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Daily Pivots: (S1) 0.6455; (P) 0.6467; (R1) 0.6485; More...

AUD/USD's recovery from 0.6418 extends higher today but stays below 0.6528 resistance. Intraday bias remains neutral and further decline is in favor. Fall from 0.6624 short term top is seen as at least correcting the rally from 0.5913. Below 0.6418 will target 38.2% retracement of 0.5913 to 0.6624 at 0.6352. Nevertheless, break of 0.6528 will dampen this bearish case, and bring retest of 0.6624 high instead.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).

Asian equity markets are broadly stable today, shrugging off the negative lead from Wall Street overnight. The broader resilience comes despite a sharp selloff in chip stocks across Japan, South Korea, and Taiwan after US President Donald Trump confirmed that new tariffs on semiconductors and chips will be unveiled “within the next week or so.”

The planned sector-specific tariffs mark a new phase in the trade war. While reciprocal country-level tariffs appear largely set following last week’s sweeping executive orders, the White House is now pivoting toward targeted sectoral action. Alongside semiconductors, Trump flagged the pharmaceutical industry as another category under review — with some levies potentially rising as high as 250%, the steepest threat to date.

So far, broader Asian indices are holding up, with investors cautiously awaiting further clarity. However, sentiment remains fragile as the risk of further escalation persists. With markets still digesting the implications of a prolonged tariff campaign, sector-specific vulnerabilities are starting to come into sharper focus, especially in export-driven economies.

In the currency markets, price action remains subdued. All major currency pairs and crosses are still trading within last week’s ranges, reflecting underlying indecision. Dollar is on the softer side today, but there was no following through selling after yesterday's disappointing ISM Services print. Loonie and Swiss Franc are also underperforming in today’s session.

Kiwi is showing a modest rebound after Q2 employment data showed a smaller-than-expected rise in unemployment. Still, the report does little to shift expectations for another RBNZ rate cut later this month. Aussie is also slightly firmer, helped by a record high in the ASX equity index. Meanwhile, Euro, Sterling, and Yen are all trading mixed in the middle.

In Asia, at the time of writing, Nikkei is up 0.55%. Hong Kong HSI is down -0.01%. China's Shanghai SSE is up 0.18%. Singapore Strait Times is up 0.19%. Japan 10-year JGB yield is up 0.017 at 1.493. Overnight, DOW fell -0.13%. S&P 500 fell -0.49%. NASDAQ fell -0.65%. 10-year yield fell -0.004 to 4.196.

Japan real wages remain negative despite stronger 2.5% nominal growth

Japan’s real wages continued to contract in June, falling -1.3% yoy — the sixth straight month of decline. While that marked an improvement from May’s revised -2.6% yoy drop, persistent inflation, particularly in food prices, continues to erode household purchasing power. Consumer prices used for wage calculations rose 3.8% yoy in June, far outpacing nominal wage gains.

Nominal wages climbed 2.5% yoy, up from 1.4% yoy in May and rising for the 42nd consecutive month. However, the reading missed expectations of 3.2% yoy, tempering the positive headline. Base pay rose 2.1% yoy, and special earnings — mainly bonuses — grew 3.0% yoy, supporting a modest rise in overall pay levels during the reporting month.

NZ unemployment rate rises to 5.2%, RBNZ August cut in play

New Zealand’s Q2 labour market report confirmed continued softening, with employment falling -0.1% qoq and unemployment edging up to 5.2%. That marks the highest jobless rate since 2020, though still slightly below consensus of 5.3%. Participation rate also dropped -0.2 points to 70.5%, its lowest since early 2021, suggesting a cooling in demand.

Wage growth offered a mixed signal to the RBNZ. The private sector wage index rose 0.6% qoq, higher than expected 0.5% qoq and up from Q1’s 0.4%. But annual wage inflation slowed from 2.5% to 2.2% — the lowest in over three years — hinting that longer-term wage pressures are easing.

