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New Zealand goods exports rose 7.7% yoy to NZD 6.4B in June. Goods imports rose 25.0% yoy to NZD 7.1B. Trade balance came in at NZD -701m deficit, versus expectation of NZD 204m surplus.

"Petroleum and products imports rose $795 million to reach a new high of $1.2 billion," Stats NZ. "This rise lead the sharp increase in total imports for the month compared with June 2021."

US leads monthly export rise, up 22%. Exports to EU were up 28% and Japan up 24%. Exports to China were down -6% and to Australia down -12%.

Import form all top partners rose, with China up 12%, EU up 11%, Australia up 6%, US up 30%, and Japan up 4.1%.

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DXY:

On the H4, with prices moving within the ascending channel and bouncing off the stochastic support, we have a bullish bias that prices will rise to the 1st resistance at 107.514 where the 38.2% fibonacci retracement and pullback resistance are. Once there is upside confirmation of price breaking the 1st resistance structure, we would expect bullish momentum to carry price to 2nd resistance at 109.265 where the swing high resistance and 61.8% fibonacci projection are. Alternatively, prices could drop to 1st support at 105.642 in line with overlap support and 61.8% fibonacci retracement.

Areas of consideration:

• H4 time frame, 1st resistance at 107.514
• H4 time frame, 1st support at 105.642

XAU/USD (GOLD):

On the H4, with price moving below the ichimoku cloud and in a descending trendline, we have a bearish bias that price will rise and drop from the 1st resistance at 1699.76 where the pullback support is to the 1st support at 1676.00 in line with the 100% fibonacci projection and swing low support on the daily timeframe. Alternatively, price could break 1st resistance structure on the upside and we would expect bullish momentum to carry prices to 2nd resistance at 1742.91 where the swing high resistance is.

Areas of consideration:

• H4 time frame, 1st Resistance at 1699.76
• H4 time frame, 1st Support at 1676.00

GBP/USD:

On the H4, with prices bouncing off the ichimoku indicator, RSI moving in an ascending trendline and price has broken out of the descending channel, we have a bullish bias that price will rise to the 1st resistance at 1.20469 where the swing high resistance is. Once there is upside confirmation that price has broken the 1st resistance, we would expect bullish momentum to carry prices to 2nd resistance at 1.21628 where the swing high resistance, 61.8% fibonacci retracement and 127.2% fibonacci extension are. Alternatively, price could drop to the 1st support at 1.19320 where the pullback support and 38.2% fibonacci retracement are. Should price break 1st support, we would have a bearish bias that price will drop to 2nd support at 1.17599 in line with swing low support and 100% fibonacci projection.

Areas of consideration:

• H4 1st resistance at 1.20469
• H4 1st support at 1.19320

USD/CHF:

On the H4, with price breaking the bullish channel, moving along the descending channel and crossing over the the ichimoku indicator, we have a bearish bias that price might drop from our 1st resistance at 0.97348 where the pullback resistance is to our 1st support at 0.96780, which is in line with the 50% fibonacci retracement. If the price continues going down, the price may drop to our 2nd support at 0.96434, which is in line with 61.8% fibonacci retracement. Alternatively, price may break 1st resistance and head for 2nd resistance at 0.97923 where the 23.6% fibonacci retracement is.

Areas of consideration

• 1st resistance level at 0.97348
• 1st support level at 0.96780

EUR/USD :

On the H4, with price moving above the ichimoku cloud and breaking out of the descending trend channel, we have a bullish bias that price will continue to rise from the 1st support at 1.01847 at the overlap support. If price breaks above the intermediary resistance at 1.02487 in line with the 100% fibonacci projection, we have upside confirmation that price will continue to rise to the 1st resistance at 1.03570 at the pullback resistance in line with the 61.8% fibonacci retracement. Alternatively, price may reverse off the 1st support and drop to the 2nd support at 1.01213 at the overlap support.

Areas of consideration :

• H4 1st resistance at 1.03570
• H4 1st support at 1.01920

USD/JPY:

On the H4, with price moving above the ichimoku indicator and along the ascending trendline, we have a bullish bias that price will rise to our 1st resistance at 139.377 where the 61.8% fibonacci projection and swing high resistance are from our 1st support at 137.785 in line with pullback support. Alternatively, prices could break 1st support structure and drop to 2nd support at 136.661 where the overlap support and 38.2% fibonacci retracement are.

Areas of consideration:

• H4 time frame, 1st resistance at 139.377
• H4 time frame, 1st support at 137.785

AUD/USD:

On the H4, with price moving above the ichimoku cloud, moving in an ascending support and breaking out of the descending trend channel, we have a bullish bias that price will rise from the 1st resistance at 0.68759 at the overlap resistance. If price rises and breaks the intermediary resistance at 0.69213 in line with the 61.8% fibonacci retracement, we will have upside confirmation that price will continue to rise to the 2nd resistance at 0.69658 at the swing high. Alternatively, price may reverse off the 1st resistance and drop to the 1st support at 0.68023 at the overlap support.

