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Germany PMI Manufacturing dropped from 52.0 to 49.2 in July, below expectation of 50.6. That's the lowest level in 25 months. PMI Services dropped from 52.4 to 49.2, below expectation of 50.6. That's the lowest level in 7 months. PMI Composite output dropped from 51.3 to 48.0, a 25- month low.

Paul Smith, Economics Director at S&P Global Market Intelligence said:

"Having enjoyed a growth boost from the previous easing of virus-related restrictions, a collision of various headwinds in July served to push the German economy into contraction territory for the first time in 2022 so far.

"Ongoing supply-delays and the uncertainty caused by the war in Ukraine continued to be reported as factors weighing on company performance, but based on a reading of anecdotal evidence, inflation and the pressures these are having on budgets was a noticeable feature behind the worst performance of private sector activity since the height of the first pandemic wave in the spring of 2020. With this in mind, whilst we are seeing a downward trend in our price indices, inflation rates remain stubbornly elevated according to the July survey.

"The decline in output was broad-based, with the downturn in manufacturing deepening, and service sector activity dropping into contraction territory for the first time since December. Moreover, given the noticeable falls in new business across both sectors, activity was somewhat prevented from experiencing a sharper fall thanks to the availability of previously secured contracts. With signs that this supportive prop is coming to an end, and warehouse inventories rising at a near-record rate in manufacturing, the outlook for output is turning increasingly negative. No wonder then company expectations have subsequently dropped into negative territory for the first time in over two years."

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France PMI Manufacturing dropped from 51.4 to 49.6 in July, below expectation of 50.6. That's the lowest level in 20 months. PMI Services dropped from 53.9 to 52.1, below expectation of 52.7. That's the lowest level in 15 months. PMI Composite dropped from 52.5 to 50.6, a 16-month low.

Joe Hayes, Senior Economist at S&P Global Market Intelligence said: "July 'flash' PMI data raises further concerns that the French economy is heading towards a recession as data signalled worsening trends across a number of key indicators. The level of output was up only marginally from June and solely reflected activity growth at services firms. The manufacturing sector is already in a steep downturn, with production levels falling at the fastest rate since the initial phase of the COVID-19 pandemic in the first half of 2020. The growth trend in the service sector meanwhile worsened further, and momentum is clearly to the downside here.

"Demand is being adversely impacted by the intense inflationary environment, with clients reluctant to place orders at these elevated prices. Consequently, new business fell for the first time since February 2021. It's difficult to imagine the near-term trend improving when anecdotal evidence from panellists continues to portray a picture of worsening health for demand. This is especially the case for the services economy, which is rapidly losing support from the post-pandemic recovery in consumer spending."

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USDCAD looks to be creating a floor around the 40-day simple moving average (SMA) below the 1.2900 round number. The technical indicators are failing to suggest a clear sign as the MACD is holding below its trigger line around the zero level, while the RSI is pointing slightly up near the neutral threshold of 50.

Traders, however, would be more eager to engage in buying activities if the price manages to remain above the 40-day SMA and meet the 1.2935 resistance, which coincides with the 20-day SMA. If this is successfully breached, then the rally may next rest somewhere between 1.3175 and the 20-month high at 1.3225. A closure above the latter may be needed to push the price towards the 1.3385, reached in October 2020.

On the flip side, the selling pressure could accelerate again in the short term if the market deteriorates below the 40-day SMA and the 1.2820 support. Such a move could next bring the 200-day SMA at 1.2710 into the spotlight, which if violated could trigger sharper losses, probably towards the long-term ascending trend line at 1.2600.

In the long-term timeframe, the pair has been in a bullish trend since June 2021 and only a slip beneath the 200-day SMA and the diagonal line would put the market on a sideways path.

Summarizing, USDCAD is expected to show improvement if the price overcomes the short-term SMAs. In the medium-term, a stronger push up above 1.3225 is required to upgrade the positive outlook.

GBPJPY inched lower to seek support near the 20-day simple moving average (SMA) early on Friday after getting rejected again around June’s descending trendline, which looks to be part of a symmetrical triangle.