The overall report doesn’t deviate much from RBNZ’s May projections and is unlikely to alter its near-term stance. With inflation running at 2.7% yoy in Q2, markets still expect one more 25bps rate cut from the current 3.25% this month. But the central bank is likely to stay cautious on signaling further easing until price and wage dynamics show more decisive downside momentum.

AUD/USD Daily Report

Daily Pivots: (S1) 0.6455; (P) 0.6467; (R1) 0.6485; More...

AUD/USD's recovery from 0.6418 extends higher today but stays below 0.6528 resistance. Intraday bias remains neutral and further decline is in favor. Fall from 0.6624 short term top is seen as at least correcting the rally from 0.5913. Below 0.6418 will target 38.2% retracement of 0.5913 to 0.6624 at 0.6352. Nevertheless, break of 0.6528 will dampen this bearish case, and bring retest of 0.6624 high instead.

In the bigger picture, there is no clear sign that down trend from 0.8006 (2021 high) has completed. Rebound from 0.5913 is seen as a corrective move. While stronger rally cannot be ruled out, outlook will remain bearish as long as 38.2% retracement of 0.8006 to 0.5913 at 0.6713 holds. Nevertheless, considering bullish convergence condition in W MACD, even in case of another fall through 0.5913, downside should be contained above 0.5506 (2020 low).

The price actions of the Japan 225 CFD Index (a proxy for the Nikkei 225 futures) have staged a recent decline of -5.5% from its intraday high of 42,084 on 24 July 2025 (around 1% away from its all-time high of 42,513, printed in July 2024) to hit a low of 39,980 on 1 August 2025.

Right now, we will examine whether the Japan 225 CFD has hit an inflection point or will the corrective decline from the 24 July high will extend further to the downside from a macro and technical analysis perspective.

Rising Japanese wages should boost consumer confidence

Fig. 1: Japan core-core CPI, average cash earnings (wages) & consumer confidence long-term trends (Source: MacroMicro)

Japan’s nominal wages continued to increase steadily, as they rose by 2.5% y/y in June, the fastest pace in four months (see Fig. 1).

When adjusted for inflation, real wages declined by 1.3% but the contraction is less than May’s decline of 2.6% which suggests June’s increase in nominal wages is catching up with the rise of core-core CPI inflation rate in Japan.

In addition, major Japanese firms agreed to wage hikes averaging over 5% during this year’s spring negotiations, which in turn is likely to push up the growth of real wages back into positive territory in the next wage dataset release in the July-August period.

A sustained rise in wage growth could boost consumer confidence, potentially creating a positive feedback loop that lifts Japanese equities and reinforces the medium-term bullish trend of the Nikkei 225.

Fig. 2: Japan 225 CFD Index minor trend as of 6 Aug 2025 (Source: TradingView)

Preferred trend bias (1-3 days)

The one-week minor corrective decline of the Japan 225 CFD Index (a proxy for the Nikkei 225 futures) from 24 July 2025 high to 1 August 2025 low is likely to have reached an exhaustion/inflection point where the next move may be skewed towards the bulls.

Bullish bias above 40,130 key short-term pivotal support for potential recovery towards the next intermediate resistances at 41,285, 41,610, and 41,975/42,084 (see Fig. 2).

Key elements

• The -5.5% minor corrective decline of the Japan 225 CFD Index has stalled right at the medium-term ascending trendline support in place since 23 May 2025 low and the 61.8% Fibonacci retracement of prior bullish impulsive up move from 17 July 2025 low to 24 July 2025 high.
• Its price actions have traded back up above the 20-day moving average since Monday, 4 August.
• The hourly RSI momentum indicator has continued to inch higher along a parallel ascending support and has not reached its overbought region (above 70). These observations suggest a build-up in bullish momentum, at least in the short term.

Alternative trend bias (1 to 3 days)

A break below 40,130 invalidates the bullish scenario for an extension of the minor corrective decline towards the next supports at 39,740 and 39,455 (also the 50-day moving average).