Areas of consideration

• H4 1st resistance at 0.68759
• H4 1st support at 0.68023

NZD/USD:

On the H4, with price recently breaking the descending trend channel, short term ascending support and moving above the ichimoku cloud, we have a bullish bias that price will rise from the 1st support at 0.62177 at the overlap support. If price breaks the intermediary resistance at 0.62707 at the swing high in line with the 61.8% fibonacci retracement and 100% fiboancci projection, we will have upside confirmation that price will rise to the 1st resistance at 0.63269 at the swing high in line with the 78.6% fibonacci retracement. Alternatively, price may break the support structure at the 1st support and drop to the 2nd support at 0.61419 at the pullback support.

Areas of consideration:

• H4 time frame, 1st support at 0.62177
• H4 time frame, 1st resistance at 0.63269

USD/CAD:

On the H4, prices seem to be range bound although it broke the key resistance level at 1.307. It came back down forming a descending trend with a bearish bias currently testing at the 50% fibonacci retracement level. If prices break 1.285 level, it may pullback further to test at the 61.8% fibonacci retracement level. Alternatively if price bounces off this support level, it may look to test at the next key level at 61.8% fibonacci retracement

Areas of consideration:

• H4 time frame, 2nd support at 1.2780
• H4 time frame, 1st support at 1.2873

OIL:

On the H4, with price moving along the descending channel and testing the overlap resistance, we have a bearish bias that price might drop from our 1st support at 106.629, which is in line with 50% retracement to 2nd support at 104.062, where the 38.2% fibonacci retracement is. Alternatively, price may rise to 1st resistance at 109.331 in line with 61.8% fibonacci retracement and overlap resistance.

Areas of consideration:

• H4 time frame, 1st support of 106.629
• H4 time frame, 2nd support of 104.062

Dow Jones Industrial Average:

On the H4, with price moving in a ascending trendline and moving above ichimoku cloud, we have a bullish bias that price might rise from our 1st support at 31787, which is in line with 141.4% fibonacci retracement to our 1st resistance at 32034, which is in line with 161.8% fibonacci retracement. Alternatively, price may reverse off the 1st support and drop to the 2nd support at 31390, which is in line with the 38.2% fibonacci retracement.

Areas of consideration:

• H4 time frame, 1st support of 31787
• H4 time frame, 1st resistance at 32034

DAX shows a lower low sequence from November 2021 peak and thus the 4 hour cycle is still calling for further downside. Near term though, the Index ended cycle from 3/29/2022 peak in wave (1) at 12390.95. Internal subdivision of wave (1) unfolded as a 5 waves impulse Elliott Wave structure. Down from 3/29/2022 peak, wave 1 ended at 13380.67 and rally in wave 2 ended at 14709.38. Index extended lower in wave 3 towards 13007.91, and rally in wave 4 ended at 13443.77. Final leg lower wave 5 ended at 12390.95 and this completed wave (1) in higher degree.

Wave (2) rally is in progress with subdivision as a double three Elliott Wave structure. Up from wave (1), wave ((a)) ended at 13019.13, and pullback in wave ((b)) ended at 12434.29. Expect the Index to complete wave ((c)) soon at 13064.48 – 13452.97 area and this should complete wave W. Index should then pullback in wave X to correct cycle from 7/5/2022 low in 3, 7, or 11 swing before turning higher in wave Y of (2). Near term, as far as pivot at 12392.38 low stays intact, Index has scope to extend wave (2) rally to correct cycle from 3/29/2022 peak as 7 swing structure before the decline resumes.

DAX 45 Minutes Elliott Wave Chart

• EUR/USD stayed at or below parity only briefly
• The 1.036 region and 1.050 region are possible resistance levels

A Brief Moment Below Parity

Life for EUR/USD at or below parity thus far has been short and sweet. Rather than punch, the pair gently lapped past parity between 12 and 14 July, before receding back above that level in recent days. Still, the 14 July swing low of 0.9952 stands out in the wake of the recent retracement higher in price. Meanwhile, the simplest of technical indicators, such as the 200 daily and weekly exponential moving average are tilted downwards; the current price of EUR/USD is well below the moving average line. This, alongside the absence of that big capitulation moment in EUR/USD, where sellers completely exhaust themselves on massive volume, in my opinion, risks a further move beyond the newly established precipice of 0.9952.

Retracement Opportunities

As a result, I’m keeping my eyes peeled for attractive levels to re-sell EUR/USD, on the possibility of further retracement. Until price makes a sustained break above the 30 May swing high of 1.07870, which would mark a structural shift from downtrend to uptrend, I’m more apt to look at opportunities to sell EUR/USD rather than buy. I’ve got my eye on the key Fibonacci retracement levels between the swing high of 1.07870 and 0.9952 swing low as possible levels for the current corrective move to reverse. These include the 50% Fibonacci retracement level of 1.03685, and also the 1.05 region where there is a great deal of past congestion and volume, amongst others.

Keeping a Tight Lid on Risk

Against those key Fibonacci levels, I’m looking for strong signs of possible reversal, whether they be candlestick patterns, traditional chart patterns, or other similar signals. In addition, I will judge my position sizing against the degree of relative volume that validates that potential. I always can size up my position by scaling in at a later date. But based on previous volume, I wouldn’t be looking to do that until price has successfully broken below parity again and downside momentum looks set to continue.

