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USD/JPY Consolidating.

USD/JPY is trading sideways after short-term surge. Hourly support can be found at 108.89 (14/06/2017 high). Strong support is located at 108.13 (17/04/2017 low). Hourly resistance given at 110.81 (09/06/2017 high) has been broken. Other key supports lie at a distance 106.04 (11/11/2016 low). Expected to show continued increase towards resistance given at 112.13 (24/05/2017 high

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CAD Trading sideways.

USD/CAD has strongly declined and is now consolidating. Hourly support lies at 1.3165 (14/06/2017 high). Expected to show continued weakness towards support given at 1.3010 (16/02/2017 low)

In the longer term, the pair lies in a bullish channel since a year. Strong resistance is given at 1.4690 (22/01/2016 high). Long-term support can be found at 1.2461 (16/03/2015 low).

AUD/USD Profit-taking.

AUD/USD is pushing higher since the pair has failed to reach hourly support given at 0.7329 (09/05/2017 low). The technical structure is clearly positive and the pair should head towards resistance at 0.7750 (21/03/2017 high).

In the long-term, we are waiting for further signs that the current downtrend is ending. Key supports stand at 0.6009 (31/10/2008 low) . A break of the key resistance at 0.8295 (15/01/2015 high) is needed to invalidate our long-term bearish view.

EUR/USD Holding below 1.1200.

EUR/USD is trading lower. The pair is still trading below strong resistance given at 1.1300 (09/11/2017 high). Hourly support can be found at 1.1076 (18/05/2017 low). Stronger support lies at 1.0842 (11/05/2017 low). Expected to show renewed bullish pressures.

In the longer term, the momentum is clearly negative. We favour a continued bearish bias towards parity. Key resistance holds at 1.1714 (24/08/2015 high) while strong support lies at 1.0341 (03/01/2017 low).

GBP/USD Short-term strength.

GBP/USD is trading higher above former hourly support given at 1.2757 (21/04/2017 low). Hourly resistance lies at 1.3046 (18/05/2017 high). Expected to show continued short-term increase.

The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY Consolidating.

USD/JPY is trading sideways after short-term surge. Hourly support can be found at 108.89 (14/06/2017 high). Strong support is located at 108.13 (17/04/2017 low). Hourly resistance given at 110.81 (09/06/2017 high) has been broken. Other key supports lie at a distance 106.04 (11/11/2016 low). Expected to show continued increase towards resistance given at 112.13 (24/05/2017 high

We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

The pair is probing above 111.00 barrier again after falling to 110.71 in early Asia. Near-term action remains supported by 200SMA for the second day, which underpins for renewed upside attempts, following Friday’s upside rejection.

On the other side, Doji candle with long upper shadow which was left on Friday after recovery extension was capped by daily Kijun-sen at 111.41, weighs on near-term action. Repeated scenario today would signal strong hesitation at pivotal 110.93 barrier (Fibo 38.2% of 114.36/108.80 downleg) and increase downside risk. Overbought slow stochastic on daily chart supports the notion and may put the pair under fresh pressure on bearish signal on reversal.

Such scenario requires close below 200SMA (20/200SMA death cross is also forming) to signal top and open way for fresh downside.

Conversely, sustained break above 110.93/111.00 (Fibo 38.2% / 55SMA) would signal fresh upside which requires break through falling Kijun-sen (111.32) for extension towards 111.85 barrier (100SMA).

Res: 111.00, 111.32, 111.41, 111.85
Sup: 110.71, 110.41, 110.11, 109.80

The British Pound displayed early signs of volatility during trading on Monday with prices popping above 1.2800 as anticipation mounted ahead of formal Brexit talks this afternoon. Brexit Secretary David Davis will be in the spotlight as he marches with a cavalry of nine-strong negotiators to Brussels calling for a 'deal like no other deal in history'. Although much will be discussed in the talks ranging from the status of expats, the UK's mammoth divorce bill, and Northern Ireland's borders, investors may be more interested in the tone and stance of the European negotiators.

Today could offer a rare opportunity for participants to gain further insight into the overall aim of European negotiators and if they plan to play hardball.

With political instability in Westminster placing the UK in a vulnerable position and Conservatives in a weaker position following the election, the outcome of the Brexit talks may heavily depend on what Europe wants. Although the prospect of a soft Brexit has the ability to support Sterling, I feel the currency remains vulnerable to further downside amid the confusion and ongoing uncertainty that Brexit presents.

With Phillip Hammond sharing his concerns over the impact of having no deal, or even worse, a deal that drains the lifeblood of the UK economy, it will be interesting to see on what terms Britain will leave the European Union.

From a technical standpoint, the GBPUSD still remains under pressure on the daily charts. Repeated weakness below the pivotal 1.2775 should encourage bears to target 1.2600.

