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Technical analysis

The XRPUSD pair has formed a notable inverted head and shoulders price pattern on the four-hour time frame with significant upside potential.

The MACD and Relative Strength Index indicators on the four-hour time frame have not yet started to generate clear sell signals.

What the possible outcomes are

In our most likely scenario, the XRPUSD pair will start to rally towards the 0.9000 level after breaking past the 0.7700 support area.

Alternatively, XRPUSD pair corrects one final time back towards the 0.6700 support level and then starts to rally towards the 0.9000 resistance level.

Key levels

Support 0.7000 0.6700

Resistance 0.7700 0.9000

Technical analysis

The Ichimoku indicator gives a possible bearish signal

The RSI is under line 50, indicating that a downtrend may prevail, and the MACD states the same.

What the possible outcomes are

In our most likely scenario, XAUUSD may experience a downward correction towards the first support level of 1,797.

If the pair falls below the first support level, we can expect a continued downtrend towards the second support level of 1,792.

Contrarily, the pair may initially rise towards the first resistance level of 1,806.

If the pair surpasses the first resistance level, we should expect a continued surge towards the second resistance level of 1,814.

Key levels

Support 1,792 1,797 1,802

Resistance 1,806 1,814 1,819 1,825

Daily Pivots: (S1) 1.1820; (P) 1.1839; (R1) 1.1849; More...

Intraday bias in EUR/USD stays neutral first. On the upside, above 1.1907 will resume the rebound from 1.1751 to 1.1974 resistance first. Firm break there should argue that whole corrective pattern from 1.2348 has completed. On the downside, however, break of 1.1751 will resume the fall from 1.2265 to 1.1703 support instead.

In the bigger picture, rise from 1.0635 is seen as the third leg of the pattern from 1.0339 (2017 low). Further rally could be seen to cluster resistance at 1.2555 next, (38.2% retracement of 1.6039 to 1.0339 at 1.2516). This will remain the favored case as long as 1.1602 support holds. Reaction from 1.2555 should reveal underlying long term momentum in the pair. However sustained break of 1.1602 will argue that the rise from 1.0635 is over, and turn medium term outlook bearish again.

US stocks rose sharply on Thursday as investors reacted to the strong earnings season. The Dow Jones rose by more than 270 points while the S&P 500 and Nasdaq 100 indices rose by 26 and 115 points, respectively. Many companies have reported strong quarterly results in the past two weeks, signaling that there is still growth. Some of the firms that published strong results this week are General Motors, Uber, Moderna, and Zillow. Other firms expected to publish their results today are Shift4 Payments, Motorola, and TripAdvisor.

The US dollar tilted higher as traders waited for the latest non-farm payrolls data. The numbers are expected to show that the economy added more than 700k jobs in July as the reopening accelerated. The unemployment rate is expected to drop to 5.7% while wages are expected to rise. On Wednesday, data by ADP showed that private payrolls rose by 330k, which was substantially below the expected 650k. And yesterday, data by the Bureau of Labour Statistics revealed that the number of initial jobless claims rose by 385k.

Ethereum price jumped after developers conducted the London hard fork. The fork’s goal is to help scale the network and make it more user friendly. It will also reduce the number of new coins in circulation by introducing the concept of burning. Further, the fork will also help reduce transaction fees. It is part of the process known as ETH 2.0, which will transition Ethereum from a proof of work to a proof of stake technology.

ETHUSD

The ETHUSD price has been in a strong bullish trend in the past few weeks. The pair has jumped by more than 50% from its lowest level in July. Along the way, it has moved above the 25-day and 50-day moving average. It has also risen above the key resistance levels at 2,000 and 2,500. Therefore, the pair will likely keep rising, with the next target being at 3,000.

BTCUSD

The BTCUSD pair has been in a tight range recently. It is trading at 40,490, which is lower than this week’s high of 42,000. On the 4 hour chart, the price is along the 25-day and 15-day moving averages. The RSI has made a bearish divergence while the MACD has moved close to the neutral level. This price is also close to the highest level on June 16. Therefore, a breakout above 42,500 will be a bullish sign.

EURUSD

The EURUSD pair tilted lower during the Asian session. The pair dropped to a low of 1.1822 as traders wait for the latest US nonfarm payrolls data. It also moved below the 25-day moving average. A closer look shows that it has formed a double-top pattern. Therefore, the pair will likely maintain the bearish trend as bears target the key level at 1.1750.

Daily Pivots: (S1) 1.3884; (P) 1.3916; (R1) 1.3960; More...

Intraday bias in GBP/USD remains neutral at this point and outlook is unchanged. Corrective pattern from 1.4240 could have completed with three waves down to 1.3570. Further rise is expected as long as 1.3766 support holds. On the upside, break of 1.3982 will resume the rise from 1.3570 to retest 1.4248 high. However, break of 1.3766 support will dampen this bullish view and bring retest of 1.3570.

In the bigger picture, as long as 1.3482 resistance turned support holds, up trend from 1.1409 should still continue. Decisive break of 1.4376 resistance will carry larger bullish implications. However, firm break of 1.3482 support will argue that the rise from 1.1409 has completed. GBP/USD would then be seen in another leg of long term range pattern between 1.1409 and 1.4376. Deeper fall could then be seen to 61.8% retracement of 1.1409 to 1.4248 at 1.2493, and even below.