• GBPNZD reversed from support level 1.9135
• Likely to rise to resistance level 1.9400

GBPNZD recently reversed up from the pivotal support level 1.9135 (which has been reversing the pair from the middle of April), strengthened by the lower daily Bollinger Band and the 50% Fibonacci correction of the upward move from April.

The upward reversal from the support level 1.9135 stopped the earlier short-term impulse wave 3.

Given the strength of the support level 1.9135, GBPNZD can be expected to rise further toward the next resistance level 1.9400.

• Nasdaq 100 broke resistance level 12180.00
• Likely to rise to resistance level 12920.00

Nasdaq 100 index recently broke the resistance area located at the intersection of the resistance level 12180.00 (which stopped the previous waves (a) and (i), as can be seen below) and the 61.8% Fibonacci correction of the downward impulse from the start of June.

The breakout of this resistance area should accelerate the active short-term impulse wave (iii) of wave 2 from last month.

Nasdaq 100 can be expected to rise further toward the next key resistance level 12920.00 (former monthly low from March and also the monthly high from June).

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Canada took over the inflation marathon from the UK. The rate of consumer price growth accelerated from 7.7% to 8.1% y/y in June there, although it was lower than 8.4% as expected.

However, an even more critical signal came from producer prices, which fell by 1.1% in June. The annual growth rate has fallen for the third month in a row, reaching 14.3% in June after peaking at 18% in March.

The Commodity Price Index lost 0.1% over the month, contrasting with the forecast of 4.1% growth. The annual growth rate for this index fell to 32.4% against a peak of 42.6% in March.

Notably, price pressures are weakening markedly in this country, with the Bank of Canada imposing the most aggressive policy on developed nations last week by raising its key rate by half a percentage point.

Over the next few months, a sharp tightening of policy promises to translate into a sharper slowdown in inflation than in most other G7 countries. Also not to be overlooked is that Canadian exports benefit from rising commodity prices.

This combination of factors adds to Looney’s immunity against a rising US currency. Since June 2021, the CAD has lost 7% against the USD compared to a 16% decline in EUR and GBP and a 27% decline in JPY. Suppose the stance of the Canadian monetary authorities doesn’t change. In that case, it could make the Loonie one of the leaders in the rally against the USD, reviving memories of the super cycle of 20 years ago, when USDCAD lost 42% in five years.

This week’s impressive euro rally, which has seen EUR/USD jump by about 200 points, has taken a pause today. EUR/USD is almost unchanged at 1.0224.

ECB poised for liftoff

It’s show time (finally) in Brussels, as the ECB will announce a lift-off in interest rates on Thursday. The event will be closely watched as the ECB is expected to raise rates for the first time in a decade. The markets are still uncertain as to the extent of the rate increase, with analysts split on whether the ECB will deliver a 25bp or a more substantial 50bp increase. With its deposit rate at -0.50%, the ECB is well behind the inflation curve and additional hikes are expected in the coming months. The central bank has been sounding more hawkish as inflation continues to accelerate, and the key question is whether the ECB will come out flying with a 50bp salvo or opt for a modest 25bp move.

The euro has looked good since breaching the parity line last week, but risk sentiment remains fragile when it comes to Europe. There are lingering fears about Russian gas supplies to Europe ahead of winter and the potential for a recession if gas exports are disrupted. The markets could face a test on Thursday, as the Nord Stream pipeline, which provides one-third of Russian gas exports to the EU, is scheduled to renew service after a maintenance break. If Moscow refuses to turn on the gas tap, the spectre of the EU scrambling for gas supplies could unnerve the markets and send the euro lower.

It’s certainly not business as usual in the European Commission (EC) ahead of the pipeline’s scheduled restart. On Wednesday, the Wall Street Journal quoted EU Budget Commissioner Johannes Hahn as stating that he did not expect Nord Stream 1 to restart on time. This was followed today with the EC requesting EU members to scale back gas usage by 15% by March 31, as an emergency step. Stay tuned for tomorrow’s developments.

EUR/USD Technical

• EUR/USD tested support at 1.0197 in the European session. The next support level is 1.0075
• There is resistance at 1.0307 and 1.0429

IMF said in a report that Germany's GDP growth is expected at 1.2% in 2022 and 0.8% in 2023. Unemployment rate is estimated at 3.1% in 2022 and 3.4% in 2023. Headline inflation is projected at 7.7% in 2022 and 4.8% in 2023.

It added, "uncertainty is very high, with risks to the baseline growth forecast skewed downward and risks to the inflation forecast skewed upward."

The greatest threat is a "persistent shutoff" of the remaining Russian gas exports to Europe, which could cause "sizable reductions in German economic activity and increases in inflation".

"Prolonged war and resurging COVID-19 infections could also intensify supply chain disruptions. "

"Persistently-high inflation and fears of a de-anchoring of inflation expectations can prompt major central banks to tighten policies faster than currently expected".

Full report here.