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New Zealand goods exports rose 17% yoy to NZD 6.0B in June. Goods imports rose 24% yoy to NZD 5.7B. Monthly trade balance reported NZD 261m surplus, slightly below expectation of NZD 297m.

Exports to all top trading partners were up, including China (40%), EU (21%), Australia (9.5%), Japan (13%) and US (2.9%). Imports from all top trading partners were up too, including EU (51%), China (17%), Japan (69%), USA (52%) and AU (18%).

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Key Highlights

• EUR/USD is trading in a bearish zone below the 1.1850 pivot level.
• A crucial bearish trend line is forming with resistance near 1.1800 on the 4-hours chart.
• GBP/USD recovered nicely after it tested the 1.3600 support zone.
• USD/JPY climbed above 110.00, but it is still facing hurdles near 110.50.

EUR/USD Technical Analysis

The Euro started a fresh decline below 1.1850 against the US Dollar. EUR/USD even broke the 1.1800 support zone to move further into a bearish zone.

Looking at the 4-hours chart, the pair even tested the 1.1750 support zone. It settled well below the 1.1850 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The recent low was near 1.1754 and the pair is now consolidating losses. It is trading above the 23.6% Fib retracement level of the recent decline from the 1.1830 swing high to 1.1754 low. The first key resistance on the upside is near the 1.1795 level.

The next key resistance is now forming near the 1.1800 level. It is near the 50% Fib retracement level of the recent decline from the 1.1830 swing high to 1.1754 low. There is also a crucial bearish trend line forming with resistance near 1.1800 on the same chart.

To move into a positive zone, the pair must settle above the 1.1850 resistance. The next major resistance on the upside sits near 1.1850. Conversely, the pair might continue to move down below 1.1750. The next major support is near the 1.1700 level.

Looking at GBP/USD, the pair declined heavily towards 1.3600 before the bulls took a strong stand. It is now recovering and trading above 1.3720.

Economic Releases

• German IFO Business Climate Index for July 2021 – Forecast 102.1, versus 101.8 previous.
• German IFO Current Assessment Index for July 2021 - Forecast 101.6, versus 99.6 previous.
• German IFO Expectations Index for July 2021 – Forecast 103.3, versus 104 previous.

STOCKS

Equities look mixed within their current consolidation with each index poised at different levels within their sideways ranges. Dow, Sensex and Nifty are poised at the upper end of their ranges while DAX and Nikkei have room to move up within their sideways range. Shanghai on the other hand has broken its sideways 3500-3625 range on the downside and is vulnerable to fall further before witnessing a fresh rise. We remain bullish to see an upside breakout of the ranges in Dow, DAX, Nikkei, Sensex and Nifty. It will have to be seen if the outcome of the US Federal Reserve meeting on Wednesday can provide the trigger to break the range.

Dow (35061.55, +238.20, +0.68%) has risen and is poised in the 35000-35100 resistance zone. We retain our bullish view of seeing a break above 35100 and a rise to 36000. Inability to break above 35100 now can continue to keep the index in the broad 33000-35100 range for some more time and the expected rise to 36000 will get delayed.

DAX (15669.29, +154.75, +1%) is moving up towards the upper end of its 15300-15800 range. The bias is bullish to see an upside breakout of this range and a rise to 16000-16200 eventually. The danger of seeing 15000-14800 that was cautioned last week stands reduced.

Nikkei (27931.78, +383.78, +1.39%) has opened with a gap-up and is likely to move up within the expected 27000-29500 range. As long as Nikkei remains above 27000, the broader view is bullish to break 29500 and rise to 31000 and higher levels over the medium-term. Only a break below 27000 will bring the danger of seeing a deeper fall to 26000.

Shanghai (3495.40, -55, -1.55%) has declined sharply and is trading below the 3500-3625 range. While this break sustains a fall to 3450-3400 is possible before a fresh rise is seen. While above 3400, the long-term view is bullish to see a rise to 3700-3800 eventually.

Sensex (52975.80, +138.59, +0.26%) has closed at the upper end of its 52000-53200 range (revised up from 52000-53000 mentioned last week). Our bias is bullish to see an upside break above 53200 and a rise to 54000 and higher levels going forward. It will have to be seen if the range breakout can happen immediately or after some more consolidation.

Nifty (15856.05, +32, +0.2%) is poised at the upper end of its 15600-15900 range. It is likely to break the range on the upside and move up to 16000-16200 in the coming weeks. Inability to breach 15900 can keep Nifty inside the 15600-15900 range for some more time.

COMMODITIES

Crude prices have risen but have resistances above current levels that could produce rejection and push down prices soon. While Gold and Silver look stable within 1820-1780 and 25-26 region, Copper has seen a sharp break on the upside from the long awaited 4.15-4.40 range. It can now head towards 4.60/80 in the coming days. Overall view is bullish for Copper which seems to be trading the strongest among all other commodities mentioned below.

