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EURJPY has been in a strong uptrend since the beginning of the year, posting a fresh 15-year high of 157.99 in late June. However, this rally appears to be fizzling out, with the pair experiencing a downside correction in the short term.

The momentum indicators currently suggest that bearish forces are strengthening but have not taken control yet. Specifically, the RSI retreated massively but still holds above its 50-neutral mark, while the MACD declined below its red signal line in the positive territory.

Should the pullback extend further, the pair could initially face the recent support of 154.05. If that barricade fails, the spotlight could turn to the May resistance of 151.60, which might serve as support in the future. Failing to halt there, the price could descend towards the June low of 148.58.

Alternatively, if the price reverses back higher, the recent 15-year peak of 157.99 could prove to be the first barrier for buyers to conquer. Slicing through that wall, the pair may advance towards fresh multi-year highs, where the May 2008 low of 158.60 could curb any upside attempts. Even higher, the bulls might attack the February 2008 peak of 161.38.

In brief, it seems that EURJPY’s rally has faltered after reaching extremely overbought conditions and the price is experiencing a strong pullback. Nevertheless, a break below the 50-day simple moving average (SMA) is needed to increase bears’ hopes for a sustained downtrend.

Asian markets rose on Tuesday after China strengthened support for its struggling property sector. European futures are pointing to a positive open as attention falls on the pending German ZEW Economic Sentiment Index report. In the currency arena, the dollar has weakened on the back of falling Treasury yields with investors digesting the remarks from numerous Fed speakers yesterday. Regarding commodities, oil is finding support as investors evaluate the demand outlook for China following some measures by Beijing to support its real-estate sector. Gold could push higher in the short term thanks to a weaker dollar and falling Treasury yields. Although the US inflation report is currently in the spotlight, earnings announcements by Wall Street banks on Friday could hijack investor attention.

US June CPI report in focus

All eyes will be on the latest US inflation report on Wednesday which has the potential to influence Fed hike expectations. Annual headline inflation is expected to slow to 3.1% in June, a noticeable decline from the 4% reading in May. However, annual core CPI, which strips out volatile energy and food prices, is expected to cool to 5% from 5.3% seen in the prior release. This remains above the Fed’s 2% target but ultimately, signs of cooling inflationary pressures will boost expectations around the Fed’s hiking cycle ending soon after July’s FOMC policy meeting. However, still stubborn inflation prints could fuel speculation around the Fed keeping rates higher for longer.

Commodity spotlight – Gold

Gold bulls are likely to draw strength from a weaker dollar and falling US Treasury ahead of the US CPI report on Wednesday. Should the report show further signs of slowing inflation, this could fuel speculation around the Fed's hiking cycle nearing an end. Such a development could boost attraction for zero-yielding gold, potentially pushing prices beyond the $1940 region and higher towards $1960. Should prices remain trapped below $1932, this could open a path back to $1910 and $1900, respectively.

USD/JPY breaks support

The yen bounces across the board over concerns of a potential BoJ intervention amid an oversold market. The pair cut through the round number of 142.00 which sat at the confluence of the 30-day SMA and a support-turned-resistance from a bullish breakout in late June, sending a downbeat signal. 140.80 is the next level to see if the bulls would step in before the pair extends losses to the psychological level of 140.00. The RSI’s double dip in the oversold zone may cause a limited pullback towards 143.40.

EUR/GBP grinds critical floor

The pound bounces as traders expect interest rates to rise to a peak of near 6.5%. As the pair grinds the June lows around 0.8520, a bullish RSI divergence suggests a loss of momentum in the downward direction, and a breach above 0.8570 would provide confirmation and prompt sellers to cover. Then the former support of 0.8600 could be the last obstacle standing in the way of a sustained rebound. On the downside, a fall below 0.8520 would undermine the bulls’ effort and trigger a new round of sell-off towards 0.8400.

US 30 tests daily support

The Dow Jones 30 recovered some lost ground as the market turned its attention to upcoming CPI data. The index is testing the previous swing low and daily support at 33600, a major level to keep June’s bullish momentum going as its invalidation would force bulls to abandon ship and cause a deeper correction. The top of a limited bounce at 34000 is the first hurdle to clear then the double top at 34470 is the current ceiling. In case of bearish breakout, 33100 at the base of the June breakout rally could be in the crosshairs.

Daily Pivots: (S1) 180.84; (P) 182.03; (R1) 182.96; More...

No change in GBP/JPY's outlook as intraday bias stays mildly on the downside. Fall from 183.99 short term top would target 179.90 support. Firm break there will target 55 D EMA (now at 176.39). On the upside, break of 183.99 will resume larger up trend.

In the bigger picture, as long as 172.11 resistance turned support holds, uptrend from 123.94 (2020 low) is expected to continue. On resumption, next target is 195.86 (2015 high). Nevertheless, firm break of 172.11 will argue that larger correction is already underway.

