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Technical analysis

The RSI is under line 50 but close to the oversold zone, indicating a possible correction upwards

The Ichimoku indicator shows that the price is under the Tenkan-sen line and the Kijun-sen, signifying bearish sentiment

The MACD is showing that the downtrend may prevail.

What the possible outcomes are

In our most likely scenario, GBPJPY may experience a downwards correction towards the first support level of 151.397.

If the downwards correction falls below the first support level, we can expect a continued downtrend towards the second support level of 150.786.

Conversely, it's possible to see the pair rise towards the first resistance level of 152.598.

If the pair manages to surpass the first resistance level, we should expect a continued surge towards the second resistance level of 153.141.

Key levels

Support 150.786 151.397

Resistance 152.598 153.141

Technical analysis

XAUSUD is vulnerable towards the lower Daily Bollinger Band, around the $1,772 support level, after slipping below the mid-line of the Bollinger Band indicator.

The RSI indicator on the daily time frame is bearish and has moved below 50. The overall price trend is still bearish as the yellow-metal trades below its 200-day moving average.

What the possible outcomes are

In our most likely scenario, the XAUUSD pair will decline towards the $1,772 support area and then continue to drift towards the $1,750 level as the technical outlook remains very weak.

Alternatively, XAUUSD could find strong buying interest around the $1,772 support area and start to rally back towards its trend defining 200-day moving average.

Key levels

Support $1,772 $1,750

Resistance $1,800 $1,820

Technical analysis

The XRPUSD pair has tested its upper daily Bollinger Band indicator and suffered a big rejection. The daily Bollinger Bands are narrowing, which indicates a breakout could be coming.

The daily time frame shows that the RSI indicator has not turned bullish yet and remains under 50. Bulls may have also reached the possible upside weekly target of 0.6800, meaning the chances of correcting even lower is therefore high.

What the possible outcomes are

In our most likely scenario, the XRPUSD pair will fall break under the mid-line of the daily Bollinger Band, around descend towards the lower daily Bollinger Band, close to the 0.5700 support area.

Alternatively, the XRPUSD pair may start to test back towards the current weekly high but will not break it, and then fall back towards the 0.5700 support level.

Key levels

Support $0.6000 $0.5500

Resistance $0.6500 $0.6800

US dollar edges lower

Not much has changed in currency markets overnight, as US bond yields remained almost unchanged in the overnight session. The dollar index retreated by 0.30% to 92.62, led by EUR/USD strength. The index has interim support just below 99.55, and failure on a daily close basis will signal a further pullback to 92.00 initially. Strong US tech results could be the catalyst.

The euro outperformed overnight, EUR/USD rising 0.30% to 1.1805. It looks like impatient shorts, initiated after a dovish ECB last week, have thrown in the towel, and the resulting short-squeeze has lifted the single currency out of the danger zone for now—a range of 1.1750 to 1.1850 looks to be the story for the week. With Covid-19 cases falling rapidly in the United Kingdom, GBP/USD continues to trade constructively, rising 0.50% to 1.3825 overnight. Any dips to 1.3750 should find strong buyer interest now. Sterling looks set to retest 1.3900 this week as long as the Covid-19 situation maintains an appearance of being under control, allowing the UK to reopen smoothly.

USD/CNY remains stranded in a 6.4500 to 6.4900 range, with a daily close above or below those levels signalling its next directional move. The topside remains the weaker side, with authorities quietly drawing a line under further yuan appreciation some time ago.

Although the Australian and New Zealand dollars continued to trace higher overnight, a daily close above 0.7400 and 0.7000 respectively is required to signal an extension to the rally. Both remain highly correlated to the travails of regional Asia, with my fragile five of won, baht, rupee, ringgit and rupiah still at the mercies of the region’s Covid-19 delta-variant situation. They are also vulnerable to FOMC tapering nerves, keeping ASEAN currencies offered until the FOMC passes. However, all may gain some temporary respite after the China stock market meltdown as investors move capital out of China and redeploy to other parts of Asia.

Overall, the US dollar looks like it will track lower in the near term, but lingering fears of tapering statements from the FOMC will temper any selling pressure. If the FOMC passes without incident, the US dollar will come under pressure into the week’s end.

The EUR/USD could move up if the 1.1700 holds. At this point, the pair is at support.

