• Dollar keeps steadier so far on the day, eyes on US retail sales later
• US retail sales gains more attention as Japan eyes big data to intervene
• BOJ data suggests Japan also intervened in the FX market on 12 July
• Eurozone May trade balance €13.9 billion vs €15.0 billion prior
• Germany July ZEW survey current conditions -68.9 vs -74.5 expected
• 10-year Treasury yields erase the jump higher from yesterday
• Italy June final CPI +0.8% vs +0.8% y/y prelim
• European stocks hold lower in the opening stages today
• What are the main events for today?
• Geopolitics trumps higher inflation as top tail risk in latest BofA fund manager survey
• Eurostoxx futures -0.4% in early European trading
• FX option expiries for 16 July 10am New York cut
• A couple of light releases to move things along in European trading today

It was an
uneventful European session with no central bank speaker and just the German
ZEW survey as the main highlight. The survey recorded the first decline in 2024
due to a bigger than expected fall in German exports in May, the political
uncertainty in France and the lack of clarity regarding the future monetary
policy by the ECB.

The index
has been climbing steadily, so a minor pullback isn’t something to be concerned
about. The situation indicator for the Eurozone, on the other hand, changed
only marginally climbing 2.5 points to a new reading of minus 36.1 points.

In the
markets, the major currencies are little changed with the US Dollar flat on the
day. Treasury yields erased yesterday’s gains. The S&P 500 and the Nasdaq
are mostly flat while the Russell 2000 continues to outperform.

Gold is
having another good day as it’s up 0.80% while crude oil is going for the third
consecutive negative day being down 1.40%. Bitcoin was down almost 4.0% at some
point but has recovered half the losses and it looks like it has further legs
to the upside.

The focus
will now switch to the Canadian CPI and US Retail Sales data both due in an hour.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

There’s not much in it in European morning trade today. The dollar is largely steadier, with USD/JPY coming off a little from around 159.70 in Asia to 158.40 currently. That comes as traders look to be heeding some caution ahead of the US retail sales data later today. From earlier: US retail sales gains more attention as Japan eyes big data to intervene

Besides that, EUR/USD is trading narrowly near 1.0900 with large option expiries still locking the pair. And there is little change among GBP/USD, USD/CHF and USD/CAD as well.

The aussie and kiwi are marginally lower amid a softer Chinese yuan but that’s about it. NZD/USD though is also one to be wary about as it is vulnerable to a downside break.

It’s now over to the US retail sales data to see how that will shake things up on the day.

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

Fundamental
Overview

The USD weakened across the
board last week following another soft US CPI report and benign Jobless Claims figures. The market not only fully
priced in a rate cut in September but also started to price in some chances of
a back-to-back rate cut in November.

Overall, we had a
goldilocks data release with an economy that is slowing but still growing. This
should support the soft-landing narrative and be positive for the risk
sentiment.

The EUR, on the other hand,
keeps on gaining against the US Dollar mainly because of the risk-on sentiment
as the US data continues to support at least two rate cuts from the Fed without
sending recessionary signals.

On the monetary policy
front, the ECB members continue to repeat that they will wait for the data throughout
summer before deciding on a rate cut in September. So, the ECB rate decision
this week should be a non-event.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that EURUSD is struggling to break above the 1.09 level and extend the
rally into the 1.10 handle. This is where the sellers are stepping in with a
defined risk above the level to position for a drop back into the 1.0812 support. The buyers will want to see the price
breaking higher to increase the bullish bets into the 1.10 level next.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that from a risk management perspective, the buyers will have a better risk
to reward setup around the trendline at the 1.0840 level. We can also
see that we have another steeper trendline around the 1.0885 level. Some
aggressive buyers might lean on it or split their orders in half to avoid
missing a possible rally from these levels. The sellers, on the other hand,
will likely pile in at every break lower.

EURUSD Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the recent price action and we can notice that the momentum has indeed
waned at the 1.09 handle. Today we get the US Retail Sales data and that could
provide either a spike to the upside or a break below the trendline and a
possible pullback into the next trendline around the 1.0840 level. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today we get the US Retail Sales report. Tomorrow, we have Fed’s Waller
speaking. On Thursday, we conclude with the ECB rate decision and the latest US
Jobless Claims figures.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

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

The latest yen-tervention efforts are a step out of the norm as Japan looks to be trying out a new strategy. And that is to bank on softer US data in driving down USD/JPY in particular. From earlier: BOJ data suggests Japan also intervened in the FX market on 12 July

They stepped in on Thursday following the US CPI report and did so again on Friday after arguably 30 mins following the US PPI report. On the latter, it seemed like they waited for a bit just to make sure that markets were not going to respond against them as the producer price numbers were hotter than expected.

Given the circumstances, there will be more intrigue surrounding the US retail sales data later today.

It’s not just one that is going to attract the attention of traders looking to price in the Fed outlook. But it is also one that could see USD/JPY get shoved lower by Japan, especially if the numbers miss on estimates.

A softer report would mean slowing consumption activity and bolsters the narrative for the Fed to cut sooner. In turn, that should keep the dollar pinned down and Tokyo officials might see that as another opportunity to step in again.

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