New Zealand’s Q2 labour market report confirmed continued softening, with employment falling -0.1% qoq and unemployment edging up to 5.2%. That marks the highest jobless rate since 2020, though still slightly below consensus of 5.3%. Participation rate also dropped -0.2 points to 70.5%, its lowest since early 2021, suggesting a cooling in demand.

Wage growth offered a mixed signal to the RBNZ. The private sector wage index rose 0.6% qoq, higher than expected 0.5% qoq and up from Q1’s 0.4%. But annual wage inflation slowed from 2.5% to 2.2% — the lowest in over three years — hinting that longer-term wage pressures are easing.

The overall report doesn’t deviate much from RBNZ’s May projections and is unlikely to alter its near-term stance. With inflation running at 2.7% yoy in Q2, markets still expect one more 25bps rate cut from the current 3.25% this month. But the central bank is likely to stay cautious on signaling further easing until price and wage dynamics show more decisive downside momentum.

Full NZ employment release here.

Key Highlights

• GBP/USD found support at 1.3140 and started a recovery wave.
• It cleared a connecting bearish trend line with resistance at 1.3280 on the 4-hour chart.
• EUR/USD recovered some losses and climbed above 1.1520.
• Gold prices are moving higher above the $3,375 resistance zone.

GBP/USD Technical Analysis

The British Pound started a fresh decline below the 1.3450 level against the US Dollar. GBP/USD declined below 1.3250 before the bulls appeared.

Looking at the 4-hour chart, the pair tested the 1.3140 level. It settled below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour).

A low was formed at 1.3139 and the pair is now attempting to recover. There was a move above the 1.3250 resistance zone. The pair cleared a connecting bearish trend line with resistance at 1.3280.

Moreover, there was a move above the 23.6% Fib retracement level of the downward move from the 1.3589 swing high to the 1.3139 low. On the upside, the pair now faces resistance near the 1.3320 level. The next key resistance sits near the 1.3400 level and the 100 simple moving average (red, 4-hour).

A close above the 1.3400 level could set the pace for another increase. In the stated case, the pair could rise toward the 1.3480 resistance or the 76.4% Fib retracement level of the downward move from the 1.3589 swing high to the 1.3139 low. The next major stop for the bulls could be near the 1.3550 resistance.

On the downside, immediate support is near the 1.3250 level. The next key support sits near 1.3220. Any more losses could send the pair toward the 1.3150 support zone.

Looking at EUR/USD, the pair started a recovery wave, but the bears might remain active near the 1.1620 resistance zone.

Upcoming Economic Events:

• Fed's Collins speech.
• Fed's Cook speech.

Japan’s real wages continued to contract in June, falling -1.3% yoy — the sixth straight month of decline. While that marked an improvement from May’s revised -2.6% yoy drop, persistent inflation, particularly in food prices, continues to erode household purchasing power. Consumer prices used for wage calculations rose 3.8% yoy in June, far outpacing nominal wage gains.

Nominal wages climbed 2.5% yoy, up from 1.4% yoy in May and rising for the 42nd consecutive month. However, the reading missed expectations of 3.2% yoy, tempering the positive headline.  Base pay rose 2.1% yoy, and special earnings — mainly bonuses — grew 3.0% yoy, supporting a modest rise in overall pay levels during the reporting month.

The unemployment rate rose to 5.2% in the June quarter. This was a smaller increase than we expected, but was in line with the RBNZ’s thinking.

• Unemployment rate: 5.2% (prev: 5.1%, Westpac f/c: 5.3%, RBNZ f/c 5.2%)
• Employment change: -0.1% (prev: 0.0%, Westpac f/c: -0.3%, RBNZ f/c +0.2%)
• Labour costs (private sector): +0.6% (prev: +0.4%, Westpac f/c: +0.5%, RBNZ f/c +0.6%)

New Zealand’s labour market remained soft in the June quarter. The unemployment rate rose slightly from 5.1% to 5.2%, and the number of people employed fell by 0.1% (with the previous quarter’s 0.1% rise revised to a flat outcome). This was, however, less of a decline than we were expecting based on the 0.3% fall in jobs in the Monthly Employment Indicator.