The zone is just above the M L3 camarilla pivot. We can see that the price has made 3 higher lows and on a daily TF this looks bullish. From the R:R perspective, we could see a good trading opportunity towards 1.1968 levels. Watch for a bounce and continuation if the market keeps the price above 1.1700.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.1768
Prev Close: 1.1802
% chg. over the last day: +0.29%

Germany's IFO Business Climate Index unexpectedly declined (from 101.7 to 100.8) in July, indicating the beginning of a slowdown in economic growth in the country. The reason for the slowdown is the threat of the Delta strain spreading, as well as the floods that hit the country in July. In addition, supply interruptions and higher inflation may also affect business optimism in the coming months.

Trading recommendations

Support levels: 1.1761, 1.1746, 1.1609
Resistance levels: 1.1822, 1.1834, 1.1879, 1.1934, 1.1969

From the technical point of view, the trend is still bearish. The price is trading within a wide 1.1761-1.1823 price range. The negative situation for the European currency remains unchanged, but short-term upward movements are not excluded. Under such market conditions, it is better for traders to look for sell positions from the resistance levels. Buy trades can be considered only on intraday time frames from the support levels.

Alternative scenario: if the price breaks through the 1.1879 resistance level and fixes above, the general uptrend is likely to be resumed.

News feed for 2021.07.27:

• US Core Durable Goods Orders (m/m) at 15:30 (GMT+3);
• US CB Consumer Confidence (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.3744
Prev Close: 1.3818
% chg. over the last day: +0.53%

The number of COVID-19 cases in the UK is declining, but the number of hospitalizations is increasing. The country’s recovery from the pandemic has not affected the business climate yet, but the British pound has been confidently growing for the last few days.

Trading recommendations

Support levels: 1.3805, 1.3721, 1.3676 ,1.3641, 1.3614, 1.3525
Resistance levels: 1.3899, 1.3923, 1.4002, 1.4075, 1.4101

The trend on the GBP/USD currency pair is downward on the H1 timeframe. But now, the price is ahead of the priority change level. The MACD indicator is in the positive zone but with signs of divergence. Under such market conditions, traders are better to look for sell trades from the priority change level. There are no optimal entry points for buy positions now.

Alternative scenario: if the price breaks through the 1.3839 resistance level and consolidates above, the bearish scenario is likely to be canceled.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 110.44
Prev Close: 110.38
% chg. over the last day: -0.05%

The situation on the USD/JPY currency pair remains the same. At the moment, the instrument is strongly correlated with the dollar index. Against the background of yesterday's decline in the dollar index, USD/JPY also declined and is trading in a narrow price range now. The situation is unlikely to change before the speech of the Governor of the Bank of Japan.

Trading recommendations

Support levels: 110.17, 109.70, 109.19, 108.65
Resistance levels: 110.41, 110.73, 111.06, 111.48, 110.73, 112.18

In terms of technical analysis, the situation has become uncertain. On the one hand, the price broke through the priority change level on Friday. On the other hand, the price failed to consolidate higher and returned back under the level. Traders are better to consider intraday trading now. For buy positions, it's better to wait for a pullback to the nearest support level. Sell positions should be considered only from resistance levels and with short targets.

Alternative scenario: if the price falls below 109.70, the downtrend is likely to be resumed.

News feed for 2021.07.27:

Japan BoJ Haruhiko Kuroda Speaks at 10:30 (GMT+3).

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.2556
Prev Close: 1.2545
% chg. over the last day: -0.09 %

The situation with the USD/CAD currency pair has not changed. The Canadian dollar is a commodity currency and is highly dependent on oil price movements. Oil is now trading in the narrow price corridor, causing a consolidation on the USD/CAD currency pair.

Trading recommendations

Support levels: 1.2561, 1.2519, 1.2448, 1.2404, 1.2347, 1.2312
Resistance levels: 1.2671, 1.2787, 1,2951

Technically, the trend remains bullish. But the price is trading right at the priority change level. The MACD indicator is inactive. Traders are better to play it safe and take action only after the price moves to one side of the narrow price range.

Alternative scenario: if the price breaks through the 1.2561 support level and fixes below, the downtrend is likely to be resumed.

Markets calm after China slide

A sense of calm has returned to Asia today as the China sell-off has abated and investors pause for breath and reflection. Overnight, the S&P 500, Nasdaq and Dow Jones traded sideways to be almost unchanged but still at record highs ahead of heavyweight technology earnings. Tesla’s record after-hours result has failed to lift US futures, though, with S&P 500, Nasdaq and Dow futures down around 0.15% in Asia.

