Headlines:

• EUR/USD eyes April and May highs in latest push above 1.1000
• GBP/USD stays on the hunt of the 1.3000 mark
• USD/CHF on the verge of a steeper drop
• AUD/USD gets checked back ahead of US CPI data
• BOE: Global economic outlook is highly uncertain, risk environment is challenging
• BOE’s Bailey: UK economy, financial system have been resilient so far
• Spain June final CPI +1.9% vs +1.9% y/y prelim
• US MBA mortgage applications w.e. 7 July +0.9% vs -4.4% prior
• Fed speakers due today include Barkin, Kashkari, Bostic, Mester. Fed Beige book also.

Markets:

• JPY leads, GBP lags on the day
• European equities higher; S&P 500 futures up 0.3%
• US 10-year yields down 3.8 bps to 3.944%
• Gold up 0.2% to $1,935.18
• WTI crude up 0.3% to $75.04
• Bitcoin up 0.5% to $30,726

It was a quieter session in Europe today as all the focus in markets is on the US CPI data to come later at 1230 GMT.

The dollar was softer initially but recovered some ground to keep more mixed, albeit marginally lower, on the day. EUR/USD stuck above the 1.1000 mark around 1.1020-30 levels while USD/JPY did fall below 140.00 to a low of 139.31 before keeping around 139.40-50 levels at the moment.

Meanwhile, cable got checked back on a move higher with the high earlier touching 1.2969 before retreating to 1.2915 currently. And AUD/USD also saw a similar move in a push to 0.6741 before falling back to 0.6690, near flat levels on the day.

In other markets, bond yields continue to be dragged lower while equities are keeping some optimism for a better (lower) set of inflation numbers later today.

Overall, the dollar is looking to be on the brink of a next leg lower and we’ll see if the US CPI data will deliver on that.

This article was written by Justin Low at www.forexlive.com.

Lat Friday, the NFP missed expectations for the first time after
14 consecutive beats and caused a general USD weakness across the board. The
other details in the report were good though, with the unemployment rate
falling back to 3.6% and the average hourly earnings ticking higher, which is
not what the Fed would want to see. In fact, the market’s expectations for a 25
bps rate hike at the July meeting remained unchanged.

Conversely, the SNB raised
interest rates by 25 bps as expected at the last meeting and communicated that
additional rate hikes cannot be ruled out. The Swiss CPI data though showed the inflation
rate returning back within the SNB target band and should translate into a
pause for the SNB at the next meeting, all else being equal.

USDCHF Technical Analysis –
Daily Timeframe

On the daily chart, we can see that USDCHF sold off
very hard after the miss in the US NFP report. We can notice that the bias was
anyway bearish as the moving averages were
crossed to the downside and the sellers leant on the red 21 moving average to
position for lower prices. The price has now reached the key 0.8760 level,
which is the 2020 pandemic low. We can also see that the price has been diverging with the
MACD for a
long time now, we might see a bottom here and a strong bounce into the 0.90
handle.

USDCHF Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the breakout
lower of the range supported by the miss in the NFP led to strong bearish
momentum as the sellers started to pile in aggressively. If we get a pullback
here, the sellers should lean on the downward trendline to
position for more downside and the break below the 0.8760 low. The buyers, on
the other hand, should start stepping in here with a defined risk below the
level and target the 0.90 handle. More conservative buyers may want to wait for
the price to break above the trendline before piling in.

USDCHF Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price has been diverging with the MACD falling right into the 0.8760 low. This
is generally a sign of weakening momentum often followed by pullbacks or
reversals. This should reinforce the buyers’ chances of getting a strong bounce
here. The sellers will wait at the trendline and the 38.2% Fibonacci
retracement level to position for more shorts.

Upcoming Events

Today
the market focus will be on the US CPI report. A beat to the expected numbers,
especially on the core side, should support the USD and lead to a rally in
USDCHF as the markets are likely to expect a more hawkish Fed. On the other
hand, a miss to forecasts across the board should lead to more USD weakness
going forward as the market would see less chances of higher rates and may even
bring forward rate cuts odds. We conclude the week with the US Jobless Claims
on Thursday and the University of Michigan Consumer Sentiment report on Friday.

This article was written by FL Contributors at www.forexlive.com.