Brent (73.90) and WTI (71.83) have both risen slightly. Brent can rise to 75-76 from where a rejection looks possible back towards 70 while WTI can face rejection from 74 that could push the price back to 68-66 levels soon. Watch price action over the next few sessions to see a possible rejection on both.

Gold (1806.00) is trading within the narrow range of 1820-1780 for now and unless an immediate break above 1820 is seen, it will be difficult for Gold to turn bullish. While below 1820, there is scope for a fall to 1780 before any bounce takes place.

Silver (25.33) has immediate support at 25 and resistance at 26. A range of 25-26 may hold for sometime before a break on either side of the range is seen. In the medium to longer run, a break below 25, if seen would take the price down to 24-23.

Copper (4.4510) has seen an upside break from the 4.40-4.15 region that we have been mentioning for the past 4-5 weeks. View is now bullish towards 4.60 which if manages to break could take it higher to 4.8. Support near 4.15/20 is holding strong for now.

FOREX

Dollar Index needs to break on either side of the 93.30-92.50 region to throw more directionally clarity while Euro seems to looks bearish and could break below 1.1770/50 soon. Only a rise above 1.18 can negate this possibility. EURJPY is ranged between 128.50-130.50 while Aussie and Pound looks bearish while below 0.74 and 1.38 respectively. Dollar Yen may trade within the narrow 110.80-110.0 region. USDCNY may rise sharply towards 6.49/50 or even higher. USDINR may remain within 74.40-74.60/70 today while there is possibility for a break below 74.40 to eventually head towards 74.20/74.00.

Dollar Index (92.89) is stuck below 93.30-93.00 and above 92.50, unable to decide which way to move from here. We would be in a wait and watch mode before any signal is seen on further direction from here. Watch for a break on either side of the 93.30-92.50 range.

Euro (1.1770) is falling from 1.1785 which seems to be an immediate resistance and could push Euro down towards 1.1750. Note that a range of 1.18-1.1750 is crucial just now as a break on either side would give clarity on further direction on the Euro. For now, trend looks bearish and a break below 1.1750, if seen would drag it lower to test 1.17. Watch price action near 1.18-1.1750 region.

EURJPY (129.90) is likely to remain within 130.30-128.50 region for the medium term. Only a break on either side will give more clarity on longer term direction.

Dollar-Yen (110.32) may hold within 110.80-110.00 for the very near term while downside support is seen near 109.50-109.00.

Aussie (0.7349) has dipped from 0.74 and while that holds, Aussie is bearish towards 0.73.

Pound (1.3746) has also come off from 1.3787 and Pound faces difficulty to rise above 1.38 immediately. A fall to 1.37 looks possible before a bounce back is seen. Immediate view is bearish while below 1.3787.

USDCNY (6.4808) has risen from levels seen last week but we need to see if it manages to fall back from 6.49/50 levels of manages to break on the upside, validating a possible triangle formation breakout. Watch for a possible break on the upside in the next few sessions. A fall from 6.49/50 would negate the mentioned possibility.

USDINR (74.4650) may hold within 74.40-74.60/70 but an eventual break on the downside towards 74.20/74.00 looks likely for the medium term.

INTEREST RATES

The US Treasury yields are managing to hold higher after the sharp bounce from the lows last week. There are good chances to see a corrective bounce in the coming weeks. It will have to be seen if the outcome of the US Federal Reserve meeting on Wednesday can provide the possible trigger to seeing this corrective rally. The German Yields have little room within their current fall and have supports coming up. We expect the yields to bounce from their supports going forward. The 10Yr GoI looks bullish to test 6.3%-6.32% amid muted trading. The 5Yr GoI can also move up on a break above 5.7%.

The US 2Yr (0.20%), 5Yr (0.70%), 10Yr (1.26%) and 30Yr (1.91%) Treasury yields are managing to hold higher after bouncing from the lows last week. Our view of seeing a corrective bounce remains intact. The 30Yr can move up to 2.1%-2.2% while it sustains above 1.9% and the 10Yr can rise to 1.45%-1.5% while above 1.2%. Thereafter a fresh fall can be seen to keep the broader downtrend intact.

The German 2Yr (-0.74%), 5Yr (-0.71%), 10Yr (-0.42%) and 30Yr (0.06%) remains lower and stable. The bearish view of seeing a test of -0.45%/-0.50% (10Yr) and 0%/-0.05% (30Yr) remains intact. Thereafter we expect the yields to reverse higher and see a corrective bounce within their broader downtrend.

The 10Yr GoI (6.2312%) has risen sharply above 6.2% on muted trading. It keeps alive the chances of testing 6.3%-6.32% on the upside. Thereafter a fresh fall is possible. A rise past 6.32% is less likely. The 5Yr (5.6852%) on the other hand can rise to 5.76% on a break above 5.7%.

