Dollar technicals:

• EUR/USD extends gains as the dollar resigns to its next leg lower
• USD/JPY drop looks set to continue, key downside levels come into focus
• GBP/USD looks to solidify breakout move on the week
• USD/CHF falls through the floor, what’s next?
• AUD/USD eyes June high next on dollar breakdown
• NZD/USD takes aim at April and May highs on latest jump higher

Headlines:

• ECB accounts: Members generally concurred interest rates had reached restrictive territory
• ECB’s Visco: We are not very far from the peak in interest rates
• Japan top currency diplomat Kanda says closely watching FX market moves
• UK May monthly GDP -0.1% vs -0.3% m/m expected
• Eurozone May industrial production +0.2% vs +0.3% m/m expected
• France June final CPI +4.5% vs +4.5% y/y prelim

Markets:

• AUD leads, JPY lags on the day
• European equities higher; S&P 500 futures up 0.3%
• US 10-year yields down 3.7 bps to 3.824%
• Gold up 0.1% to $1,959.73
• WTI crude up 0.2% to $75.86
• Bitcoin up 0.7% to $30,558

We are getting a continuation of the dollar slide from yesterday, as the greenback is seen falling apart across multiple charts following the softer US CPI data yesterday.

Traders were already testing waters in the run up and the inflation numbers gave reason to stick with the selling conviction this week, which is continuing now.

EUR/USD is up another 0.4% to 1.1170 while GBP/USD is up 0.6% to test waters above the 1.3000 handle, seen at 1.3060 at the moment.

USD/CHF has also broken down to its lowest levels since January 2015, falling another 0.5% to 0.8630, while the antipodeans are pushing forward with strong gains amid the better risk mood as well. AUD/USD is up 1% to 0.6860 on the day, keeping in the hunt of its June high near 0.6900 next.

Treasury yields continue to fall further and that is helping with general equities sentiment, which is also bolstered by tech stocks after Elon Musk unveiled a new AI company to rival OpenAI’s ChatGPT.

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

• Members considered that there were both upside and downside risks to the inflation outlook
• It was argued that market participants would be surprised by the upward revision of inflation
• This could trigger a repricing of the forward curve
• Members broadly concurred that inflation was still projected to remain too high for too long
• It was argued that policymakers should not put too much emphasis on the behaviour of core inflation, as its mandate related to headline inflation
• Maintaining a gradual tightening path would allow the ECB to monitor and assess the impact of past monetary policy decisions and ensure that financial conditions were adjusting in a way that was consistent with inflation moving back to the 2% medium-term target
• Members generally agreed that the data-dependent approach to monetary policymaking
• Policymakers should stress that fiscal policy needed to be tightened in order to dampen demand and support the disinflation process
• Full accounts

There isn’t anything that we don’t already know from the ECB but it just reaffirms that policymakers are sticking to what was discussed so as to not give anything away for September just yet. We’ll see after July if and how that will change.

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

Yesterday, the US CPI report missed expectations across the board
and led to a big selloff in the US Dollar. The market pricing for a 25 bps hike
at the July meeting hasn’t change though as the labour market tightness and no
hints of a skip or pause from the Fed speakers probably contributed to such
expectation.

On the other hand, the BoJ
maintains its dovish stance keeping rates at -0.10 and the YCC at the usual
settings. Core inflation in Japan keeps on rising and there are only slightly
tentative signs of a possible exit from the current policy. The BoJ board
members keep on sounding dovish and dismissing any change at the upcoming
meeting. Nevertheless, the market still sees the risk of a surprising change to
the YCC policy.

USDJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see
that the price is now reacting to a strong support level at
137.95 where we can also find the 61.8% Fibonacci retracement level.
The huge selloff since the miss in the NFP report is a bit overstretched though
as we can see from the price distance from the blue 8 moving average.
Generally, we can see some consolidation or a pullback into the moving average
before the next move.

USDJPY Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that the price is
already bouncing from the support zone and if we do get a pullback, the price
should rise into the black downward trendline where it
crosses with the broken blue trendline and the red 21 moving average.

USDJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see the
resistance zone highlighted by the blue box. That’s where the sellers should
step in with a defined risk above the black trendline and target a break below
the support zone and new lows towards the 130.00 handle. The buyers, on the
other hand, will want to see the price breaking above the resistance zone and
the black trendline to pile in and start positioning for new highs towards the
142.00 handle.

Upcoming Events

Today the market is
likely to focus on the US Jobless Claims as the labour market remains tight and
it may keep inflation high or even lead to another inflationary wave in the
future. The market should react only to a big miss or a big beat. If the data
beats expectations, we should see a pullback in USDJPY. On the other hand, if
the data misses, we should see another wave of selling. Tomorrow, we wrap up
the week with the University of Michigan Consumer Sentiment report.

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

The US CPI report
yesterday missed expectations across the board with unrounded figures being
even lower. This has led to a big rally in the EURUSD pair as the USD got
offered across the board. Curiously, the market is still fully pricing a 25 bps
hike at the next FOMC meeting, probably because of labour market tightness and
the Fed speakers not hinting to a skip or pause after the CPI release.

The ECB has already committed to a rate hike in
July, while there is a stronger debate on what will happen in September. In
fact, the ECB members keep repeating that the September hike will depend on the
data.

EURUSD Technical Analysis –
Daily Timeframe

On the daily chart, we can see that EURUSD has
rallied strongly since the bounce from the red 21 moving average. The
price is now at the top trendline of the
big rising wedge pattern.
We can also see that there’s a big divergence with the
MACD which is
generally a sign of weakening momentum often followed by pullbacks or
reversals. The price is also overstretched as we can see by the distance from
the blue 8 moving average. Generally, we can see some consolidation or a
pullback into the moving average before the next move.

