Currencies more sensitive to the fundamentals

GBPUSD – technical overview

The major has been well supported ahead of the 2019 low, helping to strengthen the case for a major base. Look for the market to start making its way back towards 1.3000, with a break above the psychological barrier to expose a retest of the 2019 high up at 1.3380. Only back below 1.2500 would delay the constructive outlook.

• R2 1.2784– 25 June high – Strong
• R1 1.2735 – 28 June high – Medium
• S1 1.2584 – 2 July low – Medium
• S2 1.2560 – 31 May low – Strong

GBPUSD – fundamental overview

The Pound had to endure another day of declines, despite some broad based selling in the US Dollar, with the UK currency unable to look past a horrid UK construction PMI showing, especially after the already worrying manufacturing PMI print from Monday. Meanwhile, BOE Carney was on the wires warning of the possibility the central bank would need to consider a policy response if fallout from the rise in protectionism intensified. Meanwhile, the Tory candidates continued with their Brexit strategy campaigns. Looking ahead, we get UK services PMIs, BOE speak from Cunliffe and Broadbent, and a batch of US data featuring ADP employment, initial jobless claims, trade, ISM non-manufacturing and factory orders.

USDJPY – technical overview

The longer-term downtrend remains firmly intact, with the major pair gravitating back towards a retest of major support in the form of the 2018 and 2019 lows respectively, down in the 104s. Any rallies should now be well capped below 110.00, though only a break back above the yearly high at 112.40 would compromise the bearish outlook.

• R2 108.80 – 11 June high – Strong
• R1 108.54 – 1 July high – Medium
• S1 107.56 – 28 June low – Medium
• S2 106.78 – 25 June low – Strong

USDJPY – fundamental overview

Japan's FY 2018 tax revenue ballooned to a record high, while a BOJ survey of Japanese companies showed a three year inflation outlook of 1%. Meanwhile, Japan's FinMin Aso announced FX chief Asakawa would be replaced by Takeuchi on the 5th of the month. The major pair was down on Tuesday, despite ongoing support for equities, with broad based US Dollar selling commanding more influence. Looking at the calendar for the remainder of the day, we get a batch of US readings featuring ADP employment, initial jobless claims, trade, ISM non-manufacturing and factory orders.

EURCHF – technical overview

The recent breakdown below critical range support in the 1.1200 area, has opened the door for the next wave of declines targeting a move back towards initial support in the form of the 1.1000 psychological barrier. The market is trading at its lowest levels in nearly two years and at this point, it would take a daily close back above 1.1279 to take the immediate pressure off the downside.

• R2 1.1265 – 12 June high – Strong
• R1 1.1173 – 2 July high – Medium
• S1 1.1057 – 20 June/2019 low – Medium
• S2 1.1000 – Psychological – Strong

EURCHF – fundamental overview

The SNB remains uncomfortable with Franc appreciation and continues to remind the market it will need to be careful about any attempts at trying to force an appreciation in the currency. But the SNB will also need to be careful right now, as its strategy to weaken the Franc is facing headwinds from a less certain global outlook. Any signs of sustained risk liquidation, will likely invite a very large wave of demand for the Franc that will put the SNB in the more challenging position of needing to back up its talk with action, that ultimately, may not prove to be as effective as it once was, given where we're at in the monetary policy cycle.

AUDUSD – technical overview

The market has been very well supported on dips since breaking down in early January to multi-year lows. The price action suggests we could be seeing the formation of a major base, though it would take a clear break back above 0.7100 to strengthen this outlook. In the interim, look for setbacks to continue to be well supported ahead of 0.6800.

• R2 0.7070 – 30 April high – Strong
• R1 0.7035 – 1 July high – Medium
• S1 0.6929 – 24 June low – Medium
• S2 0.6832 – 18 June low – Strong

AUDUSD – fundamental overview

On Tuesday, the Australian Dollar was able to find some relative strength, on a sell the rumor buy the fact reaction, after the RBA delivered a rate cut as expected, but accompanied the decision with the bonus of a more upbeat leaning tone. Aussie was also helped along by an uptick in consumer confidence and some broad based US Dollar outflows. Looking at the calendar for the remainder of the day, we get a batch of US readings featuring ADP employment, initial jobless claims, trade, ISM non-manufacturing and factory orders.

USDCAD – technical overview

The market has come under intense pressure over the past several weeks, extending declines to a fresh 2019 low. However, the longer-term structure remains constructive, with dips expected to be well supported for fresh upside, eventually back above the 2018/multi-month high at 1.3665. At this point, only a weekly close below the psychological barrier at 1.3000 would delay the outlook.

• R2 1.3230– 21 June high – Strong
• R1 1.3200 - Figure – Medium
• S1 1.3060 – 28 June/2019 low – Strong
• S2 1.3000 – Psychological – Strong

USDCAD – fundamental overview

On Tuesday, Canada returned from holiday. Sharp setbacks in the price of OIL invited some selling of the Canadian Dollar, though this was offset by a wave of broad based US Dollar outflows and a rally in the price of GOLD. Canada manufacturing PMIs were mixed and didn't really do much to factor into price action. Looking at the calendar for the remainder of the day, we get Canada trade data along with a batch of US readings featuring ADP employment, initial jobless claims, trade, ISM non-manufacturing and factory orders.

