The cracks beneath the surface

GBPUSD – technical overview

The market has seen an impressive bounce out from the lowest levels since 2016, with the price recovering back above critical resistance at 1.2310, to not only take the immediate pressure off the downside, but also transition the market into a technical uptrend on the daily chart, as per the daily Ichimoku cloud. Ultimately, only back below 1.2000 would compromise the more constructive outlook for the major pair.

• R2 1.2580 – 12 July high – Strong
• R1 1.2528 – 17 September high – Medium
• S1 1.2392 – 17 September low – Medium
• S2 1.2325 – 13 September high – Strong

GBPUSD – fundamental overview

Boris Johnson continues to look for ways to get a deal done before the October deadline, and we haven't had any major updates on this front in recent sessions. Overall, the reduced risk associated with no-deal Brexit has been supporting the Pound, despite ongoing uncertainty, with the Pound outperforming across the board over the past week. We did however see some setbacks on Wednesday, after UK inflation reads were softer and the Fed delivered a hawkish cut. Looking ahead, we get UK retail sales, followed up by the more anticipated Bank of England decision. In the US session, initial jobless claims, the Philly Fed and existing home sales stand out.

USDJPY – technical overview

The longer-term downtrend remains firmly intact, with the major pair recently taking out major support in the form of the 2018 and 2019 lows respectively. Rallies should continue to be well capped below 110.00 in favour of  the next major downside extension towards the 2016 low at 99.00.

• R2 109.32 – 1 August high – Strong
• R1 108.48 – 18 September high – Medium
• S1 107.18 – 10 September low – Medium
• S2 106.32 – 5 September low  – Strong

USDJPY – fundamental overview

The Yen has found some renewed demand (USDJPY selling) in the aftermath of the Fed's hawkish cut and the BOJ's hold. The combination of these two outcomes to the respective central bank meetings, translates to more worry associated with central bank ability to continue to support markets at this point in the cycle, which in turn, invites risk off flow that is supportive of the Yen on traditional correlations. Looking ahead, key standouts on the calendar come in the form of US initial jobless claims, existing home sales and the Philly Fed.

EURCHF – technical overview

The market is attempting to recover out from its lowest levels in two years, and at this point, it would take a daily close back above 1.1173 to take the immediate pressure off the downside. The recent breakdown below 1.1000 opens the door for the next major downside extension towards 1.0600. Look for rallies to be well capped ahead of 1.1100.

• R2 1.1064 – 26 July high – Strong
• R1 1.1020 – 18 September high – Medium
• S1 1.0911 – 17 September low – Medium
• S2 1.0811 – 4 September/2019 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 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 under pressure over the past several months, but has also been well supported on dips. 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 above 0.6700 on a weekly close basis.

• R2 0.6910 – 10 July low – Strong
• R1 0.6895 – 12 September high – Medium
• S1 0.6754 – 4 September low – Medium
• S2 0.6677 – 7 August/2019 low – Strong

AUDUSD – fundamental overview

Aussie was already under pressure in the aftermath of the Fed's hawkish cut, and has since extended declines into Thursday, getting no help from the disappointing Australia jobs report. Looking ahead, key standouts on the calendar come in the form of US initial jobless claims, existing home sales and the Philly Fed.

USDCAD – technical overview

The longer-term structure remains constructive, with dips expected to be well supported for renewed 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 compromise this outlook.

• R2 1.3383 – 3 September high – Strong
• R1 1.3311 - 18 September high – Medium
• S1 1.3202 – 13 September low – Medium
• S2 1.3133 – 10 September low – Strong

USDCAD – fundamental overview

Softer than expected Canada inflation reads and more pullback in the price of OIL, were already enough to open weakness in the Canadian Dollar on Wednesday. The Fed then went ahead with a hawkish cut, which seemed to invited further offers in the Canadian Dollar given the yield differential implication. Looking ahead, key standouts on the calendar come in the form of Canada ADP employment, US initial jobless claims, existing home sales and the Philly Fed.

NZDUSD – technical overview

Despite recent weakness, there's a case to be made for a meaningful bottom, with the market rallying out from longer-term cycle low area around 0.6300. As such, look for setbacks to be well supported in the days ahead, in anticipation of a continued recovery. Only a weekly close below 0.6300 would give reason for rethink. Back above 0.6600 will take the immediate pressure off the downside.

• R2 0.6499 – 8 August high – Strong
• R1 0.6451 –  12 September high – Medium
• S1 0.6298 – 19 September low – Medium
• S2 0.6269 – 3 September/2019 low – Medium

NZDUSD – fundamental overview

The New Zealand Dollar hasn't been finding much demand, even after Tuesday's GDT auction produced a better than expected result, New Zealand current account reads came in as expected early Wednesday, and Kiwi GDP was above forecast on Thursday. It seems the commodity currency is more concerned about external risk, with the Fed's hawkish cut and some softer economic data out of Australian, weighing more heavily on Kiwi sentiment. Looking ahead, key standouts on the calendar come in the form of US initial jobless claims, existing home sales and the Philly Fed.

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 3029 – 26 July/Record high – Strong
• R1 3022 – 12 September high – Strong
• S1 2889 – 2 September low – Medium
• S2 2777 – 6 August low – Strong

US SPX 500 – fundamental overview

Although we've seen the market extending to fresh record highs in 2019, on the back of the Fed policy reversal, 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, tension on the global trade front should continue to be a drag on investor sentiment despite any signs that would suggest otherwise. 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 1600, while in the interim, look for any setbacks to be well supported above 1400.

• R2 1600 – Round number – Strong
• R1 1558 – 4 September/2019 high – Strong
• S1 1480 – 13 August low – Medium
• S2 1400 – Psychological – 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 12,310 – 6 August high – Medium
• S1 9,348 – 29 August low – Medium
• S2 9,075 – 17 July 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. Future ECB President Lagarde has recently come out in support of cryptocurrencies as well. At the same time, it also exposes the ethos to fresh critique from higher ups at the central bank and government levels. The market is also going through a period of technical adjustment after the fierce Q2 run up, though we anticipate continued demand from institutional players starved for yield in a world where global equities are increasingly vulnerable.

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 150 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 150 would compromise the outlook.

• R2 240 – 6 August high – Strong
• R1 218 – 18 September high – Medium
• S1 164 – 29 August low – Medium
• S2 150 – Psychological  – 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. Risk off in the global economy is expected to result in Eth underperformance relative to Bitcoin.