China Industrial Profits rose by 66.90% (YTD) YoY for June, near consensus but lower than the May release. Profits rose across both state and private companies. The data suggests that China’s recovery continues, but the Asian giant is grappling with the same supply chain and material cost challenges the rest of the world is experiencing. The data impact will be low as investors remain transfixed on China regulatory risk.

The pause for breath has produced a mixed result for Asian markets. The Nikkei 225 is 0.50% higher, while the South Korean GDP release has lifted the Kospi by 0.60%, helped by Industrial Profits remaining firm in China today. In China itself, the Shanghai Composite is just 0.15% higher, while the CSI 300 has fallen by 0.35% after plummeting by 4.0% yesterday. Hong Kong is still suffering China technology and credit nerves as the Hang Seng falls by 1.0% today.

Around the region, Singapore has risen 0.50% after the government hinted at a September reopening date for borders. Taipei has fallen 0.40%, while Kuala Lumpur and Jakarta have crawled to a 0.15% gain. Bangkok has fallen by 0.45%, with Manila jumping 1.60% higher. Australian markets have followed Wall Street’s modest 0.25% gains, with the ASX 200 and All Ordinaries rising by 0.50%, helped by Victoria and South Australia signalling the end of their recent virus restrictions.

European markets are likely to follow regional Asia and open modestly higher once again. Still, I expect volatility to be modest as we await the Q2 earnings from Apple, Alphabet and Microsoft. Strong performances will greenlight more gains for Wall Street tonight.

• Freefall in Chinese stocks enters third day but rest of Asia takes cues from Wall Street
• US shares get another earnings lift, hit new records, big day ahead for tech giants
• But it's all quiet outside of equities as Fed decision awaited
• Pound outperforms, flirts with $1.38, as dollar drifts ahead of Fed outcome

China shares crash again amid crackdowns

Stocks in China and Hong Kong plummeted for a third day on Tuesday as technology, real estate and for-profit education companies found themselves in the firing line of regulators. Chinese authorities' latest crackdowns have rattled markets in the region, both by the speed and scale of the interventions.

The clampdowns seem to be driven mainly by concerns that these companies are pursuing business models that go against China's socialist principles, such as Tencent's exclusive music licencing deals, which were seen as anti-competitive, and the rising costs of tutoring by private education firms. However, there is a growing worry that regulators will not stop there and expand their crackdowns to other sectors.

China's blue-chip CSI-300 index nosedived by 3.5% today, while Chinese companies listed in Hong Kong dragged the Hang Seng index down by almost 5%. But losses were limited outside of China and Hong Kong, with most Asian indices ending the session in positive territory.

Tech earnings eyed but risk of China spillover?

However, European shares slipped at the open and US futures were in the red too. This could be an indication that the China selloff will not be confined to local markets for much longer. Though, for Wall Street, profit taking after two straight record sessions is a more plausible explanation for e-mini futures coming under pressure today.

Tesla reported better-than-expected earnings on Monday and the spotlight after today's closing bell on Wall Street will go to Apple, Microsoft and Google parent Alphabet.

In the meantime, durable goods orders and the consumer confidence index will be watched out of the United States for signs that the growth momentum is holding amid rising infections in many parts of America due to the highly contagious Delta variant.

S&P 500 futures were last down 0.4% after the benchmark index hit a new all-time high of 4,422.30 at the close on Monday.

Dollar and yen pare losses on Fed caution

In the FX sphere, the US dollar was recouping some of yesterday's losses, though in the short term, it is still consolidating from last week's 3½-month high brushed against a basket of currencies. The safe-haven yen, which whipsawed last week as risk appetite bounced back, is gaining some positive traction today. This may be due to China-related jitters or could simply be down to some caution ahead of tomorrow's FOMC meeting when the Fed is expected to signal that it is getting closer to withdrawing some of its massive stimulus.

But on the whole, there doesn't seem to be much concern about tomorrow's meeting and investors' main priority is to get some clarity on the Fed's intentions on tapering. The biggest uncertainty is perhaps how Powell's views on the economy might have changed because of the Delta outbreak. But even those anxieties have abated somewhat in recent days as investors have been encouraged by Britain's improving virus trend.

Falling UK virus cases lift pound

Daily Covid infections in the UK fell for a sixth day on Monday, in a sign that the latest wave may have peaked and that vaccines alone can limit the spread of the virus. However, scientists are warning that the impact of the lifting of almost all virus curbs on July 19 has yet to be felt and it's too early to jump to any conclusions.