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As suggested in the CFTC Commitments of Traders report in the week ended July 20, NET SHORT of USD index futures gained +931 contracts to 12 188. Speculative long positions added +1 280 contracts while shorts increased +349 contracts. Concerning European currencies, NET LENGTH in EUR futures fell -13 891 contracts to 45 822. GBP futures recorded NET SHORT of 3 497 contracts.

On safe-haven currencies, NET LENGTH of CHF futures added +905 contracts to 8 042 while NET SHORT of JPY futures dropped -519 contracts to 55 731. Concerning commodity currencies, NET SHORT of AUD futures increased +6 902 contracts to 35 690. Separately, NZD futures’ NET LENGTH slipped -184 contracts to 3 046. NET LENGTH of CAD futures slumped -13 461 contracts to 12 915 during the week.

According to the CFTC Commitments of Traders report for the week ended July 20. NET LENGTH for crude oil futures slumped -50 356 contracts to 448 740 for the week. Speculative long position declined -43272 contracts, while shorts rose +7 084 contracts. For refined oil products, NET LENGTH for heating oil gained +2 109 contracts to 24 249, while that for gasoline plunged -19 233 contracts to 29 337. NET SHORT of natural gas futures rose +8 138 contracts to 127 542 during the week.

Gold futures’ NET LENGTH gained +5 136 contracts to 195 972 while silver futures’ NET LENGTH declined -6 214 contracts to 37 475. For PGMs, NET LENGTH of Nymex platinum futures fell -3 248 contracts to 12 113 while that for palladium dropped -1 098 contracts to 1 283.

EUR/USD edged lower to 1.1751 last week with weak downside momentum as seen in 4 hour MACD. Outlook is unchanged this week that further fall is expected as long as 1.1880 resistance holds. Current decline from 1.2265, as the third leg of correction from 1.2348 would target 1.1703 support. However, break of 1.1880 will indicate short term bottoming and turn bias back to the upside for stronger rebound to 1.1974 resistance first.

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.

In the long term picture, focus remains on 1.2555 cluster resistance (38.2% retracement of 1.6039 to 1.0339 at 1.2516). Sustained break there should confirm long term bullish reversal and target 61.8% retracement at 1.3862 and above. However, rejection by 1.2555 will keep medium term outlook neutral first, and raise the prospect of down trend resumption at a later stage.

USD/JPY's rebound from 109.05 extended higher last week. The development argues that corrective fall from 111.65 has completed. Initial bias stays on the upside for retesting 111.65 next. On the downside, though, break of 110.00 will turn bias back to the downside for 109.05. Break will resume the fall from 111.65 to 38.2% retracement of 102.58 to 111.65 at 108.18.

In the bigger picture, medium term outlook is staying neutral with 111.71 resistance intact. The pattern from 101.18 could still extend with another falling leg. Sustained trading below 55 day EMA will bring deeper fall to 107.47 support and below. For now, outlook won't turn bullish as long as 111.71 resistance holds, even in case of strong rebound.

In the long term picture, the rise from 75.56 (2011 low) long term bottom to 125.85 (2015 high) is viewed as an impulsive move, no change in this view. Price actions from 125.85 are seen as a corrective pattern which could still extend. In case of deeper fall, downside should be contained by 61.8% retracement of 75.56 to 125.85 at 94.77. Up trend from 75.56 is expected to resume at a later stage for above 135.20/147.68 resistance zone.

GBP/USD dived to as low as 1.3570 last week but rebounded from there. Initial bias remains neutral this week for some consolidations first. Deeper fall is expected as long as 1.3908 resistance holds. On the downside, break of 1.3570 will resume the fall from 1.4248 to 1.3482 resistance turned support first. Decisive break there will target 38.2% retracement of 1.1409 to 1.4248 at 1.3164. On the upside, break of 1.3908 resistance will turn bias back to the upside for retesting 1.4248 high instead.

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.

In the longer term picture, a long term bottom should be in place at 1.1409, on bullish convergence condition in monthly MACD. Rise from there would target 38.2% retracement of 2.1161 to 1.1409 at 1.5134. Reaction from there would reveal whether rise from 1.1409 is just a correction, or developing into a long term up trend.

USD/CHF stays in range of 0.9116/9273 last week as sideway trading continued. Initial bias remains neutral this week first. On the downside, break of 0.9116 support will affirm the case that rebound from 0.8925 has completed at 0.9273. Deeper fall would then be seen back to retest 0.8925 low. On the upside, however, break of 0.9273 and sustained trading above 61.8% retracement of 0.9471 to 0.8925 at 0.9262 will target 0.9471 resistance next.

In the bigger picture, medium term outlook is currently neutral with focus on 0.9471 resistance. Sustained break there will indicate completion of whole decline from 1.0342 (2016 high). Medium term outlook will be turned bullish for a test on 1.0342 high. But, rejection by 0.9471 again will revive bearishness for another fall through 0.8756 low.

In the long term picture, price actions from 0.7065 (2011 low) are currently seen as developing into a long term corrective pattern, at least until a firm break of 1.0342 resistance.