While the results were a little better than our forecasts, the key details were in line with what the Reserve Bank assumed in its May Monetary Policy Statement. As such, today’s surveys are unlikely to sway the Monetary Policy Committee’s existing stance heading into its August policy review. We see a 25bp OCR cut as highly likely, leaving the door open for further easing if needed, but with no strong signal about the extent or timing of any future rate cuts.

The labour force participation rate continues to play an important role in moderating the extent of the rise in unemployment. Participation fell from 70.7% to 70.5%, its lowest level since March 2021, with a particularly large fall among teenagers. This group was brought into the workforce to an unusual degree during the 2022-23 boom, when demand was running hot and migrant workers weren’t available. As conditions have softened, teens have tended to see the largest drop in employment as well, with many of them returning to focus on study rather than classifying themselves as ‘unemployed’.

Turning to wages, the Labour Cost Index (LCI) rose by 0.6% for the private sector, following a 0.4% rise in the March quarter. This was a little higher than the 0.5% that we expected, but was in line with the RBNZ’s forecast. The sectoral breakdown suggests there may have been a little more impact from the minimum wage increase than we gave it credit for (considering that it was raised by only 1.5% this year).

On an annual basis, the private sector LCI slowed from 2.5% to 2.2%, the slowest pace since June 2021. The message was similar across a range of wage growth measures: the analytical unadjusted LCI (which includes pay increases that are related to higher productivity), the proportion of roles seeing a pay increase, and the median size of wage increases, were all back to 2021 levels.

The Quarterly Employment Survey (QES) was an exception, with average hourly earnings for the private sector accelerating from 3.8%yr to 4.6%yr. However, this measure is not adjusted for changes in the composition of jobs, and is typically much more variable than the LCI.

GBPUSD found intermediate lows at 1.3140, losing close to 7 handles since its June 30 highs.

The pound had seen a huge uptrend in 2025, with a 13.57% increase from 1.21, as the year commenced, to its recent top at 1.3790.

July changed Forex markets consequently with the Dollar Index retaking some of what it had lost through the first half – After the injurious US Non-Farm Payrolls report from last Friday, the Greenback saw some of its momentary strength evaporate and which allowed the GBP to take a breather from strong selling flows.

The Bank of England began a non-continuous rate-cutting cycle, taking their benchmark rate from 5.25% to the current 4.25%.

The Central Bank has struggled with persistently high inflation, in both goods and services sectors, prompting a cautious dovish stance.

However, with the degrading global outlooks and some government mess-ups, Markets have priced a 96% chance of a 25 bps cut for the upcoming meeting.

There is still some uncertainty regarding how dovish the communications from the BoE will be, which will impact the outlook for the pair.

In the waiting for the Thursday meeting (decision released at 7:00 A.M. ET), let's have a look at the Technicals for the pair.

GBPUSD Technical Analysis ahead of Thursday's Bank of England Meeting

GBPUSD Daily Chart

GBPUSD Daily Chart, August 5, 2025 – Source: TradingView

As explained in the introduction, the strong selling flows that started on the 1st of July has found a local bottom on Friday, leading the pair to a 1,300 Pip recovery back right around the 1.33 handle.

It is notable that GBP/USD broke below its 2025 rising channel – It will be key to see how markets react after this. A Head and Shoulders pattern could also be developing.

The pair saw some technical support from an oversold daily RSI, with the indicator currently still stalling in its lower bound. Participants seem to await for the BoE Meeting to move their pieces further.

Today's session marks another consecutive doji candle, so let's take a closer look to spot more detailed levels.

GBPUSD 4H Chart

GBPUSD 4H Chart, August 5, 2025 – Source: TradingView

Buyers are trying to push the pair towards the 4H 50-period Moving Average but seem to find some lack of conviction at the 1.33 psychological level.

The support and resistance levels, drawn in our previous Bank of England June-meeting analysis have held very strongly (for now), with the pair finding some dip buyers at the previous S3 level (currently S2 – see the prices below).

