Sample Category Title

AUD/USD is attempting a fresh increase from the 0.6715 support. NZD/USD is also rising and could target the 0.6090 resistance.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar found support at 0.6715 and recovered higher against the US Dollar.
• There is a major bearish trend line forming with resistance at 0.6740 on the hourly chart of AUD/USD at FXOpen.
• NZD/USD is consolidating above the 0.6050 support.
• There was a break above a key bearish trend line with resistance at 0.6060 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair formed a base above 0.6715. The Aussie Dollar started a decent recovery wave above the 0.6725 resistance against the US Dollar, as mentioned in the previous analysis.

The bulls pushed the pair above the 23.6% Fib retracement level of the downward move from the 0.6793 swing high to the 0.6714 low. However, the pair is still below the 50-hour simple moving average.

On the upside, the AUD/USD chart indicates that the pair is now facing resistance near the 0.6740 zone. There is also a major bearish trend line forming with resistance at 0.6740.

The first major resistance might be 0.6755 and the 50% Fib retracement level of the downward move from the 0.6793 swing high to the 0.6714 low. An upside break above the 0.6755 resistance might send the pair further higher.

The next major resistance is near the 0.6775 level. Any more gains could clear the path for a move toward the 0.6795 resistance zone.

If not, the pair might correct lower. Immediate support sits near the 0.6725 level. The next support could be 0.6715. If there is a downside break below the 0.6715 support, the pair could extend its decline toward the 0.6660 zone. Any more losses might signal a move toward 0.6640.

NZD/USD Technical Analysis

On the hourly chart of NZD/USD on FXOpen, the pair also followed AUD/USD. The New Zealand Dollar formed a base above the 0.6035 level and started a decent increase against the US Dollar.

The pair climbed above the 0.6050 resistance. There was a break above a key bearish trend line with resistance at 0.6060. The pair spiked above the 50-hour simple moving average and tested the 50% Fib retracement level of the downward move from the 0.6125 swing high to the 0.6033 low.

The NZD/USD chart suggests that the RSI is back above 50 and signaling a positive bias. On the upside, the pair is facing resistance near the 0.6080 zone. The next major resistance is near the 0.6090 level and 61.8% Fib retracement level of the downward move from the 0.6125 swing high to the 0.6033 low.

A clear move above the 0.6090 level might even push the pair toward the 0.6130 level. Any more gains might clear the path for a move toward the 0.6180 resistance zone in the coming days.

On the downside, there is a support forming near the 0.6050 zone. If there is a downside break below the 0.6050 support, the pair might slide toward 0.6035. Any more losses could lead NZD/USD in a bearish zone to 0.6000.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Markets

Consensus-beating June US retail sales only temporary interfered with reigning market momentum. Core retail sales rose by 0.8% M/M (& 0.9% M/M for retail sales control group) in what for now remains more of a catch-up move after weak consumer spending YTD. Sales were mainly boosted by goods spending with customers lured by price discounts. US Treasuries spiked lower in a first reaction with the dollar profiting, but those moves were completely undone during US trading hours. US yields lost 4 bps (2-yr) to 8.6 bps (30-yr), with the long end of the curve overturning the temporary underperformance related to president-candidate Trump’s boost in election polls. The US 2-yr yield tested the March low at 4.4% with the US 10-yr yield at risk of giving away first technical support around 4.18%. Markets are adding to bets that the Fed will have to cut policy rates sooner and faster than indicated in June. Fed governors don’t commit to a specific guidance and stick to the official view that it will be appropriate to lower borrowing costs later this year. Fed Kugler yesterday indicated that a weaker labour market driven by layoffs (instead of reducing vacancies) could prompt her to support a rate cut sooner rather than later. If the next inflation reports don’t confirm the Q2 easing of inflation pressures, it may be appropriate to hold rates steady a little bit longer. In FX space, the dollar spiked to EUR/USD 1.0870 immediately after June retail sales, but the pair eventually closed around 1.09. It is still at risk of breaking 1.0916 resistance. US stock markets rose by 0.2% (Nasdaq) to 1.85% (Dow). YTD it was the best result for the Dow Jones. The small cap Russell 2000 added 2.9% and is an astonishing 12% higher since last week’s benign CPI print. The interest-rate sensitive small cap index profits from rotation inflows as the market set its eyes on a near term Fed rate cut.