Daily Pivots: (S1) 154.98; (P) 155.83; (R1) 156.32; More....

Intraday bias in EUR/JPY stays on the downside as fall from 157.99 short term top is in progress for 154.03 support or below. But overall outlook will stay bullish as long as 151.60 resistance turned support holds. Larger rally is still expected to resume through 157.99 after the correction completes. On the upside, above 156.66 minor resistance will bring retest of 157.99 high first.

In the bigger picture, as long as 151.60 resistance turned support holds, rise from 114.42 (2020 low) is in progress. On resumption, next target is 100% projection of 124.37 to 148.38 from 138.81 at 162.82. Nevertheless, sustained break of 151.60 will argue that larger correction is already underway.

Daily Pivots: (S1) 0.8535; (P) 0.8559; (R1) 0.8579; More...

EUR/GBP is staying in range above 0/8517 and intraday bias remains neutral. Also outlook stays bearish for deeper decline. On the downside, firm break of 0.8517 will resume the whole decline from 0.8977. Next target will be 61.8% projection of 0.8874 to 0.8517 from 0.8650 at 0.8436. On the upside, above 0.8657 resistance will turn bias to the upside for stronger rebound instead.

In the bigger picture, the down trend from 0.9267 (2022 high) is still in progress. It's seen as part of the long term range pattern from 0.9499 (2020 high). Deeper fall could be seen towards 0.8201 (2022 low). But strong support should be seen from there to bring reversal. This will now remain the favored case as long as 0.8717 support turned resistance holds.

Daily Pivots: (S1) 1.6397; (P) 1.6462; (R1) 1.6545; More...

EUR/AUD is staying in range below 1.6552 and intraday bias remains neutral. With 1.6247 support intact, further rally is expected. As noted before, correction from 1.6785 should have completed with three waves down to 1.5846. Above 1.6552 will target a retest on 1.6785 high next. Nevertheless, on the downside, firm break of 1.6247 will dampen this view and turn bias to the downside for 1.5846 support.

In the bigger picture, with 38.2% retracement of 1.4281 to 1.6785 at 1.5828 intact, rally from 1.4281 is still in progress. Firm break of 1.6785 will confirm rise resumption. Next target is 100% projection of 1.5254 to 1.6785 from 1.5846 at 1.7377. On the other hand, rejection by 1.6785 will extend the corrective pattern with another fall leg. But outlook will stay bullish as long as 1.5828 holds.

Daily Pivots: (S1) 0.9731; (P) 0.9747; (R1) 0.9755; More...

No change in EUR/CHF's outlook and intraday bias stays neutral. On the upside break of 0.9840 will resume the rebound from 0.9670. That will also revive the case that whole corrective decline from 1.0095 has completed at 0.9670. Further rally should be seen to 0.9878 resistance next. However, sustained trading below 0.9670 will resume the whole fall from 1.0095.

In the bigger picture, medium term outlook is staying bearish as the pair is capped below falling 55 W EMA (now at 0.9913). Down trend form 1.2004 (2018 high) is in favor to extend through 0.9407 at a later stage. Nevertheless, decisive break of 38.2% retracement of 1.1149 to 0.9407 will raise the chance of bullish trend reversal.

Daily Pivots: (S1) 1.3263; (P) 1.3284; (R1) 1.3300; More....

Intraday bias in USD/CAD remains neutral and outlook is unchanged. On the upside, break of 1.3386 and sustained trading above 55 D EMA (now at 1.3359) will argue that whole corrective pattern from 1.3976 has completed with three waves down to 1.3115. Further rally should then be seen to 1.3653 resistance next. Nevertheless, break of 1.3202 support will bring retest of 1.3115 low instead.

In the bigger picture, price actions from 1.3976 are viewed as a correction to up trend from 1.2005 (2021 low) only. Hence, the up trend is in favor to resume through 1.3976 at a later stage. Nevertheless, another fall below 1.3115 will extending the decline from 1.3976 to 61.8% retracement of 1.2005 to 1.3976 at 1.2758, and raise the chance of bearish trend reversal.

Daily Pivots: (S1) 0.6634; (P) 0.6665; (R1) 0.6706; More...

Intraday bias in AUD/USD stays neutral as range trading continues, and further decline is expected. On the downside, break of 0.6594 will resume the decline from 0.6898 to 0.6457 support next. Nevertheless, firm break of 0.6719 resistance will turn bias back to the upside for stronger rebound.

In the bigger picture, price actions from 0.7156 are seen as a correction to the rebound from 0.6169 only, rather than part of larger down trend from 0.8006 (2021 high). Break of 0.6457 could cannot be ruled out but downside should be contained above 0.6169. Meanwhile, nevertheless, break of 0.6898 resistance will argue that rise from 0.6169 is ready to resume through 0.7156.