The symmetrical triangle formation is considered a neutral trend signal. Therefore, traders may adopt a wait and see approach as the price is near to complete the pattern and the momentum indicators provide a mixture of signals; the RSI is sliding towards its 50 neutral mark, the MACD is stabilizing marginally above its zero and signal lines, whereas the stochastics are changing direction to the downside.

If the price brings the bulls back into play above the triangle and the 166.00 – 166.38 region, all eyes will turn to the ceiling of 167.80 - 168.70. A decisive move higher from here could chart a new peak around 170.50, where the pair faced some limitations at the start of 2016.

Alternatively, a close below the triangle’s lower boundary seen at 163.93 is expected to shift the balance in the favor of the bears, likely prompting a sharp decline towards the 38.2% Fibonacci retracement of the 150.96-168.70 upleg at 161.95. A step beneath that base may create additional losses towards the 50% Fibonacci of 159.86, unless the tentative support trendline drawn from 150.96 comes to the rescue around 160.70. The 200-day SMA could be the next destination at 158.00 if downside pressure further intensifies.

Summarizing, GBPJPY is expected to exhibit a neutral performance in the coming sessions, with traders waiting for a close above or below the triangle to navigate the market accordingly.

EUR/USD

Due to the aggregation of several significant pieces of news, yesterday was a very significant day for the euro. Specifically, the departure of Mario Draghi, the Italian prime minister, who was tasked with steering the nation out of its escalating crisis. The ECB's 50 basis point rise in the deposit interest rate, which had not been done in a decade, was as significant. Around the start of the European session, the day saw a small advance, but after it reached the crucial level of 1.0220, the bulls slowed down in anticipation of the news. The pair went higher once more as volatility increased surrounding the unexpected 50 basis point rate hike, but after encountering resistance near 1.0270, the euro began an aggressive correction, hitting support and ending the day around 1.0200. The release of data revealing managers' rates of flash manufacturing and services in EU nations will take place from 08:15 GMT to 09:30 GMT today, which is also a significant day for the single European currency. The level at 1.0270 will be the first goal if the bulls decide to launch another attack, but if the bears maintain control, EUR/USD may once more aim for 1.0120.

USD/JPY

Due to the declining value of the dollar and the fact that the levels around 138.85 served as resistance twice in the space of four hours, the bulls abandoned additional assaults, the corrective move is still in progress. Clearly in charge for the remainder of the day, the bears were able to bring prices crashing down by 140 pip and reach back around the support at 137.45. If the aforementioned support does not hold, it is extremely likely that the downward move will continue. However, if the reaction to the data is favorable, we may anticipate USD/JPY to resume its upward trend. Today's eyes are on US Preliminary Manufacturing PMI data at 13:45 GMT.

GBP/USD

The pair once again reached levels of 1.2000 towards the start of the European session, but the balance of power tipped in favour of the bears, who launched a fierce attack that drove the GBP/USD down to 1.1930. The ECB's decision to hike interest rates in the EU by 50 basis points—a move that had not been made in ten years—caused a rise in volatility, which had an impact on the Cable as well. The market experienced an intense correction that went as far as 1.1890, but the bulls found favourable levels to stop the slide and the pair was able to close above 1.1960. The information from the UK Flash Manufacturing and Services Managers' rate is the subject of much attention today at 08:30 (GMT). Whether the uptrend resumes depends on traders' reaction to the data release.

EUGERMANY40

Yesterday, when the European session began, it became clear that the day would be tumultuous for the EUGERMANY40. The bulls had the upper hand at the start of the session, but after the index reached the levels of 13353, an aggressive correction started. The German index returned to the area between 13185 and 13353 after support was located there. The bear attack was convincing and succeeded in pushing prices as far as 13095. Germany is scheduled to provide the information in the flash manufacturing and services managers' estimate at 09:30 today (GMT). The response to today's data and other factors will determine if the German index breaks out of its range.

US30

Yesterday, the blue chip index was locked in a narrow range between 31930 and 31650. Around the time the ECB decided to raise interest rates by 0.50 percent, volatility spiked sharply at 13:30 (GMT). After the release of the data, US30 prices started to quickly correct downward, but after they reached about 31510, the bulls entered the market and were able to drive the price to a new weekly high of 32045. Prices again ended the day close to the previously indicated range after a correction, though. Today's attention is on the 13:45 US PMI (GMT). If the market reacts favourably to the data , the weekly upswing may continue and 32045 may be passed; nevertheless, if the data disappoints then the index might search for a bottom below 31500 is likely.