Nevertheless, the pound's rebound over the past week from the dollar's onslaught has been the most impressive. Cable is testing the $1.38 level again, which is a key resistance area that needs to be broken if the recovery is to be sustained.

The euro, on the other hand, has barely budged from its lows, and the aussie's and kiwi's bounce back has only marginally been stronger. The loonie has fared somewhat better, aided by higher oil prices, which were up again today despite the weak risk-on sentiment and ongoing worries about the growth outlook.

An air of calm has returned to Asian markets today after the China equity sell-off after escalating government clampdowns on the technology and education sectors. Helping things along was Wall Street trading sideways as equity markets moved into wait-and-see mode ahead of US big-tech earnings results and this week’s FOMC meeting. Despite the calm this morning, the repricing of China regulatory risk is likely to continue for some time yet.

South Korean Advanced GDP for Q2 rose by 0.70% QoQ this morning, notable for its significant increase in imports as the domestic economy improves. That follows the extra budget approved over the weekend, with direct payments to most households as the country attempts to overcome its Covid-19 hiccup and keep its recovery on track. In totality, this should be enough to keep the Bank of Korea on track for its 4th quarter rate hike, and the Won has duly rallied this morning, although USD/KRW remains near 9-month highs.

China Industrial Profits rose by 66.90% (YTD) YoY for June, near consensus but lower than last month 83.40% as 2020 baseline effects fade. Profits rose across both state and private companies. The data suggests that China’s recovery continues, albeit with the same supply chain and material cost challenges the rest of the world is experiencing. The data impact will be low as investors remain transfixed on China regulatory risk and are likely to for some time.

Bitcoin fell from USD 40,500.00 to USD 36,500.00 this morning after Amazon denied it was looking at either issuing its own digital coin or was going to start accepting tokens as payment. Bitcoin’s 100-day moving average, today at USD 40,603.00, capped the rally last night. Despite today’s retreat, the digital Dutch tulip is still holding onto most of its gains from yesterday. A move higher through the 100-DMA will signal the next leg higher.

I received a few vitriolic emails yesterday about calling Bitcoin nonsense. One odd chappy from America sent me about 200 links on blockchain and called me a loser for not buying Bitcoin at 1 dollar. Fair play, but it is an opportunity cost, not an actual loss. I did not buy Tesla in 2017 either and I sleep soundly at night, no FOMO-itis here. To clarify for all my readers, I believe digital currencies and their equally smelly un-stable coin brethren are indeed digital Dutch tulips.

To be fair, though, and as I have said before, bitcoin and its ilk are tradeable assets, if we must use that word, but are not investable assets. There is a difference. As for the blockchain, it is indeed an exciting frontier. But show me a buyer of Bitcoin in 99.999999999999999% of circumstances who says, “I’m buying it because I believe in the potential of the blockchain,” and not “I want to double my money in 24 hours,” and I’ll show Elvis Presley alive and well and living in Bali.

Looking ahead, the data calendar is relatively thin across the globe today, leaving markets to the tender mercies of headline-driven volatility for the rest of the session. US Durable Goods is unlikely to move markets as the street awaits earnings from Apple, Alphabet and Microsoft today, and the FOMC outcome early Thursday Asian time.

GBPUSD extended its recovery from a 5 ½-month low of 1.3570 marginally above the 1.3800 level and the 20-day simple moving average (SMA) on Monday but another obstacle has emerged.

The price is currently battling the surface of a descending channel and the 38.2% Fibonacci retracement of the latest downfall at 1.3829. Should efforts prove fruitful, the door would open for the 50% Fibonacci of 1.3900, while within breathing distance, the 50-day SMA at 1.3952 may cancel any corrections towards the 61.8% Fibonacci of 1.4032.

The upside reversal in the momentum indicators is endorsing the above bullish scenario, though downside corrections cannot be excluded as long as the RSI keeps hovering below its 50 neutral level and the Stochastics flirt with overbought levels.

Failure to bounce above the trendline and the 1.3829 barrier could see another test near the 23.6% Fibonacci of 1.3730 and the 200-day SMA. Breaching this floor, the bears could take a rest near the 1.3668 support region before gearing down to meet the 1.3570 low. Beneath the latter, the channel’s bottom line could be the next pivot point around 1.3500.

Summarizing, despite its latest rebound, GBPUSD has yet to confirm a bullish bias, with traders waiting for a close above the descending channel to increase exposure in the market.