Dollar bulls seeking inspiration

The Greenback stabilized against a basket of currencies on Monday after tumbling on disappointing US economic data last week. Price action currently suggests that Dollar bullish investors may be in need of inspiration to support the currency as the effect of June's hawkish surprise wears off. This is a week packed with comments by top Federal Reserve officials and participants may use this opportunity to seek for further clues on future rate hikes.

Although the central bank remains optimistic over the health of the US economy, there seems to be a growing disconnect between what the markets think and what the Fed is signaling. If economic data from the States fails to stabilize and a period of economic softness proves more than just 'transitory', the Dollar could find itself under renewed selling pressure.

Gold struggles below $1260

Gold bulls were missing in action last week with bears making a guest appearance on Monday as the Dollar stabilized. The Fed hawks still have a grip on the zero-yielding metal with the prospect of higher US interest rates this year enforcing downside pressures. If the Dollar continues to stabilize and Federal Reserve officials adopt a hawkish stance this week, Gold could be instore for further punishment.

While the uncertainty surrounding Brexit negotiations and ongoing US political instability is likely to support safe haven assets such as Gold in the medium term, short term bears remain in control below $1260. From a technical standpoint, the GBPUSD is pressured on the daily charts and support around $12260 should transform into a dynamic resistance that opens a path towards $1240.

Commodity spotlight – WTI Oil

Oil prices were slightly pressured on Monday as the continued expansion in US Shale was seen as obstructing OPEC's efforts to stabilize the saturated markets. A stabilizing US Dollar complimented the downside with sellers sending prices towards $44.50. The tale of OPEC vs US Shale is starting to feel like an ongoing battle of attrition with the champion taking the spoils. From a technical standpoint, WTI Crude remains in the bears' territory on the daily charts and a break below $44 should entice sellers to target $43.

Today marks the beginning of the Brexit negotiations. Even though there is the likelihood for sterling to be headline-driven, we believe that over the next few days, market attention is likely to remain primarily on UK domestic politics. The deal between the Tories and the DUP is not finalized yet, while it still remains to be seen whether the Queen's speech will pass through Parliament. As such, it is not certain whether Theresa May will even have a seat on the negotiating table in a few weeks, and with what kind of mandate the UK will approach these talks.

On Sunday, Chancellor Philip Hammond noted that he wants to push for a 'jobs first' Brexit, and also rejected the government's previous mantra that 'no deal is better than a bad deal'. We consider these as preliminary indications that the Conservatives' stance to Brexit may have started to soften up. If more government or Tory officials echo similar remarks, then speculation regarding a smoother Brexit could resurface. Combined with a potential Tory-DUP deal that allows May to keep her position, these factors could prove positive for sterling, as political uncertainty dissipates somewhat. The Queen's Speech on Wednesday has the potential to lift some more of this uncertainty (see below). Even though Parliament will not vote on the Speech until next week, we will probably get some fresh indications on what May's government hopes to achieve in the Brexit talks.

GBP/USD traded in a consolidative manner on Friday, staying slightly below the resistance line of 1.2815 (R1). The pair continues to lie above the longer-term upside support line drawn from the low of the 7th of October, and also above the prior downside resistance line taken from the peak of the 6th of December. Nevertheless, it still trades below the key hurdle of 1.2850 (R2) and the short-term downside resistance line taken from the peak of the 18th of May. Therefore, we prefer to wait for a clear break above these key obstacles before we start getting confident that the pair may appreciate in the near term.

RBA June meeting minutes in focus

During the Asian morning Tuesday, the RBA will release the minutes of its June gathering, where it kept its policy unchanged, and maintained a balanced tone overall. Even though policymakers offered very little new information regarding the next move in interest rates, they did appear slightly more upbeat on the labor market, a sector of the economy they had previously expressed concerns about. Market focus may revolve around their views on this topic again, given that the last two employment reports from Australia have been stellar. Even though this may not be reflected in these minutes, as the latest jobs report was released after the June RBA meeting, we think that the Bank is likely to sound more upbeat with regards to the labor market when it meets again, on the 4th of July.

AUD/USD has been trading in a short-term uptrend since the 2nd of June. On Friday, the pair rebounded from near the 0.7565 (S1) support zone and during the early European Monday, it appears ready to challenge the 0.7635 (R1) resistance, marked by the peak of the 14th of June. A decisive break above that hurdle would confirm a forthcoming higher high on the 4-hour chart and is likely to aim for our next resistance of 0.7675 (R2). One the other hand, a rejection from near 0.7635 (R1) and a dip below the uptrend line taken from the low of the 2nd of June could see scope for a test near 0.7565 (S1). A break below that barrier could signal the completion of a double top and perhaps bring a short-term trend reversal.

Today's highlights:

The economic calendar is relatively empty today. We only have two speakers on the agenda: New York Fed President William Dudley and ECB Governing Council member Jens Weidmann.