Daily Pivots: (S1) 164.21; (P) 165.09; (R1) 165.64; More...

Intraday bias in GBP/JPY is turned neutral for the moment. Break of 163.54 minor support will argue that consolidation from 168.67 is extending with another falling leg. Intraday bias will be back on the downside for 160.37 support. On the upside, above 166.23 will resume the rebound to retest 168.67 high instead.

In the bigger picture, up trend from 123.94 (2020 low) is still in progress. Sustained break of 61.8% retracement of 195.86 (2015 high) to 122.75 (2016 low) at 167.93 will be a long term bullish signal, and could pave the way back to 195.86 high. This will now remain the favored case as long as 155.57 support holds, even in case of deep pull back.

Daily Pivots: (S1) 139.62; (P) 140.97; (R1) 141.80; More....

EUR/JPY's break of 140.41 minor support argues that rebound from 136.85 has completed. Corrective pattern from 144.23 is still extending, with another falling leg. Intraday bias is back on the downside for 136.85 support first. On the upside, break of 142.31 will resume the rebound to retest 144.26 high.

In the bigger picture, up trend from 114.42 (2020 low) is seen as the third leg of the pattern from 109.30 (2016 low). Further rally is in favor as long as 134.11 resistance turned support holds, even in case of deep pull back. Firm break of 139.78 will target 149.76 (2015 high). However, sustained break of 134.11 will be a sign of medium term bearish reversal and turn focus to 124.37 support for confirmation.

Daily Pivots: (S1) 0.8485; (P) 0.8535; (R1) 0.8576; More...

EUR/GBP retreated after hitting 0.8585 and intraday bias is turned neutral again. Further rise will remain mildly in favor as long as 0.8456 minor support holds. Above 0.8585 will target a retest on 0.8720 resistance. However, break of 0.8456 should resume the fall from 0.8720 through 0.8401.

In the bigger picture, attention remains on 38.2% retracement of 0.9499 to 0.8201 at 0.8697. Sustained break there will affirm the case that rise from 0.8201 is a medium term up trend itself. Further rally would then be seen to 61.8% retracement at 0.9003. However, rejection by 0.8697 will confirm medium term bearishness for another fall through 0.8201.

Daily Pivots: (S1) 1.4691; (P) 1.4801; (R1) 1.4858; More...

EUR/AUD's fall from 1.5396 resumes and hits as low as 1.4686 so far. Corrective rise form 1.4318 should have completed at 1.5396, after rejection by 1.5354 support turned resistance. Intraday bias is back on the downside for retesting 1.418 low. On the upside, above 1.4910 minor resistance will turn intraday bias neutral first.

In the bigger picture, rejection by 1.5354 support turned resistance, as well as 55 week EMA (now at 1.5378), maintain medium term bearishness. That is, larger down trend from 1.9799 is not completed yet. Break of 1.4318 low will target 61.8% projection of 1.9799 to 1.5250 from 1.6434 at 1.3623, which is close to 1.3624 long term support (2017 low). This will remain the favored case now as long as 1.5396 resistance holds.

Daily Pivots: (S1) 0.9849; (P) 0.9900; (R1) 0.9936; More....

Intraday bias in EUR/CHF stays neutral at this point and outlook stays bearish with 0.9953 minor resistance intact. Firm break of 0.9084 low will resume larger down trend. next target is 0.9650 long term projection level. On the upside, however, break of 0.9953 minor resistance will suggest short term bottoming at 0.9804, on bullish convergence condition in 4 hour MACD. Intraday bias will be back on the upside for 55 day EMA (now at 1.0108).

In the bigger picture,long term down trend from 1.2004 (2018 high) is expected to target 100% projection of 1.2004 to 1.0505 to 1.1149 at 0.9650. On the upside, break of 1.0513 resistance is needed to indicate medium term bottoming. Otherwise, outlook will stay bearish in case of strong rebound.