EURUSD Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we had the
ascending triangle pattern near the 1.0850 level and the breakout to the upside
led to a strong rally into the 1.1150 level. Here is where the sellers are
likely to step in with a defined risk above the top trendline and target the
bottom trendline somewhere near the 1.0750 level. The buyers, on the other
hand, will need to break above the top trendline with conviction to keep
bidding to new highs.

EURUSD Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is breaking above the top trendline of the wedge pattern, but after such
a strong run to the upside there’s a high risk of a fakeout, especially if the
data in the next days goes against the trend. If we get a pullback, the buyers
are likely to lean on the blue trendline to try another breakout. The sellers,
on the other hand, should extend the selloff if the price breaks below the
trendline.

Upcoming Events

Today the market will
focus on the US Jobless Claims to see if the labour market remains healthy or
there are signs of cracking. At this point it looks like only very strong data
or very weak numbers can give the USD support. Tomorrow, we conclude the week
with the University of Michigan Consumer Sentiment report.

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

• The government strategy deployed is ‚completely inadequate‘
• There is too much focus on short-term economics rather than long-term risks
• Beijing has taken advantage of that, targeting the UK and its interest ‚prolifically and aggressively‘
• China has successfully penetrated every sector of the UK economy

We’ll see if that will evolve into any policy changes in how the UK will deal with China on trade, geopolitics, and general business investments. But considering the fragility of the UK economy at the moment, I doubt we will see any major changes any time soon.

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

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.

• Prior -4.4%
• Market index 208.4 vs 206.5 prior
• Purchase index 165.3 vs 162.4 prior
• Refinance index 416.0 vs 421.3 prior
• 30-year mortgage rate 7.07% vs 6.85% prior

Mortgage applications increased slightly in the past week as the jump in purchases activity helped to offset a decline in refinancing activity. This comes despite a massive 22 bps jump in the average rate of the most popular US home loan to above 7% again – its highest since November last year.

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

The BoE surprised at the last meeting delivering a
50 bps rate hike instead of the 25 bps expected as the hot employment report
and the higher inflation data forced the central bank to choose a more
aggressive action. Yesterday we got another employment report and this
time it missed expectations on the jobs side but beat again on the wages side
which points to a wage price spiral in action. In fact, the market is pricing
in a higher chance of a 50 bps hike at the next meeting, although the UK CPI
report next week will probably decide if it’s going to be 25 bps or 50 bps.

On the other hand, the BoJ remains stuck with its
dovish monetary policy even if Japan’s core inflation keeps climbing to new
highs. There are tentative signs of a possible exit from this policy though but
the recent comments from the BoJ board members suggest that we won’t see any
change in the near future.

GBPJPY Technical Analysis –
Daily Timeframe

On the daily chart, we can see that after the
incredibly strong rally out of the hot UK employment report in June the
momentum started to wane near the 183.00 level. The price then started to pull
back into the trendline but
without a change in the fundamentals, so this looks like a technical
retracement from overstretched levels. The moving averages are also
threatening a bearish crossover, which is something to watch closely.

GBPJPY
Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the rising wedge around
the 183.00 led to the deeper pullback once the price broke out to the downside.
We can see that we also had a divergence with the
MACD
signalling weakening momentum and a possible pullback or reversal coming. The
price is now near a strong support zone
where we can find the trendline, the 180.00 round number, the base of the wedge
pattern and the 38.2% Fibonacci retracement level.

GBPJPY Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that we
have another divergence with the MACD right when the price is nearing the
strong support zone. We should see the buyers stepping in here with a defined
risk below the level and target a new high into the 185.00 level. More
conservative buyers may want to wait for the price to first break above the
downward minor trendline before piling in. The sellers, on the other hand, will
want to see the price breaking below the strong support zone to pile in
aggressively and extend the selloff towards the 173.00 level.

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

The recession in the manufacturing sector in the
biggest economies in the world has been weighing on the Copper price. The lack
of economic stimuli coupled with low demand and restrictive monetary policies,
suggest that we may see even lower prices going forward. In the short term
though, China might start to stimulate its economy much more given the risk of deflation, so we
might see stable or higher prices going forward.

Copper Technical Analysis –
Daily Timeframe

On the daily chart, we can see that Copper got
rejected from the 3.9575 resistance where we
had also the 61.8% Fibonacci retracement level
for confluence. The
strong selloff led to a downside crossover of the moving averages which
points to a bearish bias. We can notice that the sellers are now leaning on
that red 21 moving average and the 3.8245 resistance to position for more
downside. A strong break above the 3.8245 level should invalidate the bearish
setup.

Copper Technical Analysis –
4 hour Timeframe

On the 4 hour chart, we can see that we have also
the 50% Fibonacci retracement level at the 3.8245 resistance. This makes that
resistance zone a strong level and a break above the 61.8% Fibonacci
retracement level would entirely invalidate the bearish setup. In fact, we can
notice that the black trendline forms an
ascending triangle pattern
with the resistance, so a break on either side should lead to a sustained move
in the direction of the breakout.

Copper Technical Analysis –
1 hour Timeframe

On the 1 hour chart, we can see that the
price is basically ranging within the ascending triangle. The best strategy
would be to sit and wait for a breakout on either side supported by a
fundamental catalyst and then go with the flow.

Upcoming Events

Today we have the US
CPI report which is expected to be a pivotal release for the upcoming FOMC rate
decision and especially for the following ones. A miss to the expectations
should be risk positive and support Copper going forward, while a beat should
lead to a risk off mood in the markets and send the Copper price lower. After
the CPI we have the US Jobless Claims report on Thursday and the University of
Michigan Consumer Sentiment report on Friday.

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