Market movers today

• Today's highlight will be the US jobs report, which will give insights into whether businesses had more success hiring workers in July. The FOMC has clearly stated that job growth is a key determinant for the monetary policy outlook. Consensus is looking for an increase in non-farm payrolls by 870k, but the private sector ADP employment report earlier this week missed expectations with only 330k new jobs created during July. Labor shortages might hence still limit jobs growth despite half of US states have already phased out extraordinary unemployment benefits.
• In Sweden, the NDO publishes borrowing numbers for July where the reference is a projected SEK6.3bn deficit. The cumulated outcome since the last government borrowing report in May is almost banged in line with the NDO forecast.

The 60 second overview

Bank of England: The Bank of England maintained its monetary policy unchanged in the August meeting, but struck a moderately hawkish tone by clearly signaling some monetary tightening if the economy continues recovering in line with expectations. Inflation was seen accelerating to 4% by the end of this year before stabilizing towards the 2% target next year. We expect BoE to end its quantitative easing program by the end of this year, and begin lifting rates by a first 15bp hike in H2 2022. BoE also noted that it plans to begin unwinding the QE purchases once the benchmark rate reaches 0.5%, which is currently being priced in by 2023.

US labor market: Both initial (385k; prev. 400k) and continuing (2930k; prev. 3269k) US jobless claims continued edging lower as 26 states ended the federal unemployment benefits early during June and July. Both figures remain elevated compared to the pre-pandemic levels (around 200k for initial, 1700k for continuing).

Delta variant: Fed's Kashkari was optimistic about the labor market recovery, yet he was worried about the spreading of the delta variant. In Australia, RBA governor Philip Lowe noted that the Reserve Bank is ready to act if the virus situation worsens further. However, in its monetary policy statement released overnight, the central bank's base scenario still assumes that the current lockdowns can be eased in the fall. BoE also had a positive view in its statement yesterday, expecting the pandemic's effect on the British economy to fade.

Equities: Equities higher yesterday resulting in a new all-time high for MSCI world and some local indices as well, including the S&P 500 and Nasdaq. Interestingly the correlation between yields and equities is back in positive territory so it will be important to see if that holds after the NFP number later today. Energy and financials outperforming yesterday while high flying health care underperforming. A strong run lately for health care combined with some less encouraging earnings results in the reason for the move lower yesterday. Asian markets are mixed this morning while European and US futures are slightly negative.

FI: 10Y US Treasury yields rose some 4bp during Thursday's trading hours on the back of somewhat positive US labor market data and a more hawkish Bank of England statement. There were some spill-over effects on European yields, but the 10Y German government bond yield remains around -50bp. However, the spread tightening between the periphery and the core-EU also continued, and we are back to testing 100bp in the 10Y spread between Germany and Italy in the 10Y segment.

FX: EUR/GBP dropped below 0.85 yesterday after the Bank of England meeting, which send a hawkish signal to the market. EUR/NOK fell below 10.43 and EUR/SEK held steady close to 10.20.

Credit: Credit had a good run yesterday, with iTraxx Xover tightening 2½bp (to 234bp) and Main ½bp (to 46bp). HY bonds tightened 2bp and IG finished marginally tighter.

Daily Pivots: (S1) 0.9053; (P) 0.9066; (R1) 0.9079; More....

Intraday bias in USD/CHF remains neutral for consolidation form 0.9017. As long as 0.9116 resistance holds, further decline is expected. On the downside, break of 0.9017 will resume the decline from 0.9273 to retest 0.8925 low. Nevertheless, sustained break of 0.9116 will turn bias back to the upside for retesting 0.9273 instead.

In the bigger picture, failure to sustain above 55 week EMA (now at 0.9183) affirms medium term bearish in USD/CHF. Break of 0.8925 support should resume the whole decline form 1.0342 (2016 high) through 0.8756 low. For now, risk will stay on the downside as long as 0.9273 resistance holds, in case of rebound.

Daily Pivots: (S1) 109.53; (P) 109.66; (R1) 109.91; More...

Outlook in USD/JPY remains unchanged a intraday bias stays neutral first. Further decline remains in favor as long as 110.58 resistance holds. On the downside, break of 108.71 will resume the decline from 111.65 to 38.2% retracement of 102.58 to 111.65 at 108.18. Nevertheless, firm break of 110.58 will argue that that corrective fall has completed and bring retest of 111.65.

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. Firm break of 107.47 will argue that pattern from 101.18 has started another falling leg already. Deeper decline could be seen back to 101.18/102.58 support zone. For now, outlook won't turn bullish as long as 111.71 resistance holds, even in case of strong rebound.