Breaking the most recent lows point to a resumption of the bearish trend and this would see the Pound giving back more of its early 2025 gains.

In the meantime, look at the reactions to the 50-period MA (currently at 1.3328); any break higher will test the key 1.34 pivot, a major level for bull/bear strength.

Levels to watch for the pair:

Resistance Levels

• 4H MA 50 1.3328
• 2024 Highs turned Pivot/Resistance 1.34 Zone
• Previous Pivot Now Resistance 1.3470
• Main Resistance 2 1.36

Daily Support Levels

• Support 1 1.3260-1.33
• Support 2 1.3170 - 1.31850 – Most recent lows 1.3140
• S3 at 1.30 Zone (+/- 300 pips)

A lack of conclusive price action does not warrant many reasons to look at smaller timeframes, with the pair stuck in a 500 pip range between 1.3260 (lows) to 1.33150 (highs).

Trade the pair with caution in the waiting of the rate decision.

Safe Trades!

The Swiss Franc has been on a formidable run in 2025, continuing a trend that began when it reached parity with the US Dollar in November 2022.

With the American Exceptionalism theme, widening deficits, and growing trade distrust, markets have sought the CHF as a stable hedge against the Greenback.

Switzerland’s neutrality in economic and geopolitical affairs—and its low, stable inflation—make it an attractive safe haven, especially in a world facing fresh conflicts.

The Franc’s rally to 2011 highs has also been fueled by regional currency trends. Since early 2025, the Euro’s strength has lifted its neighbors, adding tailwinds to the CHF.

This trend is actually one to watch in Forex where currencies tend to move in tandem with their neighbours – It's an historic trend but got exacerbated with the ongoing geopolitics.

Still, the Swissie hit a local top in July against most majors, including the Yen against which it attained weekly record highs.

While the CHF’s appreciation has not been as explosive as the Euro’s, the trend had remained consistent and persistent – but is it now over?

Next, we’ll look at USDCHF technicals to see if momentum can hold—or if a reversal is on the horizon.

Which safe-haven currency to choose – A small parenthesis on CHF/JPY

CHF/JPY Daily Chart, August 5, 2025 – Source: TradingView

CHF/JPY has been up-trending since May 2020 (which coincides with lows on Global Yields post-COVID peak fears), and this same trend found some steep acceleration, particularly since Liberation Day.

The pair went from 109.00 lows to the current 186.00 highs.

One aspect to consider when looking at this pair is the Safe-Haven nature of both currencies—the current overperformance of the Franc has marked it as the preferred option for flight-to-safety exposure.

We are now seeing this trend conclude.

The rest is to see if the recent highs mark an intermediate top or more one for the longer-run.

USD/CHF Technical Analysis

USD/CHF Daily Chart

USD/CHF Daily Chart, August 5, 2025 – Source: TradingView

The major pair, which had been in a steep downtrend since the beginning of 2025, has marked a double-bottom on its Daily charts during the month of July after attaining levels unseen since 2011.

Since, the rebound has been consequent but with buyers failing to breach above the 0.8150 to 0.82 Main Resistance, the action is seeing more balance.

Watch the 50-Day MA acting as immediate support to spot if buyers manage to respond to the 2025 Main Descending Trendline, which just acted as a supply zone for USD/CHF Sellers.

The RSI Momentum was rising but is still closer to the neutral level than decisively bullish momentum.

USDCHF 4H Chart

USD/CHF 4H Chart, August 5, 2025 – Source: TradingView

Looking closer, sellers are bringing back the pair into its 0.80 Main Pivot Zone (0.80 to 0.8070), where reactions will be important to monitor.

There are some conflicting signs between the uptrending intermediate trendline formed after the double bottom and the main descending 2025 trend.

Looking at the conflicting price action, there is a high probability of a range forming around the Pivot Zone but it is still far from being confirmed, therefore the pair will have to be watched closely and may move fast depending on risk appetite.

The current price action is currently seller-dominated after this morning's miss in the US Services PMIs.