Today’s eco calendar is thin with US housing data and production figures. A speech by Fed Waller is a wildcard. He has been the most outspoken en influential Fed member calling to delay interest rate cuts (“What’s the rush?”, “There’s still no rush”). Any signals that he’s moving closer to action will add to current market momentum, pushing (short term) US yields and the dollar down. Sterling this morning holds just above EUR/GBP 0.84 as near consensus inflation figures (headline 2% Y/Y, core 3.5% Y/Y, services 5.7% Y/Y) suggest a wait-and-see approach by the Bank of England at the August 1 policy meeting.

News & Views

New Zealand inflation eased slightly more than expected in Q2, to 0.4% Q/Q and 3.3% Y/Y (from 0.6% Q/Q and 4%). As such, inflation is moving closer to the 1-3% target range of the Reserve Bank of New Zealand. Housing and household utilities was the largest contributor to the quarterly inflation rate due to rising prices for rent (+1.2%), construction of new houses (0.9%) and household energy (including electricity and gas) increasing 2.8%. The largest downward contributor was recreation & culture. Tradeable inflation (final goods and services that are influenced by foreign markets) remains very subdued at -0.5% Q/Q and 0.3% Y/Y. Non-tradeable inflation, an indicator of the domestic supply-demand balance, also eased to 0.9% Q/Q and 5.4% Y/Y, but remains sticky driven mainly by rent, insurance and tobacco. The latter is a source of concern for the RBNZ, even as the central bank indicated at last week’s policy meeting that it might be coming closer to the point to at least consider some scaling back of the tightening. The 2-y New-Zealand bond yield adds 3.bps this morning. The market still sees a 50% chance for a rate cut in August. The Kiwi dollar rebounds modestly after the recent setback (NZD/USD 0.6065).

The National Bank of Poland published its monthly core inflation figures (June) yesterday. Core inflation excluding food and energy prices rose by 0.2% M/M and 3.6% Y/Y (from 3.8%). Other measures of underlying inflation (ex-administered prices +0.1%M/M, ex most volatile prices +0.2% M/M and 15% trimmed average +0.2% M/M) also showed benign monthly dynamics. The data probably won’t convince the National Bank of Poland to cut rates anytime soon though as the central bank expects price hikes for energy and strong wage growth to reaccelerate inflation in the second half of this year and early 2025. NBP governor Glapinski at the July policy meeting excluded a rate cut this year and even indicated that it might take until 2026 for the NBP to be able to ease policy.

Graphs

GE 10y yield

The ECB cut its key policy rates by 25 bps at the June policy meeting. A more bumpy inflation path in H2 2024, the EMU economy gradually regaining traction and the Fed’s higher for longer US strategy make follow-up moves difficult. Markets are coming to terms with that. Meanwhile, much of the save haven bids were reversed after the (first round in) the French elections. The 2.34%-2.4% support zone looks solid.

US 10y yield

The Fed indicated that it needs more evidence to lower its policy rate. June dots suggested one move in 2024 and four next year. Disappointing ISM and back-to-back downward CPI surprises put the US money market back on (at least) two rate cuts this year (September/December). The US 10-yr yield tests the recent lows and the downside of the downward trend channel in the 4.2% area.

EUR/USD

EUR/USD is testing the topside of the 1.06-1.09 range as the dollar loses interest rate support at stealth pace. Markets consider a September rate cut a done deal and only need confirmation from high-ranked Fed officials. In the meantime, the euro got rid of the (French) political risk premium. Risks of a topside break are high, bringing the psychologic 1.10 and the December 2023 top at 1.1139 on the radar.

EUR/GBP

Debate at the BOE is focused at the timing of rate cuts. May headline inflation returned to 2%, but core measures weren’t in line with inflation sustainably returning to target any time soon. Still some BoE members at the June meeting appeared moving closer to a rate cut. Labour has yet to reveal its policy plans after securing a landslide election victory. EUR/GBP 0.84 is support is being tested.

Daily Pivots: (S1) 0.8395; (P) 0.8403; (R1) 0.8408; More....

Immediate focus in on 0.8390 temporary low in EUR/GBP. Firm break there will resume larger down trend and target 61.8% projection of 0.8619 to 0.8396 from 0.8498 at 0.8360. While another recovery cannot be ruled out, outlook will stay bearish as long as 0.8498 resistance holds.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 key support (2022 low). For now, outlook will remain bearish as long as 0.8643 resistance holds, even in case of stronger rebound.

Daily Pivots: (S1) 204.94; (P) 205.37; (R1) 205.94; More...

