At this point, there is no clear sign of range breakout yet. Hence, we'd be cautious on topping again as it approaches medium term fibonacci level at 0.7849. Meanwhile, break of 0.7523 will argue that rebound from 0.7328 is completed. In that case, intraday bias will be turned back to the downside for 0.7370 support.

In the bigger picture, we're still treating price actions from 0.6826 low as a corrective pattern. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8096) and above.

In the longer term picture, while the down trend from 1.1079 might extend lower, we're not anticipating a break of 0.6008 (2008 low) yet. We'll look for bottoming above there to reverse the medium term trend.

USD/CAD stayed in consolidation above 1.3164 last week and outlook is unchanged. Initial bias remains neutral this week first. Upside of recovery should be limited by 1.3387 support turned resistance to bring fall resumption. As noted before, corrective rise from 1.2460 has completed at 1.3793 already. Below 1.3164 will extend the decline from 1.3793 to 1.2968 cluster support, 61.8% retracement of 1.2460 to 1.3793 at 1.2969. However, firm break of 1.3387 will dampen our view and turn focus back to 1.3537 resistance next.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. Rise from 1.2460 is seen as the second leg and has completed at 1.3793, ahead of 61.8% retracement of 1.4689 to 1.2460 at 1.3838. Break of 1.3222 should now indicate the start of the third leg while further break of 1.2968 should confirm. In that case, USD/CAD should decline through 1.2460 support to 50% retracement of 0.9406 to 1.4869 at 1.2048.

In the longer term picture, rise from 0.9056 (2007 low) is viewed as a long term up trend. It's taking a breath after hitting 1.4689. But such rise expected to resume later to test 1.6196 down the road.

GBP/JPY's recovery last week was limited below 142.75 minor resistance and there is no confirmation of completion of fall from 148.09 yet. Initial bias remains neutral this week first. On the downside, break of 138.65 will resume the decline from 148.09. In that case, we'd look for bottoming signal around 135.58, which is close to 135.39 fibonacci level, to bring rebound. On the upside, break of 142.75 should confirm completion of the fall from 148.09 and turn bias back to the upside for this resistance.

In the bigger picture, while the fall from 148.09 is deeper than expected, we're not bearish in the cross yet. Price action from 148.42 is possibly developing into a sideway pattern with fall from 148.09 as the third leg. Deeper decline could be seen but we're looking for strong support from 135.58 and 50% retracement of 122.36 to 148.42 at 135.39 to contain downside. Rise from 122.36 is still mildly in favor to resume at a later stage. However, sustained break of 135.58/39 will confirm reversal and target a retest on 122.36 low.

In the longer term picture, based on the impulsive structure of the decline from 195.86 to 122.36, such fall should not be completed yet. But we will now pay close attention to the structure of the rise from 122.36 to determine whether it's a corrective move, or an impulsive move. That would decide whether a break of 116.83 low would be seen.

EUR/JPY's consolidation from 125.80 continued last week and outlook is unchanged. Initial bias is neutral this week first. In case of another fall, downside should be contained by 38.2% retracement of 114.84 to 125.80 at 121.61 to bring rebound and then rise resumption. On the upside, decisive break of 125.80/126.09 resistance zone will extend the whole rise from 109.03 to 100% projection of 109.03 to 124.08 from 114.84 at 129.89.

In the bigger picture, focus is staying on 126.09 support turned resistance. Decisive break there will confirm completion of the down trend from 149.76. And in such case, rise from 109.20 is at the same degree and should target 141.04 resistance and above. Meanwhile, rejection from 126.09 and break of 114.84 will extend the fall from 149.76 through 109.20 low.

In the long term picture, medium term decline from 149.76 is seen as part of a long term sideway pattern from 88.96. We're not seeing any sign of an established long term trend yet. Hence, we'll be cautious on strong support at 94.11 in case of another fall. Also, there could be strong resistance at 149.76 in case of a medium term rise.