Levels to watch for the pair:

Daily Resistance Levels

• Main resistance 0.8150 to 0.82 (last highs 0.8165)
• 0.83350 bear Pivot
• May 2025 highs 0.8475 Resistance Zone

Daily Support Levels

• Long-term pivot 0.80 Zone (0.80 to 0.8070) Confluence with Daily and 4H MA 50
• 0.7950 bull Pivot
• 0.7875 2025 lows

Safe Trades!

Gold prices have seen whipsaw price action today with a $30 drop being wiped away after the US open. Part of this could be down to another poor US data point which will only add to rate cut bets moving forward.

The US ISM Services PMI dropped to 50.1 in July 2025 from 50.8 in June, falling short of the expected 51.5. This shows the services sector barely grew, with seasonal and weather issues affecting business. There was a slowdown in business activity (52.6 vs 54.2), new orders (50.3 vs 51.3), and inventories (51.8 vs 52.7).

Meanwhile, price pressures increased to their highest level since October 2022 (69.9 vs 67.5), with many survey participants highlighting the impact of tariffs, especially on commodities.

Gold prices had already been on a recovery from a daily low around $3349 before the data further boosted the recovery.

Gold Prices Moving Forward - Federal Reserve Policy & Rate Cut Expectations

Golds looked on course for a potential correction last week before the US jobs data. The picture since then has changed dramatically however, and this underscores the age old adage, ‘trade what you see, not what you think’.

The most significant change has come in the form of rate cut expectations from the US Federal Reserve. Ahead of the jobs data on Friday last week, markets were still split around the 50-50 mark on a potential rate cut in September following the Fed meeting on Wednesday.

However, as of this morning the CME FedWatch Tool reflected a high 88% probability of such a cut at the upcoming monetary policy meeting in September.

Source: CME FedWatch Tool

The jobs data has raised hopes in the market for two or even three interest rate cuts by the end of the year, with the first expected in September and the second in October.

Even cautious comments from Federal Reserve officials were seen as signs that rate cuts might be coming. San Francisco Fed President Mary Daly urged caution about expecting aggressive rate cuts, saying the job market wasn’t "too weak" and suggesting the Fed could wait a bit longer. However, she also mentioned that the Fed "can’t wait forever" and downplayed the idea that tariffs were causing long-term inflation. Markets took her comments as a sign that the Fed might still cut rates in September.

This strong belief in upcoming rate cuts is helping support gold prices. Lower interest rates make gold more attractive because it doesn’t pay interest, so the cost of holding it becomes less of a concern.

Looking ahead, the next big catalyst which could shape both Fed rate cut expectations and have a material impact on Gold is likely to be the US CPI data. A strong CPI print would likely trigger a significant re-evaluation of its bullish trajectory, whereas other data points might only cause minor fluctuations.

Technical Analysis - Gold (XAU/USD)

From a technical standpoint, Gold monthly candle close for July closed as a massive shooting star which hints at further downside ahead.

This also marked the first bearish monthly close since December 2024 and could be a sing of the shift in momentum between buyers and sellers.

However, price action since Friday has left a potential deeper pullback at risk. On a monthly chart, a candle close above the 3439 handle will be needed to invalidate the setup and for this we will have to wait the rest of the month.

Looking at a more near-term perspective, let us look at the daily timeframe. Here we can see the recent bullish move which is approaching the most recent swing high around 3431.

A daily candle close above this level will invalidate the bearish setup on the daily timeframe and put bulls firmly in control.

Given that tariffs are now largely set and implementation is largely what remains, the chance that we enter a period of consolidation is shrinking.

This hints that a daily candle close above the 3431 may lead to more bullish momentum.

Gold (XAU/USD) Daily Chart, August 5, 2025

Source: TradingView (click to enlarge)

Client Sentiment Data - XAU/USD

Looking at OANDA client sentiment data and market participants are Long on Gold with 55% of traders net-long. I prefer to take a contrarian view toward crowd sentiment, however with a 55-45 split this is rather too close to draw any conclusions just yet.