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Daily Pivots: (S1) 153.21; (P) 153.46; (R1) 153.84; More...

Intraday bias in GBP/JPY remains neutral for the moment. On the downside, below 152.59 will likely extend the corrective pattern from 156.05 through 151.28 support. In this case, we'd expect strong support from 38.2% retracement of 136.96 to 156.05 at 148.75 to bring rebound. On the upside, above 155.13 will target a test on 156.05 high instead.

In the bigger picture, rise from 123.94 is seen as the third leg of the pattern from 122.75 (2016 low). Focus is now on 156.59 resistance (2018 high). Sustained break there should confirm long term bullish trend reversal. Next target is 61.8% retracement of 195.86 (2015 high) to 122.75 at 167.93. On the downside, break of 149.03 support is needed to be the first sign of completion of the rise from 123.94. Otherwise, outlook will remain bullish even in case of deep pull back.

Key Highlights

• EUR/USD extended its decline below the 1.1850 support zone.
• A key bearish trend line is forming with resistance near 1.1900 on the 4-hours chart.
• The US nonfarm payrolls increased 850K in June 2021, up from 583K.
• The Euro Zone Services PMI is likely to remain stable near 58 in for June 2021.

EUR/USD Technical Analysis

The Euro remained in a bearish zone below the 1.1900 pivot level against the US Dollar. EUR/USD even traded below 1.1850 to move further into a bearish zone.

Looking at the 4-hours chart, the pair settled well below the 1.1900 level, the 100 simple moving average (red, 4-hours), and the 200 simple moving average (green, 4-hours).

The pair traded as low as 1.1807 and it is now correcting losses. There was a break above the 23.6% Fib retracement level of the recent decline from the 1.1975 high to 1.1807 low.

On the upside, there is a major barrier near the 1.1900 level. There is also a key bearish trend line forming with resistance near 1.1900 on the same chart. A clear break above the trend line could push the price towards the 1.1950 level.

Any more gains could lead the price towards the 1.1980 zone and the 100 simple moving average (red, 4-hours). On the downside, there is a key support forming near 1.1800. The next major support is near the 1.1780 level, below which the pair could dive towards 1.1720.

Fundamentally, the US nonfarm payrolls report for June 2021 was released this past Friday by the US Bureau of Labor Statistics. The market was looking for an increase from 559K to 583K.

The actual result was better than the forecast, the US nonfarm payrolls increased to 850K. Moreover, the last reading was revised from 559K to 583K.

The report added:

Both the unemployment rate, at 5.9 percent, and the number of unemployed persons, at 9.5 million, were little changed in June. These measures are down considerably from their recent highs in April 2020 but remain well above their levels prior to the coronavirus (COVID-19) pandemic.

Overall, EUR/USD could remain bearish as long as it is below 1.1950. Similarly, GBP/USD is likely to struggle to clear the 1.3900 and 1.3920 resistance levels.

Economic Releases

Germany’s Services PMI for June 2021 - Forecast 58.1, versus 58.1 previous.

Euro Zone Services PMI for June 2021 – Forecast 58.0, versus 58.0 previous.

UK Services PMI for June 2021 – Forecast 61.7, versus 61.7 previous.

STOCKS

Equities look mixed overall. Dow has moved up further on Friday and has a crucial resistance coming up the 35000-35100 region which will have to be broken to become bullish for a further rise. The US markets are closed today. DAX continues to trade mixed around 15600 and has equal chances to move either ways inside its 15400-15800 range. Nikkei is coming down gradually and can test 28500 and even 28000. Shanghai has declined sharply within its 3500-3625 range and need to see if it can sustain above 3500 in the coming days or not and retain the range. Sensex and Nifty have bounced on Friday and can move up further within their 52000-53000 and 15600-15900 range respectively.

Dow (34786.35, +152.82, +0.44%) has moved above 34700 and needs to be seen if it can sustain higher. 35000-35100 will be the next important resistance zone to watch. Dow will have to rise past 35100 (revised up from 35000 mentioned all through last week) in order to gain fresh bullish momentum and rise to 36000. Else a fall back to 34000-33500 again cannot be ruled out.

DAX (15650.09, +46.28, +0.30%) continues to hover around 15600 and remains mixed in the near-term. A strong rise past 15800 is needed to see a fresh rise to 16000-16100 and even higher. 15400 is an immediate support and a break below it can take it down to 15200-15000. For now the 15400-15800 range remains intact.