Intraday bias in GBP/JPY stays neutral for consolidation above 203.82 temporary low. Corrective fall from 208.09 short term top could still extend lower. Break of 203.82 would target 38.2% retracement of 191.34 to 208.09 at 201.69. Strong support is expected there to bring rebound. On the upside, above 206.35 minor resistance will turn intraday bias will turn bias back to the upside for retesting 208.09. However, sustained break of 201.69 will argue that larger correction is already underway.

In the bigger picture, long term up trend is still in progress. Next target is 100% projection of 155.33 to 188.63 from 178.32 at 211.62. Outlook will stay bullish as long as 200.72 resistance turned support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.2948; (P) 1.2965; (R1) 1.2992; More...

GBP/USD is staying in consolidation below 1.2994 temporary top and intraday bias remains neutral. Further rally is expected as long as 1.2859 resistance turned support holds. Above 1.2994 will resume the rally from 1.2298 and target 100% projection of 1.2298 to 1.2859 from 1.2612 at 1.3173, which is slightly above 1.3141 key medium term resistance. However, break of 1.2859 will turn bias to the downside for deeper pullback.

In the bigger picture, corrective pattern from 1.3141 medium term top (2023 high) could have completed with three waves to 1.2298 already. This will now remain the favored case as long as 1.2612 support holds. Firm break of 1.3141 will target 61.8% projection of 1.0351 (2022 low) to 1.3141 from 1.2298 at 1.4022.

Forex markets have been relatively subdued today. Sterling remains steady after June's UK CPI data revealed that both headline and core inflation were unchanged from the previous month. Significantly, services inflation also failed to cool, which could keep BoE cautious about making a premature rate cut on August 1. Some key members of the MPC may prefer to see further progress in disinflation before taking any action.

Earlier in Asian session, New Zealand Dollar showed a surprising rebound despite lower-than-expected Q2 CPI figures. Many economists have now revised their forecasts, anticipating the first RBNZ rate cut in November. Kiwi's bounce can be seen as a "cover-on-news" move, as the Q2 inflation data was not disastrous enough to cause major concern.

For the week so far, Swiss franc is leading as the best performer, followed by Dollar and Euro. New Zealand Dollar remains the weakest, with Australian Dollar and Canadian Dollar also underperforming. Yen and Pound are positioned in the middle of the performance spectrum.

Technically, following up on our post yesterday, Gold did break to new record high. It's now facing a key cluster projection level at around 2500, with 100% projection of 1160.17 to 2074.84 from 1614.60 at 2529.27 and 161.8% projection of 1614.60 to 2062.95 from 1810.26 at 2535.96. Strong resistance could be seen from there to bring rebound.

However, decisive break above 2500/50 range could prompt upside acceleration to 200% projection of 1614.60 to 2062.95 from 1810.26 at 2706.96. For this upside acceleration to occur, broad-based selloff in Dollar might have to be seen, with EUR/USD breaking through 1.09 handle decisively.

In Asia, Nikkei fell -0.43%. Hong Kong HSI is up 0.01%. China Shanghai SSE is down -0.35%. Singapore Strait Times is down -0.01%. Japan 10-year JGB yield rose 0.0103 to 1.035. Overnight, DOW surged 1.85%. S&P 500 rose 0.64%. NASDAQ rose 0.20%. 10-year yield fell -0.062 to 4.167.

UK CPI steady at 2% in Jun, core CPI unchanged at 3.5%

UK CPI was unchanged at 2.0% yoy in June, matched expectations. CPI core (excluding energy, food, alcohol and tobacco) was unchanged at 3.5% yoy, above expectation of 3.4% yoy. CPI goods annual rate fell from -1.3% yoy to 1.4% yoy. CPI services annual rate was unchanged at 5.7% yoy.

For the month, CPI rose 0.1% mom , matched expectations.

New Zealand's CPI slows to 3.3% in Q2, vs exp 3.5%

New Zealand's CPI for Q2 rose by 0.4% qoq, down from previous quarter's 0.6% qoq and missing the expected 0.5% qoq.

Tradeable inflation, which includes goods and services that are subject to international competition, fell by -0.5% qoq, an improvement from previous -0.7% qoq. Conversely, non-tradeable inflation, covering domestic goods and services, rose by 0.9% qoq, down from prior 1.6% qoq.

Over the past 12 months, CPI growth rate slowed from 4.0% yoy to 3.3% yoy, falling short of anticipated 3.5% yoy. This marks the lowest level since Q2 2021 but remains slightly above RBNZ's target band of 1-3%.