As for the rest of the week:

On Tuesday, as we outlined above, we get the minutes from the RBA June meeting. On Wednesday, market focus turns back to the UK, where the Queen's Speech takes place. The Queen will outline a list of laws that the government wants to get approved over the coming year and Parliament will spend the next six days debating these plans, before holding a vote. If Theresa May secures the support of the DUP lawmakers, or if other parties support her policies, she keeps her place as PM. On Thursday, during the Asian morning, the RBNZ rate decision will be in the spotlight. We see the case for a more cautious tone by policymakers. During the European day, the Norges Bank will also announce its decision. On Friday, we get preliminary manufacturing and services PMIs for June from several European nations and the Eurozone as a whole. Canada's CPI data for May are also due out.

GBP/USD

Support: 1.2700 (S1), 1.2635 (S2), 1.2515 (S3)

Resistance: 1.2815 (R1), 1.2850 (R2), 1.2910 (R3)

AUD/USD

Support: 0.7565 (S1), 0.7515 (S2), 0.7500 (S3)

Resistance: 0.7635 (R1), 0.7675 (R2), 0.7700 (R3)

The bullion is set to fall below the 1,245 mark at some time during Monday's trading session. That is being indicated from a technical perspective by the fact that the commodity price has passed the strong support level of the monthly pivot point, which is located at the 1,253 mark. The support of the monthly PP held the bullion from falling below the 1,250 mark more than 40 hours. It is most likely that the commodity price will decline below the 1,245 level, as until that mark there are no notable support levels, which could hinder the fall. Meanwhile, it has to be noted that the commodity price is approaching the support of a long term pattern. The lower trend line of the dominant pattern on Monday morning was located just above the 1,240 mark.

Even though the USD/JPY currency pair remained relatively unchanged on Friday, the bullish momentum seems to be intact. A new trend-line is supporting the pair’s exchange rate, but is unlikely to last long due to its sharp angle. Nevertheless, the Buck is likely to appreciate again today, as there are no significant bearish signals. The recovery could well last until the 111.80 level is reached, where the monthly pivot point rests. Resistance here could be sufficient to reverse momentum, as the Greenback was forced to edge lower in a similar situation in the beginning of the month. A successful breach of the monthly PP, on the other hand, should open the door for a much stronger recovery, with the main target being the 114.40 handle, namely the May’s high.

The British currency traded flat against the US Dollar on Friday, due to the absence of market movers. Upside volatility was somewhat limited by the 200-hour SMA, but it is unlikely to prevent the Pound from appreciating further, as the pair is trading within the borders of an ascending channel pattern. Although the channel is not fully confirmed yet, the exchange rate is still expected to rebound within the next two days. Technical indicators are mostly in favour of the given scenario, even though today’s signals are bearish. A successful surge towards the channel’s upper border, however, could only be achieved if the 1.28 major level is retaken this week—a goal the Cable failed to achieve for quite some time now.

The decline of the common European currency against the US Dollar continued on Monday. Although the currency exchange rate had regained some of its losses in the second half of Friday’s trading session, that surge was short lived, as the currency exchange rate encountered the resistance of the 200-hour SMA, which on Monday morning had forced the Euro below the strong support cluster near the 1.1190 mark. Meanwhile, the rate still had the support of the 55-hour SMA at 1.1177. If that support level gets passed, the currency pair will be set to fall down to the 1.1110 level, where the next notable support cluster begins. However, it is quite possible that the decline will be hindered during today’s trading session.

Official kick-off for the Brexit negotiations

Roughly one year after the British referendum, the Brexit negotiations officially start today in Brussels. This will be a long and winding road for the UK government, particularly since the Conservative party lost its majority in the House of Commons. Against this backdrop, we expect EU negotiators to try to take advantage of the situation as Prime Minister Theresa May finds herself in a potentially weak position.

Last week, the pound sterling recovered from the massive sell-off following the loss of the Tory parliamentary majority. On Monday morning, the pound held steady against most of its peers as GBP/USD was treading water below the 1.28 threshold, while EUR/GBP eased to 0.8740.

For now, market participants have remained remarkably constructive on the pound as they prefer to see the glass as half full. However, the level of uncertainty keeps rising and we expect investors will finally realise how complicated those negotiations will become.

Mexico will follow in Fed's footsteps and raise rates

Banxico is clearly following the Fed rate. The Mexican central bank even changed its agenda in 2015 to carefully follow the Fed meetings and to maintain a rate differential to avoid any capital outflow. Tonight the institution will raise to 7%. Currency-wise, the demand for Mexican peso should continue and we should see USDMXN declining towards 17 peso for one single dollar note. The MXN is one of the best performing currencies of the year at the moment.

On top of this, the now infamous wall is far from being built and will certainly not be erected. Markets are less confident that President Trump could properly deliver his programme and this definitely adds upside pressures on the Mexican peso.

For the time being, despite the strengthening of its currency, one should not forget Mexico is still paying the price of the lack of investments in its industry sector. In particular, this is in its oil industry, which has infrastructure that is very ancient and does not enable Mexico to be competitive. Yet, pipeline constructions are booming. Domestic oil demand is also strengthening so there is room for further oil development but Mexico needs foreign investments which fell 19% in 2016.