Nikkei (28612.57, −170.71, -0.59%) has been coming down gradually. A test of 28500 looks likely and a break below it can drag it to 28000. As mentioned last week, 28000 is a crucial long-term support which is likely to hold and keep the broader uptrend intact. While above 28000, the long-term trend is still up and a rally to 31000-32000 is still a possibility. Only a break below 28000 will be bearish to see 27000-26000 on the downside.

Shanghai (3526.40, +7.64, +0.22%) is trading slightly higher after having fallen sharply on Friday. A test of 3500 – the lower end of its 3500-3625 range is likely now. A break below 3500 can see a deeper fall to 3450-3400. Thereafter a fresh rise is possible. While above 3400 the broader view of seeing 3700-3800 on the upside remains intact.

Sensex (52484.67, +166.07, +0.32%) and Nifty (15722.20, +42.20, +0.27%) have bounced on Friday and could move up further today following the rise in US markets on Friday. Sensex can attempt to test 53000 again and Nifty 15800/900. We reiterate that a strong rise past 53000 (Sensex) and 15900 is needed to become bullish and see a fresh rise to 54000 (Sensex) and 16000-16200 (Nifty) going forward. Else the 52000-53000 (narrow) or 51000-53000 (broad) and 15600/700-15900 (narrow) or 15400-15900 (broad) range could remain intact for some more time.

COMMODITIES

Crude prices have dipped a bit and could be ranged for the very near term while below respective resistances. Another attempt to test resistances can be possible by the end of the week before any sharp decline sets in. Gold, Silver and Copper have risen from respective supports and while above 1760, 26 and 4.10, view is bullish towards 1800/20, 27-28 and 4.30/40 respectively.

Brent (75.95) tested 76.43 last week before dipping slightly from there. $77/78 seems to be holding well now and while that holds, a dip to 74-72 could be possible on the downside. A break above $77/78 can take the price higher to $80 before any sharper decline is seen.

WTI (74.99) on the other hand is holding below $76 just now and could remain ranged below $76 for 2-3 sessions before again attempting to bounce back. Immediate support is seen near $74.

Gold (1789.40) has immediate trend support at 1760 and while the price trades above 1760, there is scope for a rise to 1800/20 I the near term. View is bullish while above 1760.

Silver (26.68) has risen well above 26.50 and could be headed towards 27-28 in the near term. On the near term charts, there is scope for a rise to resistance at 28 in the next few sessions before a sharp decline is seen. View is bullish towards 28 while above 26.

Copper (4.2740) is likely to trade within 4.30-4.10 for the very near term. Thereafter, a break above 4.3 can take it higher towards upper resistance at 4.40. Broad range of 4.10-4.40 may continue to hold.

FOREX

Dollar index has bounced well and can be headed towards resistance at 93 before falling from there. In the meanwhile Euro has some chances of falling towards 1.18 again. But while 1.18 holds as a decent support we may expect an eventual rise over this week and the next. EURJPY may hold above 131 and eventually rise towards 132 in the near term. Aussie can rise towards 0.76 while Pound needs to see a break above 1.3850 to move up further in the near term. USDCNY may move up towards 6.48/50 while downside could be limited to 6.44. Dollar Rupee came down well from 74.8725 on Friday and if the fall sustains it could be headed towards 74.40 else an attempt to rise towards 75 cannot be negated. Watch price action near current levels.

Dollar Index (92.334) has bounced from 92.16 and can rise towards 92.70 if the upward momentum continues to hold. We may look for a possible test of immediate resistance near 93 before falling sharply towards 92 or lower again in the coming 1-2 weeks. A rise from current levels to 93 could keep Euro weak for the near term.

Euro (1.1852) has bounced well after almost falling to 1.18 on Friday. The currency has bounced well and can be expected to move up towards 1.19 again. But note that if the Dollar Index rises from current levels, the Euro might fall back to 1.1830-1.1800 in the near term before a medium term rise is seen. Watch price action on the Dollar Index near current levels.

EURJPY (131.68) has bounced a bit and if it manages to move up further, it can rise towards 132. Failure to rise from current levels can drag it down back towards 131.30-131.00 in the medium term. Watch price action near current levels.

