Investor Enthusiasm Fades Away

GBPUSD – technical overview

The major has been well supported on dips in 2019, but will need to hold up above 1.2400 on a weekly close basis, to keep the constructive outlook intact. If the market can hold up above 1.2400, it will set up a higher low above the +30 year low from 2016, ahead of the next major upside extension. If however the market puts in a weekly close below 1.2400, this will open the door for a retest of the sub-1.2000 2016 low.

• R2 1.2579 – 12 July high – Strong
• R1 1.2500 – Psychological – Medium
• S1 1.2382 – 17 July/2019 low – Strong
• S2 1.2365 – April 2016 low – Strong

GBPUSD – fundamental overview

Renewed Brexit worry has been a thorn at the side of the Pound over the past several days, as Theresa May's replacement takes a harder stance with the EU. Comments from Brexit minister Barclay that this risk of no-deal Brexit was underpriced, further contributed to the slump. But the Pound was able to recover on Wednesday, after initially extending to a fresh 27 month low, helped along by as expected inflation data and renewed soft Dollar trade policy talk out from President Trump. Looking ahead, Thursday’s calendar features UK retail sales and US data in the form of the Philly Fed and initial jobless claims. We also get Fed speak from Bostic and Williams.

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 109.00 – 10 July high – Medium
• R1 108.61 – 12 July high – Strong
• S1 107.80 – 15 July low – Medium
• S2 107.53 – 3 July low – Strong

USDJPY – fundamental overview

The Yen found its way back to the topside on Wednesday, with flows the major fundamental drivers all working in its favour (USDJPY lower). These drivers came from a wave of profit taking in US equities off record highs and President Trump back on the wires, talking soft US Dollar trade policy, as he issued warnings of more tariffs on China. In Japan, BOJ Kuroda said the central bank would consider extra easing if momentum was lost, while Fitch was out reaffirming Japan's long-term foreign currency debt rating. Looking ahead, the market will digest some Japan trade data, before turning its attention to US data later in the day, in the form of the Philly Fed and initial jobless claims. We also get Fed speak from Bostic and Williams.

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 – 16 July/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 0.7049 – 7 May high – Medium
• S1 0.6954 – 11 July low – Medium
• S2 0.6911 – 10 July low – Strong

AUDUSD – fundamental overview

The Australian Dollar managed to find its footing after a pullback in Tuesday trade, with the commodity currency benefiting from rallying metals prices and soft US Dollar protectionist talk out from President Trump. Looking ahead, the Australian Dollar will digest the early Thursday release of Aussie employment, before attention then turns to US data later in the the day, in the form of the Philly Fed and initial jobless claims. We also get Fed speak from Bostic and Williams.

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 1.3146– 1 July high – Strong
• R1 1.3100 - Figure – Medium
• S1 1.3018 – 12 July/2019 low – Strong
• S2 1.3000 – Psychological – Strong

USDCAD – fundamental overview

OIL has come back under pressure this week, though the Canadian Dollar has held up well in the face of this, with the Loonie benefiting from renewed soft US Dollar protectionist talk out from President Trump, and an above forecast Canada CPI reading. Looking ahead, an empty Canada calendar leaves the focus on US data in the form of the Philly Fed and initial jobless claims. We also get Fed speak from Bostic and Williams.

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 projecting a measured move upside extension towards 0.7000, further strengthening the constructive outlook. The daily chart now shows the next confirmed higher low in place at 0.6568.

• R2 0.6783 – 15 April high – Strong
• R1 0.6747 –  17 July high – Medium
• S1 0.6653 – 12 July low – Medium
• S2 0.6568 – 10 July low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has performed well over the past several days, with the currency getting another jolt on Wednesday, on the back of some above forecast Kiwi inflation data and renewed soft US Dollar protectionist talk out from President Trump. Looking ahead, the focus will be on US data in the form of the Philly Fed and initial jobless claims. We also get Fed speak from Bostic and Williams.

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 monthly close above 3000 would be required to compromise the outlook calling for a top.

• R2 3050 – Psychological – Strong
• R1 3021 – 15 July/Record high – Medium
• S1 2960 – 9 July low – Medium
• S2 2911 – 26 June low – Strong

US SPX 500 – fundamental overview

Although we've seen the market extend to another record high in 2019, on Fed signals of additional rate cuts, with so little room for additional easing, given an already depressed interest rate environment, the prospect for a meaningful extension of this record run, on easy money policy incentives, should no longer be as enticing to investors as it once was. 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

Overall, look for additional upside to be limited for now, as the market continues to correct and consolidate, in the aftermath of a major surge in the second quarter of 2019. Any setbacks should be very well supported ahead of 7,000, with an eventual higher low sought out in favour of a bullish continuation back above the 2019 high at 13,748. Only a weekly close below 7,000 would compromise the constructive outlook.

• R2 13,748– 26 June/2019 high – Strong
• R1 11,031 – 16 July high – Medium
• S1 9,075 – 17 July low – Strong
• S2 8,935 – 19 June low – Strong

BTCUSD – fundamental overview

Bitcoin enjoyed a spectacular run in the second quarter of 2019, racing to fresh yearly highs, surging towards 14k, on the back of increased adoption and more openness from the traditional investor community. The news of tech giants now turning towards the world of crypto has invited a higher profile that should be a net positive in the long run, but that has also exposed the ethos to critique from higher levels at the central bank and government levels. The market is also going through a period of technical adjustment after the fierce run up, though we anticipate renewed demand from institutional players into dips.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of a major correction after a surge in the second quarter of 2019. Look for setbacks to be well supported above of previous resistance turned support at 170 on a weekly close basis, in favour of the next major higher low and bullish resumption back towards and through the 2019 high up at 363. Ultimately, only a weekly close below 170 would compromise the longer term constructive outlook.

• R2 325 – 30 June high – Strong
• R1 290 – 11 July high – Medium
• S1 191 – 16 July low – Strong
• S2 170 – 24 February High  – Strong

ETHUSD – fundamental overview

There was 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 critique of the space from the likes of President Trump and Fed Chair Powell, along with worry associated with fallout in the global economy, are stories that could keep the more risk correlated crypto asset weighed down in the second half of the year.