NZDUSD – technical overview

Despite recent weakness, there's a case to be made for a meaningful low in place at 0.6425 (2018 low). As such, look for setbacks to be well supported above the latter, in anticipation of renewed upside, with only a close below to compromise the outlook. The most recent rally has triggered a double bottom, further strengthening the constructive outlook. Look for a higher low to carve out ahead of 0.6500.

• R2 0.6783 – 15 April high – Medium
• R1 0.6727 –  1 July high – Strong
• S1 0.6595 – 26 June low – Medium
• S2 0.6535 – 20 June low – Strong

NZDUSD – fundamental overview

We've seen the recent recovery in the New Zealand Dollar stall out, in favour of a round of profit taking. Initially, it was the broad based US Dollar demand on the news earlier in the week of the renewed trade talks between the US and China, and then on Tuesday, weakness came from the NZIER Q2 survey of business opinion, which sunk to a ten year low. GDT auction results were also out, but didn't really factor into price action, with the print improving from previous reads, but still in negative territory. Looking at the calendar for the remainder of the day, we get a batch of US readings featuring ADP employment, initial jobless claims, trade, ISM non-manufacturing and factory orders.

US SPX 500 – technical overview

There have been signs of a major longer term top, after an exceptional run over the past decade. Any rallies from here, are expected to be very well capped, in favour of renewed weakness targeting an eventual retest of strong longer-term previous resistance turned support in the form of the 2015 high at 2140. The initial level of major support comes in at 2729, with a break below to strengthen the outlook. A weekly close above 3000 would be required to compromise the outlook calling for a top.

• R2 3000 – Psychological – Strong
• R1 2979 – 1 July/Record high – Medium
• S1 2911 – 26 June low – Medium
• S2 2867 – 13 June low – Strong

US SPX 500 – fundamental overview

Although we've seen the market extend to another record high in 2019, exhausted monetary policy tools post 2008 crisis suggest the prospect for a meaningful extension of this record run at this point in the cycle is not realistic. Meanwhile, expected renewed tension on the global trade front, should continue to be a drag on investor sentiment. We recommend keeping a much closer eye on the equities to ten year yield comparative going forward, as the movement here is something that could be a major stress to the financial markets looking out.

GOLD (SPOT) – technical overview

The recent breakout above the 2016 high at 1375 was a significant development, and suggests the market is in the early stages of a bullish move that follows a multi-month consolidation. The next major level of resistance comes in around 1500, while in the interim, look for any setbacks to be well supported above 1300.

• R2 1488 – May 2013 high – Strong
• R1 1440 – 25 June/2019 high – Strong
• S1 1358 – 20 June low – Medium
• S2 1320 – 11 June low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about exhausted monetary policy, extended global equities, political uncertainty, systemic risk and trade war threats. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.

BTCUSD – technical overview

The market has enjoyed a nice run since breaking out above a consolidation between Q4 2018 and Q1 2019, though the rally had resulted in extended technical readings after racing through 10k psychological barrier. Overall, look for additional upside to be limited for now, to allow for these technical readings to unwind some more from stretched readings, before the market considers that next meaningful push. Setbacks should ideally be supported ahead of 7,000.

• R2 14,335– 15 January high (2018) – Strong
• R1 13,748 – 26 June/2019 high – Medium
• S1 9,721 – 2 July low – Medium
• S2 8,935 – 19 June low – Strong

BTCUSD – fundamental overview

Bitcoin is enjoyed a spectacular run in the second quarter of 2019, racing to fresh yearly highs, surging through 10k, on the back of increased adoption and a clear readiness for the investment community to welcome the new digital asset into the mainstream. The news of tech giants now turning towards a world of crypto transactions has given Bitcoin a major boost, with the latest moves over at Facebook, only serving to give crypto assets additional credibility. The market is going through a period of technical adjustment after the fierce run up, though we anticipate renewed demand from institutional players into the dip.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The recovery has recently accelerated to a fresh 2019 high, surging through medium-term resistance at 300 and back into critical previous support from back in 2018 around 355. The upside break suggests the market is now looking to establish a meaningful base, in favour of bullish structural shift. Still, shorter-term, the run was looking stretched and before we see that next major upside extension, expect rallies well capped, to allow extended readings to continue unwinding before the market gets going again. Setbacks should now be well supported ahead of 200.

• R2 400 – Psychological – Strong
• R1 363 – 26 June/2019 high – Medium
• S1 272 – 2 July low – Medium
• S2 260 – 19 June low  – Strong

ETHUSD – fundamental overview

There has been a lot more buzz around adoption following the Q2 2019 Bitcoin surge, with many mainstream names coming out in support of blockchain integration. Demand for web 3.0 applications is on the rise, and Ethereum is the blockchain with the biggest front end application potential. At the same time, profit taking in the aftermath of the rapid Q2 appreciation has triggered a healthy period of correction, while worry associated with fallout in the global economy, could be a theme that keeps the more risk correlated crypto asset weighed down, or at least underperforming against Bitcoin in the second half of the year.