Dollar-Yen (111.09) has dipped a bit but if the Dollar Index heads towards 93, we may expect the Dollar-Yen to re-rise towards 111.50 or higher. Note that 112 is an important resistance above current levels and is likely to hold in July and push the pair towards support near 110-109.50.

Aussie (0.7515) tested 0.7444 before bouncing back to 0.7533 on Friday and has again dipped from there. 0.7450/30 is now the important level above which Aussie can rise towards 0.76 in the near term. A range of 0.7430-0.76 can hold for the near term.

Pound (1.3824) recovered the sharp fall seen on Thursday last week itself and now trades stable but a bit lower. While below 1.3850, view remains bearish for a fall to 1.3795 or lower. A sustained rise above 1.3850 is needed for the Pound to rise towards 1.3850-1.39.

USDCNY (6.4650) could be ranged within 6.44-6.48/50 region for the near term. Need to watch price action if the pair breaks on either side of the mentioned range.

USDINR (74.7450) came down sharply to close at 74.7450 after a test of 74.8725 on Friday. Support is seen at 74.40 while resistance is seen at 75 which still has some scope to be tested in the near term. A broad range of 75-74.40 can hold for this week.

INTEREST RATES

The US Treasury yields have declined sharply on Friday following the uptick in the US unemployment rate . The US unemployment rate has increased from 5.8% in May to 5.9% in June. The Treasury yields are coming closer to their crucial range supports. A strong bounce-back move is needed this week in order to avoid the downside break of the range and a much deeper fall. The US markets are closed today. The German Yields are also coming down and looks vulnerable to break their supports contrary to our expectation. In that case our earlier bullish view will get negated. The 5Yr GoI has risen on Friday and has little room on the upside to test its resistance which will have to be broken to move up further.

The US 2Yr (0.23%), 5Yr (0.86%), 10Yr (1.42%) and 30Yr (2.04%) Treasury yields fell sharply across tenors. The 10Yr is close to its crucial support zone of 1.4%-1.35%. The 30Yr on the other hand has room to test 1.9% on the downside. The 10Yr and 30Yr will have to hold above these supports in order to keep the expected sideways range intact and also to avoid a much deeper fall from here. The price action in the coming days will need a close watch.

The German 2Yr (-0.68%), 5Yr (-0.61%), 10Yr (-0.24%), 30Yr (0.27%) yields have dipped further. The rise that we have been expecting so far seems to be not happening. The 10Yr and 30Yr looks vulnerable to their supports at -0.30% and 0.25% respectively and fall to -0.45% (10Yr) and 0.10% (30Yr) in the coming days. Such a fall will negate our earlier bullish view. We will have to wait and watch.

The 5Yr GoI (5.75%) has risen on Friday. It has room to test 5.8% and 6% in the near-term. A strong rise past 6% is needed for it to gain momentum and rise further. Inability to rise past 6% can drag it to 5.5% and 5% again in the coming days.

Daily Pivots: (S1) 131.53; (P) 131.88; (R1) 132.08; More....

Intraday bias in EUR/JPY remains neutral for the moment. On the downside, break of 131.21 support will likely extend the correction from 134.11 through 130.02. But in this case, we'd expect strong support from 38.2% retracement of 121.63 to 134.11 at 129.34 to bring rebound. On the upside, break of 132.68 will bring retest of 134.11 high instead.

In the bigger picture, rise from 114.42 is seen as a medium term rising leg inside a long term sideway pattern. Next target is 137.49 (2018 high). Decisive break there will open up the possibility that it's indeed resuming the up trend from 94.11 (2012 low). For now, outlook will stay bullish as long as 127.07 resistance turned support holds, in case of pull back.

Daily Pivots: (S1) 1.0906; (P) 1.0940; (R1) 1.0957; More....

Intraday bias in EUR/CHF is mildly on the downside at this point. Rebound from 1.0863 could have completed at 1.0985, after rejection by medium term channel resistance. Deeper fall would be seen to 1.0863 support first. Break there will resume whole decline from 1.1149 to 1.0737 cluster support zone. For now, risk will be on the downside as long as 1.0985 holds.