Tradeable inflation saw a significant decline from 1.6% yoy to 0.3% yoy, reflecting lower imported inflationary pressures. Non-tradeable inflation also eased, dropping from 5.8% yoy to 5.4% yoy, indicating some cooling in domestic price pressures.

Australia's Westpac leading index ticks up to -0.13%, below trend growth persists

Australia's Westpac leading index saw a slight improvement, rising from -0.28% to -0.13% in June. Despite this uptick, economic activity is expected to remain below trend until early 2025.

Westpac said while growth is expected to pick up slightly in the latter half of 2024 and into early 2025, it will still be modest, at an annual pace of 2.2%, and is about flat in per capita terms.

Fed's Kugler signals rate cuts later this year amid continued disinflation

In a speech overnight, Fed Governor Adriana Kugler noted that despite "a few bumps" earlier in the year, inflation has "continued to trend down" across "all price categories."

She mentioned that supply and demand are "gradually coming into better balance," with supply bottlenecks easing and demand moderating due to high interest rates and the depletion of households' excess savings.

Kugler also pointed out that the labor market has seen "substantial rebalancing," with nominal wage growth moderating. This trend suggests that inflation will continue moving toward Fed's 2% target.

Kugler indicated that if economic conditions continue to evolve favorably, with more rapid disinflation and resilient employment, "it will be appropriate to begin easing monetary policy later this year." However, she stressed that her approach will remain data-dependent.

She added that if the labor market cools too much and unemployment rises due to layoffs, it might be necessary to cut rates "sooner rather than later." On the other hand, if data do not confirm that inflation is moving sustainably toward 2%, it may be appropriate to "hold rates steady for a little longer."

IMF's Gourinchas suggests Fed can wait before cutting rates

IMF chief economist Pierre-Olivier Gourinchas stated in a Reuters interview that Fed can afford to "wait a little bit" before lowering interest rates. He expected that one Fed rate cut is likely this year but refrained from specifying the timing.

Gourinchas noted that the IMF expects US inflation to reach Fed's 2% target in the first half of 2025, ahead of Fed's internal projection of 2026. This suggests that there would not be an "extended period" before rate cuts become appropriate.

Looking ahead

Eurozone CPI final will be released in European session. Later in the day, US will release building permits and housing starts, industrial production and capacity utilization. Fed will also publish the beige book economic report.

GBP/USD Daily Outlook

Daily Pivots: (S1) 1.2948; (P) 1.2965; (R1) 1.2992; More...

GBP/USD is staying in consolidation below 1.2994 temporary top and intraday bias remains neutral. Further rally is expected as long as 1.2859 resistance turned support holds. Above 1.2994 will resume the rally from 1.2298 and target 100% projection of 1.2298 to 1.2859 from 1.2612 at 1.3173, which is slightly above 1.3141 key medium term resistance. However, break of 1.2859 will turn bias to the downside for deeper pullback.

In the bigger picture, corrective pattern from 1.3141 medium term top (2023 high) could have completed with three waves to 1.2298 already. This will now remain the favored case as long as 1.2612 support holds. Firm break of 1.3141 will target 61.8% projection of 1.0351 (2022 low) to 1.3141 from 1.2298 at 1.4022.

Economic Indicators Update

The S&P500 hit a fresh record this year for the 38th time on Tuesday, banks rallied on earnings which showed that the big banks’ trading revenue jumped nearly 20% in Q2 and investment banking revenues rose significantly on increased dealmaking. The technology-heavy Nasdaq 100 lagged, with smaller gains. The Russell 2000 rallied another 3.5%, on the other hand, hinting at a developing sector rotation from Big Tech to others. As such, the Russell 2000 gained more than 10% since last week, while the S&P500’s equal weight index rose faster than the technology-heavy, normal-weighted index. And all this, regardless of a better than expected retail sales data in the US and a jump in Atlanta Fed’s GDP forecast to 2.5% – which could’ve cool down the Federal Reserve (Fed) rate cut expectations, but did not.

Activity on Fed funds futures suggests that the market is now pricing in a 100% chance for a September rate cut from the Fed (odds of a 50bp cut are on the rise – yet unreasonable without a severe shock/stress). Yesterday’s retail sales data and the first few hours of Amazon Prime day sales – which climbed by almost 12% compared to last year – are not necessarily supportive of dovish Fed expectations. But the dovish Fed expectations are gaining momentum, the machine is running and it’s difficult to stop it.

