Tension heats up between the US and China

GBPUSD – technical overview

The market has rebounded sharply, after collapsing to a +30 year low below 1.1500. This supports the longer-term constructive outlook, with a major bottom sought out ahead of the start to a big run to the topside back through 1.3000. Look for the major pair to hold up well into setbacks, and ultimately above 1.2000 on a monthly close basis for confirmation.

• R2 1.2813 – 10 June high – Strong
• R1 1.2768 – 21 July high – Medium
• S1 1.2650 – 21 July low – Medium
• S2 1.2480 – 14 July low – Medium

GBPUSD – fundamental overview

A little more optimism around the Pound, following the discouraging Telegraph piece from earlier in the week, with the government saying it didn't want a long drawn out negotiation process with the EU, despite significant differences. Looking ahead, key standouts on the calendar come in the form of UK CBI trends, a BOE Haskel speech, and US initial jobless claims.

USDJPY – technical overview

We're seeing signs of a pickup in volatility in the major pair, with the market chopping around quite a bit. Still, there is no clear directional insight, with the price confined to a larger triangle formation. Overall, rallies have been well capped above 110.00 and dips well supported below 104.00.

• R2 108.55 – 9 June high – Medium
• R1 108.17 – 1 July high – Medium
• S1 106.07 – 23 June low – Medium
• S2 105.99 – 6 May low  – Strong

The Yen is still caught up in two way flow, with the major currency not really going anywhere at all. On the one side, the increase in risk appetite has been generating Yen offers, while on the other side, broad based US Dollar outflow is generating Yen demand. Japanese markets are now closed for the long holiday weekend. Looking ahead, US initial jobless claims data is the only notable standout on the calendar.

EURCHF – technical overview

The market remains very well capped into offers and the medium-term picture continues to favour the downside. A weekly close back above 1.1000 would be required to take the immediate pressure off the downside.

• R2 1.0916 – 5 June/2020 high – Strong
• R1 1.0798 – 16 July high – Medium
• S1 1.0600 – Figure – Medium
• S2 1.0577 – 25 May low – 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 renewed risk liquidation in 2020, 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

Technical studies have turned up in 2020, after the market traded down to its lowest levels since 2003 earlier this year. There is evidence of a longer-term bottom following the latest push back through 0.7000, though at this stage, there is risk for a pullback to allow for shorter term studies to unwind. Setbacks should now be well supported ahead of 0.6500.

• R2 0.7206 – 17 April high, 2019  – Strong
• R1 0.7183 – 22 July/2020 high – Medium
• S1 0.7013 – 21 July low – Medium
• S2 0.6921 – 14 July low – Strong

AUDUSD – fundamental overview

The Australian Dollar has extended its run to fresh 2020 highs, with the currency getting the boost from the broad based resurgence in risk appetite. At the same time, coronavirus cases in Victoria have been surging, while the overall global recovery outlook remains in question in the aftermath of the pandemic. Additionally, we're now seeing more tension on the trade front, with US-China relations getting even more heated. This could suggest that additional upside could be limited from here. Earlier, NAB business confidence came in weaker than previous, while S&P said Australia's AAA rating can absorb the growing deficit. Looking ahead, US initial jobless claims data is the only notable standout on the calendar.

USDCAD – technical overview

Has been in the process of correcting since topping out earlier this year above 1.4600. At this stage, with the correction well extended, the market is likely to find solid support in the 1.3200-1.3400 area, ahead of a resumption of gains. Ultimately, only a weekly close below 1.3300 would suggest otherwise.

• R2 1.3647 – 14 July high – Strong
• R1 1.3601 – 20 July high – Medium
• S1 1.3350 – Mid-Figure – Medium
• S2 1.3315 – 10 June low – Strong

USDCAD – fundamental overview

The Canadian Dollar has been in demand this week, mostly on the back of the pickup in global risk appetite and concurrent round of broad based US Dollar selling. But we have also seen additional demand after Wednesday's Canada CPI reads came in hotter than forecast. Looking ahead, US initial jobless claims data is the only notable standout on the calendar.

NZDUSD – technical overview

There's a case to be made for a meaningful bottom, after the market collapsed below massive psychological support at 0.5500 earlier this year. The latest break back above the 0.6600 area further strengthens this outlook, with the market back in uptrend mode as per the weekly Ichimoku cloud. Any setbacks are expected to be well supported ahead of 0.6200.

• R2 0.6740 – 2 January/2020 high – Strong
• R1 0.6700 –  Figure – Medium
• S1 0.6559 – 21 July low – Medium
• S2 0.6503 – 14 July low – Strong

NZDUSD – fundamental overview

No major updates out of New Zealand into Thursday, though the currency has been bid up on a resurgence in risk appetite. Earlier this week, the RBNZ announced it will reduce the frequency of TAF operations to weekly from July 28th, with auctions to be conducted every Tuesday. Looking ahead, US initial jobless claims data is the only notable standout on the calendar.

US SPX 500 – technical overview

The market has been in recovery mode since bottoming out in March. Still, the recovery is classified as corrective, with a lower top sought out below the record high from February, ahead of the next major downside extension, eventually back below the March low.

• R2 3398 –  20 February/Record high – Strong
• R1 3300 – Round number – Medium
• S1 3114 – 9 July low – Medium
• S2 2936 – 15 May low – Strong

US SPX 500 – fundamental overview

Although we've seen attempts at recovery in response to unlimited QE from the Fed and massive US stimulus, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for additional runs to the topside, on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, tension on the global trade front, geopolitical risk, and ongoing worry associated with recovery post coronavirus, should weigh more heavily on investor sentiment in 2020.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for an acceleration towards a retest of the 2011 record high at 1920. Setbacks should now be well supported above 1700.

• R2 1920 – 2011 record high – Strong
• R1 1877 – 23 July/2020 high – Medium
• S1 1790– 14 July low – Medium
• S2 1747 – 26 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, coronavirus fallout, 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

Setbacks should be very well supported ahead of the 2018 low, with a higher low sought out in favour of a bullish continuation back above the 2019 high and towards the record high from late 2017 further up. Ultimately, only a weekly close below 5,000 would compromise the constructive outlook. Back above 10,500 further encourages the bullish prospect. Shorter studies are however stretched and warn of a pullback ahead.

• R2 10,477– 9 February/2020 high – Strong
• R1 10,360 – 2 June high – Medium
• S1 8,000 – Psychological – Medium
• S2 7,704 – 29 April low – Strong

BTCUSD – fundamental overview

Bitcoin has enjoyed a nice recovery since bottoming in March, with the runup in stocks and hype around the halving event contributing to a lot of the momentum. Interest from well known traditional market participants is helping to generate plenty of buzz as well. At the same time, given the extended nature of technical readings into important resistance, we see this as timing well for a sell the fact with the 2020 halving event now officially behind us and global equities once again looking vulnerable.

BTCUSD - Technical charts in detail

ETHUSD – technical overview

The market is in the process of attempting to establish a meaningful base after stalling out in the latter half of 2019. Look for setbacks to be well supported above the 2018 low, in favour of another big bounce, eventually back towards and through the 2019 high up at 363.

• R2 289 – 15 February/2020 high – Strong
• R1 253 – 2 June high – Medium
• S1 176 – 11 May low – Medium
• S2 148 – 16 April low  – Strong

ETHUSD – fundamental overview

While there is plenty of Ether demand built up, with so much optimism around prospects for the blockchain, given all of the development going on in the decentralised finance space, macroeconomics will likely play a negative role in 2020, with Ether expected to underperform in a mostly risk off backdrop, in light of Ethereum's higher sensitivity and correlation with risk themes.