In the bigger picture, current development argues that rebound from 1.0505 (2020 low) might be completed at 1.1149 already. Rejection by 55 month EMA (now at 1.1074) at least keeps medium term bearishness open. Sustained break of 1.0737 cluster support (61.8% retracement of 1.0505 to 1.1149 at 1.0751) will argue that the down trend from 2004 (2018 high) is ready to resume through 1.0505 low. Sustained trading below 55 week EMA (now at 1.0885) will affirm this bearish case. Nevertheless, strong support from 55 week EMA will revive the case for resuming the rise from 1.0505 at a later stage.

Daily Pivots: (S1) 0.8564; (P) 0.8588; (R1) 0.8601; More...

Intraday bias in EUR/GBP remains neutral first. On the downside, break of of 0.8529 will resume the choppy decline towards retesting 0.8470 low. On the upside, decisive break of 0.8670 will confirm that corrective fall from 0.8718 has completed. Further rise would be seen to resume the rebound from 0.8470.

In the bigger picture, price actions from 0.9499 are still seen as developing into a corrective pattern. That is, up trend from 0.6935 (2015 low) would resume at a later stage. This will remain the favored case as long as 0.8276 support holds. However, firm break of 0.8276 support will suggest that rise from 0.6935 has completed and turn medium term outlook bearish.

Daily Pivots: (S1) 1.5723; (P) 1.5800; (R1) 1.5842; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, break of 1.5699 support will suggest rejection by 38.2% retracement of 1.6827 to 1.5250 at 1.5852. Intraday bias will be turned back to the downside for 1.5418 support first. Break there should confirm completion of consolidation pattern from 1.5250. On the upside, break of 1.5877 will extend the near term rebound to 1.6033 key support turned resistance.

In the bigger picture, price actions from 1.9799 are developing into a deep correction, to long term up trend from 1.1602 (2012 low). Deeper fall would be seen to 61.8% retracement of 1.1602 to 1.9799 at 1.4733. Medium term outlook will remain bearish as long as 1.6033 support turned resistance holds, even in case of strong rebound. However, firm break of 1.6033 will argue that such decline has completed, and turn focus to 1.6827 structural resistance for confirmation.

Dollar and Yen recover some ground in mixed Asian session today. Stocks in Japan and Hong Kong are slightly down by China and Singapore are steady. Much weaker than expected services data from China triggered little reactions. Swiss Franc is retreating against other major currencies but losses are limited. Commodity currencies are softening somewhat. With US on holiday, main focus will be on Eurozone Sentix investor confidence.

Technically, we'd see that Euro is a bit vulnerable in crosses. With rebound from 1.0863 likely completed at 1.0985, EUR/CHF would be heading back to retest 1.0863. Such development could drag Euro lower, in particular against commodity currencies. Eyes will be on 1.4580 low in EUR/CAD first, and then 1.5699 support in EUR/AUD. Break of these levels will add to near term bearishness in Euro.

In Asia, at the time of writing, Nikkei is down -0.60%. Hong Kong HSI is down -0.22%. China Shanghai SSE is up 0.25%. Singapore Strait Times is up 0.22%. Japan 10-year JGB yield is down -0.0086 at 0.038.

China Caixin PMI services dropped to 50.3, PMI composite dropped to 50.6

China Caixin PMI Services dropped to 50.3 in June, down from 55.1, well below expectation of 55.7. There were the softest increase in activity and new work for 14-months. Staff numbers fell as capacity pressured eased. Rates of input cost and output charge inflation slowed notably. PMI Composite dropped to 50.6, down from 53.8, worst in 14-month.

Wang Zhe, Senior Economist at Caixin Insight Group said: "Overall, activity in both the manufacturing and services sector continued to expand. However, impacted by the resurgence of the virus in some regions in China, the services sector was weaker than the manufacturing sector, both in terms of market supply and demand or employment."

Australia retail sales rose 0.4% mom in May, impacted by Victorian lockdown

Australia retail sales rose 0.4% mom, 7.7% yoy in May. That's an upward revision to preliminary result of 0.1% mom rise.

Ben James, Director of Quarterly Economy Wide Surveys, said: "The main themes from the Retail Trade Preliminary release remain relevant for the Final release. Retail turnover in May was impacted by the Victorian lockdown from May 28 onwards, as well as those states recovering from restrictions in April."

Australia AiG construction dropped to 55.5, facing capacity constraints

Australia AiG Performance of Construction dropped -2.8 pts to 55.5 in June. Current activity dropped -0.9 to 54.8. Employment dropped -6.1 to 58.3. New orders rose 0.9 to 56.1. Supplier deliveries dropped -8.5 to 50.9. Input prices rose 2.5 to 98.3. Selling prices rose 7.0 to 85.2. Average wages rose 5.4 to 70.4.