And the thinking behind the sector rotation is simple: the upcoming rate cuts should give support to smaller and more cyclical pockets of the market, and convince investors to rotate from highly valued technology names to other sectors. Some say that the rising odds for a Donald Trump win in November election is also supportive of smaller and cyclical pockets of the market, provided that his domestic and growth-focused policies will benefit disproportionally to these sectors. But hey, another set of strong earnings could get investors to think twice. Plus, Mr. Vance – that Trump just revealed as his running mate earlier this week – is a tech and crypto investor. It’s said that Vance is one of the strongest blockchain advocate on Trump’s shortlist, it appears that he perceives cryptocurrencies as ‘the only realistic way to shake up big tech and finance’. No wonder Bitcoin is also having a good run since the assassination attempt on Donald Trump last weekend boosted his chances of returning to the White House, with Vance by his side.

Gold shines

Gold also hit a fresh record on the back of falling US yields – that decrease the opportunity cost of holding the non-interest bearing gold, and on the back of rising geopolitical tensions on news that Iran reportedly tried to kill Trump in the past weeks (although there has been no evidence that the weekend’s shooting has anything to do with them). It’s probably just a matter of time before we see the yellow metal hit the $2500 per ounce milestone. Some profit-taking could kick in at that level though, given that, at the current levels, gold is entering the overbought market territory, suggesting that the yellow metal may have been bought too fast in a too short period of time – as the rest of the assets that have been boosted by the super duo of Trump and Powell - and it would be healthy to see some minor downside correction.

FX and Oil

The US dollar index is still sitting on the major 38.2% Fibonacci support on this year’s rebound and should – based on the rising dovish Fed expectations – be in a position to clear this support and step into the medium-term bearish consolidation zone.

Cable jumped this morning as a kneejerk reaction to the latest inflation figures but gains rapidly faded. The data showed that inflation in Britain stagnated in June versus the expectation of a further easing. And higher-than-expected figures cooled down the expectation of an August rate cut from the Bank of England (BoE). But because the September Fed rate cut is already fully priced in, there is still room for a dovish BoE pricing into late summer – which means that we shall still see a limited upside potential in Cable: the 1.30 level could be hard to clear.

Across the Channel, the EURUSD is drilling the 1.09 offers to the upside and the euro bulls are targeting the 1.10 level. The Eurozone will reveal the latest inflation figures this morning which should show steady-to-slightly lower figures across the board.

What’s interesting is that crude oil is not benefiting from the actual Trump/Fed euphoria. The sluggish Chinese growth is weighing on the black gold since the week started. The barrel of US crude is back below its 100-DMA and is preparing to test an important Fibonacci support neat $80pb – the major 38.2% retracement on June to July rebound – to determine whether the price should stay on the actual rising path or sink into a medium-term bearish consolidation zone. Fundamentally, the reflation environment is supportive of oil prices, therefore we should see a decent support into the $80pb technical and psychological level.

UK CPI was unchanged at 2.0% yoy in June, matched expectations. CPI core (excluding energy, food, alcohol and tobacco) was unchanged at 3.5% yoy, above expectation of 3.4% yoy. CPI goods annual rate fell from -1.3% yoy to 1.4% yoy. CPI services annual rate was unchanged at 5.7% yoy.

For the month, CPI rose 0.1% mom , matched expectations.

Full UK CPI release here.

Daily Pivots: (S1) 1.0877; (P) 1.0900; (R1) 1.0916; More....

Intraday bias in EUR/USD remains neutral for the moment. Further rally is expected as long as 1.0805 support holds. Firm break of 1.0915/21 will will resume whole rise from 1.0601 to 100% projection of 1.0601 to 1.0915 from 1.0665 at 1.0979. However, break of 1.0805 will turn bias back to the downside for deeper pullback.

In the bigger picture, price actions from 1.1274 are viewed as a corrective pattern, possibly a triangle, that's still be in progress. Break of 1.1138 resistance will be the first signal that rise from 0.9534 (2022 low) is ready to resume through 1.1274 (2023 high). This will now remain the favored case as long as 1.0601 support holds.

Daily Pivots: (S1) 0.8922; (P) 0.8951; (R1) 0.8967; More…

Intraday bias in USD/CHF remains neutral and further fall is in favor with 0.9000 resistance intact. Below 0.8914 will bring retest of 0.8825 low. However, break of 0.9000 will turn bias back to the upside for 0.9049 resistance instead.

In the bigger picture, with 0.9243 resistance intact, medium term outlook in USD/CHF is neutral at best. For now, more sideway trading is likely between 0.8332/9243. However, firm break of 0.9243 will indicate larger bullish trend reversal.