How will it all settle into the weekly close?

Today’s report: How will it all settle into the weekly close?

So how will it all settle into the weekly close? We’ve heard this story many times before and time and again, the end of the story is the same. What’s the story? Well…the story is a brief moment of risk off flow, with stocks under pressure off record highs and the Buck rallying, before it all goes away.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The market has been looking for a higher low since topping out in 2021 up at 1.2350. Ideally, this next higher low is sought out ahead of 1.1600 in favour of the next major upside extension back through 1.2350 and towards a retest of the 2018 high at 1.2555 further up.

  • R2 1.1976 – 25 June high– Strong
  • R1 1.1910 - 30 June high – Medium
  • S1 1.1782 - 7 July low – Medium
  • S2 1.1704 – 31 March/2021 low – Strong

EURUSD – fundamental overview

Euro outperformance on Thursday came from the news of the ECB adopting a symmetric inflation goal. Key standouts on Friday’s calendar come in the form of UK trade, industrial production, construction output and GDP, an ECB Lagarde speech, and Canada employment. There are no first tier releases due out of the US.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Technical studies are in the process of consolidating from stretched levels after the push to fresh multi-month highs. This leaves room for additional consolidation, before the market considers a meaningful bullish continuation towards a retest of the 2018 high. But look for setbacks to now be very well supported into the 1.3500 area.

  • R2 1.4002 – 23 June high – Strong
  • R1 1.3899 – 6 July high – Medium
  • S1 1.3732 – 2 July low – Medium
  • S2 1.3669 – 12 April low – Strong

GBPUSD – fundamental overview

The rise in coronavirus cases is making the market more nervous about the outlook for the Pound given UK plans for a full reopening in the days ahead. Key standouts on Friday’s calendar come in the form of UK trade, industrial production, construction output and GDP, an ECB Lagarde speech, and Canada employment. There are no first tier releases due out of the US.

USDJPY – technical overview

The major pair has run into massive resistance in the form of the monthly Ichimoku cloud. This translates to a longer-term trend that is still bearish despite the latest run higher. Look for additional upside to be limited, with scope for a topside failure and bearish resumption over the coming sessions. It would take a clear break back above 113.00 to negate the outlook.

  • R2 111.00 – Figure– Medium
  • R1 110.68 – 8 July high – Strong
  • S1 109.53 – 8 July low – Medium
  • S2 109.19 – 7 June low – Strong

USDJPY – fundamental overview

We've seen a resurgence in Yen demand of broad flight to safety. The news of the emergency measures in Japan and an expectation the BOJ will be lowering growth forecasts have also factored into price action. Key standouts on Friday’s calendar come in the form of UK trade, industrial production, construction output and GDP, an ECB Lagarde speech, and Canada employment. There are no first tier releases due out of the US.

AUDUSD – technical overview

Technical studies have turned up in recent months, after the market traded down to its lowest levels since 2003 in 2020. 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 deeper pullback to allow for shorter term studies to unwind. Setbacks should now be well supported ahead of 0.7000.

  • R2 0.7617 – 25 June high – Strong
  • R1 0.7599 – 6 July high – Medium
  • S1 0.7417 – 8 July/2021 low – Strong
  • S2 0.7400 – Figure – Medium

AUDUSD – fundamental overview

The Australian Dollar has sunk to fresh yearly lows on the massive risk liquidation in global markets. Weakness in the RMB and metals have also factored into the price action. RBA Lowe was out reiterating the importance for full employment. Key standouts on Friday’s calendar come in the form of UK trade, industrial production, construction output and GDP, an ECB Lagarde speech, and Canada employment. There are no first tier releases due out of the US.

USDCAD – technical overview

Has been in major decline since topping out in 2021 above 1.4600. At this stage, with the decline now well extended, the market is likely to find solid support into the 1.2000 area ahead of a resumption of gains. Ultimately, only a weekly close below 1.2000 would suggest otherwise. A weekly close back above 1.2500 will strengthen the outlook.

  • R2 1.2655 – 21 April high – Strong
  • R1 1.2591 – 8 July high – Medium
  • S1 1.2423– 7 July low – Medium
  • S2 1.2252 – 23 June high – Strong

USDCAD – fundamental overview

The Canadian Dollar has come under pressure on the broad based risk off flow and decline in OIL prices. But a late Thursday OIL recovery did help to inspire some Loonie demand. Key standouts on Friday’s calendar come in the form of UK trade, industrial production, construction output and GDP, an ECB Lagarde speech, and Canada employment. There are no first tier releases due out of the US.

NZDUSD – technical overview

The market has been very well supported in recent months and there is evidence of a longer-term base. Look for setbacks to hold up above 0.6800, with sights set on a run back towards the 0.7500 area.

  • R2 0.7106 – 6 July high – Strong
  • R1 0.7050 – Mid-Figure – Medium
  • S1 0.6935 – 8 July low– Medium
  • S2 0.6923 – 18 June/2021 low – Strong

NZDUSD – fundamental overview

The New Zealand Dollar has been trying to hold up into dips, but hasn't been able to escape weakness from the broad based risk off flow in markets into the end of the week. We have however seen Kiwi hold up better than its Aussie cousin on the back of rising odds for a November RBNZ rate hike. Key standouts on Friday’s calendar come in the form of UK trade, industrial production, construction output and GDP, an ECB Lagarde speech, and Canada employment. There are no first tier releases due out of the US.

US SPX 500 – technical overview

Longer-term technical studies are looking quite exhausted and the market is showing signs of wanting to roll over after racing to another record high. Look for rallies to be well capped ahead of 4400, with a break back below 4139 to strengthen the outlook.

  • R2 4400 – Psychological – Strong
  • R1 4364– 7 July/Record high – Medium
  • S1 4289 – 8 July low – Medium
  • S2 4218 – 22 June low – Medium

US SPX 500 – fundamental overview

We're trading just off fresh record highs, and yet, with so little room for additional central bank accommodation, given an already depressed interest rate environment, the prospect for sustainable runs to the topside on easy money policy incentives and government stimulus, should no longer be as enticing to investors. Meanwhile, ongoing worry associated with coronavirus fallout and risk of rising inflation should weigh more heavily on investor sentiment into the second half of 2021.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs and an acceleration beyond the next major psychological barrier at 2000. Setbacks should now be well supported above 1600.

  • R2 1917 – 1 June high – Strong
  • R1 1826 – 17 June high – Medium
  • S1 1750 – 29 June low – Medium
  • S2 1724 – 13 April 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, and coronavirus fallout. 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.

Peformance chart: 30 Day Performance vs. US dollar (%)

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