Ai Group Head of Policy, Peter Burn, said: "Australia's construction industry continued its run of strong growth in June but the pace of expansion is slipping as it faces capacity constraints and rising input prices."

Also released, building permits dropped -7.1% mom in May, versus expectation of -5.0% mom.

RBA rate decision to the highlight the week, with FOMC minutes

RBA rate decision is a highlight for the week. There are many questions to answer and they are somewhat inter-related. Firstly, RBA would announce whether to continue the current AUD 100B bond purchase program after expiry in September, and in what way. Secondly, RBA will tell us whether it will extend the maturity of the purchase from April 2024 bond to November 2024 bond. Thirdly, RBA should indicate whether it's still expecting interest to be at current level until at least 2024. There are many parameters to play with for the monetary policy ahead.

FOMC minutes will be another highlight. The latest economic projections surprised the markets by showing that median projections were for rate to be hiked twice in 2023. There were also 7 participants who penciled in one hike or more in 2022. The in-depth discussions would be scrutinized for the chance of more hawkish shift in the committee. ECB minutes is another focus but it's less likely to give any surprise.

As for economic data, main focuses will be on Germany ZEW economic sentiment, US ISM services; China CPI and PPI, UK GDP and Canada employment. Here are some highlights for the week:

• Monday: Australia AiG construction, MI inflation gauge, retail sales, building approvals; China Caixin PMI services; Eurozone PMI services final, Sentix investor confidence; UK PMI services final; BoC business outlook survey.
• Tuesday: Japan average cash earnings, household spending; RBA rate decision; Germany factory orders; UK Construction PMI; Germany ZEW economic sentiment, retail sales; US ISM services.
• Wednesday: Australia AiG services; Germany industrial production; France trade balance; Swiss foreign currency reserves; Canada Ivey PMI; FOM minutes.
• Thursday: Japan bank lending, current account, Eco watcher sentiment; Swiss unemployment rate; German trade balance; ECB meeting accounts; US jobless claims.
• Friday: China CPI, PPI; UK GDP, trade balance, production; France industrial production; Canada employment.

EUR/AUD Daily Outlook

Daily Pivots: (S1) 1.5723; (P) 1.5800; (R1) 1.5842; More...

Intraday bias in EUR/AUD remains neutral for the moment. On the downside, break of 1.5699 support will suggest rejection by 38.2% retracement of 1.6827 to 1.5250 at 1.5852. Intraday bias will be turned back to the downside for 1.5418 support first. Break there should confirm completion of consolidation pattern from 1.5250. On the upside, break of 1.5877 will extend the near term rebound to 1.6033 key support turned resistance.

In the bigger picture, price actions from 1.9799 are developing into a deep correction, to long term up trend from 1.1602 (2012 low). Deeper fall would be seen to 61.8% retracement of 1.1602 to 1.9799 at 1.4733. Medium term outlook will remain bearish as long as 1.6033 support turned resistance holds, even in case of strong rebound. However, firm break of 1.6033 will argue that such decline has completed, and turn focus to 1.6827 structural resistance for confirmation.

Economic Indicators Update

China Caixin PMI Services dropped to 50.3 in June, down from 55.1, well below expectation of 55.7. There were the softest increase in activity and new work for 14-months. Staff numbers fell as capacity pressured eased. Rates of input cost and output charge inflation slowed notably. PMI Composite dropped to 50.6, down from 53.8, worst in 14-month.

Wang Zhe, Senior Economist at Caixin Insight Group said: "Overall, activity in both the manufacturing and services sector continued to expand. However, impacted by the resurgence of the virus in some regions in China, the services sector was weaker than the manufacturing sector, both in terms of market supply and demand or employment."

Full release here.

Australia retail sales rose 0.4% mom, 7.7% yoy in May. That's an upward revision to preliminary result of 0.1% mom rise.

Ben James, Director of Quarterly Economy Wide Surveys, said: "The main themes from the Retail Trade Preliminary release remain relevant for the Final release. Retail turnover in May was impacted by the Victorian lockdown from May 28 onwards, as well as those states recovering from restrictions in April."

Full release here.