Investors hoping for a better week

Next 24 hours: Focus on Fed decision and US tech earnings

Today’s report: Investors hoping for a better week

Global markets will try their best to get into a better mood after contending with a tough wave of risk off flow in the previous week. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

Wake-up call

Chart talk: Technical & fundamental highlights

Choose pair:

EURUSD – technical overview

The Euro has been in a multi-month consolidation since bottoming out in 2022. Setbacks have since been exceptionally well supported on dips below 1.0500, with a higher platform sought out ahead of the next major upside extension. Look for a push through the 2023 high at 1.1276 to strengthen the constructive outlook and extend the recovery run towards 1.2000. Only back below 1.0400 negates.

  • R2 1.0982 – 8 March high – Strong
  • R1 1.0949 - 17 July high – Medium
  • S1 1.0798 - 5 July low– Medium
  • S2 1.0666 – 26 June low – Strong

EURUSD – fundamental overview

The Euro was up modestly at the end of last week on the back of a hawkish round of ECB comments. ECB Schnabel warned of sticky inflation from wages, freight costs, and protectionism. The central banker also added that one cut didn't mean more cuts were coming. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

EURUSD - Technical charts in detail

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The door is now open for the next major upside extension towards the 2023 high at 1.3143. Any setbacks should be well supported ahead of 1.2500.

  • R2 1.3100 – Figure – Medium
  • R1 1.3045 – 17 July/2024 high – Strong
  • S1 1.2818 – 4 June high – Medium
  • S2 1.2778 – 9 July low – Strong

GBPUSD – fundamental overview

The UK government is set to approve above-inflation pay hikes for the public sector. The Chancellor has also acknowledged the funding gap, and the expectation is that there will be higher taxes. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

USDJPY – technical overview

The market remains confined to a strong uptrend, most recently extending to a multi-year high through 160.00. Key support comes in at 151.86, with only a weekly close below to delay the constructive outlook. Next major resistance comes in at 165.00.

  • R2 157.87 – 19 July high – Strong
  • R1 156.00 – 24 July high – Medium
  • S1 153.11 – 24 July low – Medium
  • S2 151.86 – 3 May low – Strong

USDJPY – fundamental overview

There are still many Yen shorts caught in trapped carry trades, though we have seen some signs of renewed Yen weakness after a very healthy recovery rally. Attention turns to this week's BOJ decision which is pricing about a 66% chance for a rate hike. Still, this pricing could be a little aggressive when considering the BOJ's track record when it comes to hawkish moves. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

  • R1 0.6799– 11 July high – Strong
  • R2 0.6703 – 22 July high – Medium
  • S1 0.6507 – 25 July low– Medium
  • S2 0.6465 – 1 May low – Strong

AUDUSD – fundamental overview

The metals sector remains under pressure and Chinese equities have struggled. However, the Australian Dollar was able to snap a 9 day losing streak against the Buck, getting help from a recovery in US equities. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

  • R2 1.3900 – Figure – Medium
  • R1 1.3850 – 26 July/2024 high – Medium
  • S1 1.3756 – 2 July high – Medium
  • S2 1.3700 – 19 July low – Medium

USDCAD – fundamental overview

The Canadian Dollar slid to a fresh yearly low against the Buck on Friday, still struggling with lower US equities, a BoC rate cut and dovish communication, and softer commodities prices. Discouraging Canada wholesale sales only further contributed to the weakness. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

  • R2 0.5982 – 23 July high – Strong
  • R1 0.5958 – 24 July high – Medium
  • S1 0.5874 – 1 May low – Medium
  • S2 0.5852 – 19 April/2024 low – Strong

NZDUSD – fundamental overview

Last week's distressing New Zealand trade data along with an ongoing slide in commodities prices and downturn in US equities proved to be a big weight on the New Zealand Dollar. Key standouts on Monday’s calendar come from UK consumer credit, mortgage approvals, and CBI trades, along with Dallas Fed manufacturing.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from overbought levels. There is now room for a pullback towards previous resistance turned support in the form of the previous record high from April around 5,290 before the market considers a run to another record high.

  • R2 5679 – 16 July/Record high – Strong
  • R1 5593 – 23 July high – Medium
  • S1 5398 – 25 July low – Medium
  • S2 5352 – 23 May high – Strong

US SPX 500 – fundamental overview

Though we have seen a healthy adjustment of investor expectations towards the amount of rate cuts in 2024, the market still hopes policy will end up erring more towards the investor friendly, accommodative side of things. This bet has kept stocks well bid into dips and consistently pushing record highs. Still, if there is a sense the Fed will need to be more sensitive towards erring on the side of higher rates, it could invite a much bigger disruption to stocks.

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 this next major upside extension into the 2500-3000 area. Setbacks should now be well supported above 2200 on a monthly close basis.

  • R2 2500 – Psychological– Strong
  • R1 2484 – 17 July/Record high – Medium
  • S1 2350 – 4 July low – Strong
  • S2 2287– 7 June low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal has pushed record highs in 2024 with solid demand from medium and longer-term accounts. These players are more concerned about inflation, geopolitical risk and a less upbeat global growth outlook. 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 end.

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

Suggested reading

Daily Reports Global FX Insights   joelkruger  

Any opinions, news, research, analyses, prices or other information ("information") contained on this Blog, constitutes marketing communication and it has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further, the information contained within this Blog does not contain (and should not be construed as containing) investment advice or an investment recommendation, or an offer of, or solicitation for, a transaction in any financial instrument. LMAX Group has not verified the accuracy or basis-in-fact of any claim or statement made by any third parties as comments for every Blog entry.

LMAX Group will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. No representation or warranty is given as to the accuracy or completeness of the above information. While the produced information was obtained from sources deemed to be reliable, LMAX Group does not provide any guarantees about the reliability of such sources. Consequently any person acting on it does so entirely at his or her own risk. It is not a place to slander, use unacceptable language or to promote LMAX Group or any other FX and CFD provider and any such postings, excessive or unjust comments and attacks will not be allowed and will be removed from the site immediately.