Headlines/Economic data

Australia/New Zealand

• ASX 200 opened -0.1%.
• (AU) Reserve Bank of Australia (RBA) Gov Lowe: At the Board's meeting earlier this week we considered the case for delaying this tapering to $4 billion a week.
• (AU) RESERVE BANK OF AUSTRALIA (RBA) STATEMENT ON MONETARY POLICY (SOMP): Will act if worsening health outcomes hit economic outlook; Wage price index to gradually increase to around 2.75% by 2023.
• (AU) Australia July AIG Services Index: 51.7 v 57.8 prior.
• (AU) Australia sells A$700M v A$700M indicated in 0.25% Nov 2025 bonds, avg yield 0.4965%, bid to cover 5.97x.

China/Hong Kong

• Hang Seng opened +0.2%, Shanghai Composite flat.
• (CN) Growth in China aggregate financing might rebound in Q4, rebound could be supported by adjustments in future monetary policy - China Securities Journal front-page.
• (CN) Said that Local govt bond issuance may increase notably in Aug and Sept – Press.
• (CN) China State Planner (NDRC) Vice Chair: Economy growing steady but the recovery is unbalanced - People's Daily.
• (CN) China State Planner (NDRC): Will release reserves of commodities essential for livelihoods in timely and targeted manner; will ensure supplies of essential produce after flooding and coronavirus.
• (CN) Beijing said to halt enclosed community spaces for entertainment and limit traffic at parks to control virus spread – press.
• (CN) Said that business groups have been calling on US President Biden to restart trade talks with China - Press.
• (CN) China Former Education Ministry Spokesman Wang Xuming: Crackdown on Education has 'only scratched the surface' of what is to come - SCMP.
• (CN) China PBOC Open Market Operation (OMO): Injects CNY10B in 7-day reverse repos v CNY10B in 7-day reverse repos prior; Net drain CNY20B v Net drain CNY20B prior.
• (CN) China PBOC sets Yuan reference rate: 6.4625 v 6.4691 prior.

Japan

• Nikkei opened -0.1%.
• (JP) Japan Jun Household Spending M/M: -3.2% v +2.0% prior; Y/Y: -5.1% v 0.2%e.
• (JP) Japan Jun Labor Cash Earnings Y/Y: -0.1% v +1.1%e; Real Cash Earnings Y/Y: -0.4% v +1.2%e.
• (JP) Japan July FX Reserves $1.39T v $1.38T prior.
• (JP) Japan Jun Preliminary Leading Index CI: 104.1 v 104.2e; Coincident Index: 94.0 v 94.0e.

Korea

• Kospi opened flat.
• (KR) South Korea Jun Current Account (BOP): $8.8B v $10.8B prior (14th consecutive surplus); Balance of Goods (BOP): $7.6B v $6.4B prior.
• (KR) Said that South Korea will extend social distancing measures for 2 weeks - Yonhap.

Other Asia

• (IN) INDIA CENTRAL BANK (RBI) LEAVES REPURCHASE RATE UNCHANGED AT 4.00%; AS EXPECTED; Votes 5-1 On accommodative stance.
• (TW) Taiwan to extend its coronavirus level 2 alert through Aug 23rd - Press.

North America

• (US) Fed's Kashkari (dove, non-voter): We could meet the goal of 'substantial further progress' this fall if the jobs market is strong.
• (US) Said that Democrats in Congress will not seek extension of Unemployment insurance benefits – Press.
• (US) Senator Schumer (D-NY): Confirms Senate to reconvene Saturday for the Infrastructure bill.
• Duolingo [DUOL]: Says aware that app is no longer available in certain China app stores.
• Li Auto [LI]: Said to guide HK IPO pricing at HK$118/shr.

Europe

• (TR) Turkey President Erdogan appoints 3 Vice Presidents to Statistical Institute Turkstat.

Levels as of 01:20 ET

• Nikkei 225, +0.2%, ASX 200 +0.1% , Hang Seng +0.1%; Shanghai Composite -0.5% ; Kospi -0.3%.
• Equity S&P500 Futures: flat; Nasdaq100 flat, Dax flat; FTSE100 flat.
• EUR 1.1835-1.1818 ; JPY 109.88-109.74 ; AUD 0.7408-0.7378 ;NZD 0.7060-0.7041.
• Gold -0.4% at $1,802/oz; Crude Oil +0.1% at $69.17/brl; Copper +0.3% at $4.3617/lb.

Daily Pivots: (S1) 1.2467; (P) 1.2508; (R1) 1.2540; More...

USD/CAD is staying in consolidation from 1.2421 and intraday bias remains neutral first. As long as 1.2605 resistance holds, further decline is still in favor. On the downside, break of 1.2421 will resume the decline from 1.2805 to 1.2301 cluster support (61.8% retracement of 1.2005 to 1.2805 at 1.2311). However, firm break of 1.2605 will turn bias back to the upside for retesting 1.2805 resistance.

In the bigger picture, fall from 1.4667 is seen as the third leg of the corrective pattern from 1.4689 (2016 high). It should have completed after hitting 1.2061 (2017 low) and 50% retracement of 0.9406 to 1.4689 at 1.2048. Sustained break of 38.2% retracement of 1.4667 to 1.2005 at 1.3022 will pave the way to 61.8% retracement at 1.3650 and above. Overall, medium term outlook remains neutral at worst with 1.2048/61 support zone intact.