#EconomicComment
Germany recorded a second-record foreign trade surplus of 24.9bn in May, second only to January this year. The figures are noticeably better than the previous 22.2bn and the expected 19.9bn. This is moderately positive news for the euro as it reflects stronger net demand for the euro.
However, worryingly, the surplus widened as the 6.6% fall in imports exceeded the 3.6% decline in exports. The dynamics of imports in Germany are closely linked to manufacturing activity, and both are at their peak. In turn, this could have a negative impact on the economy in the coming months, outweighing the initial positivity for the single currency by a margin.
The Sentix Investor Confidence index plummeted to -7.3 after just a month in positive territory (it was 0.3 in June). The index initially fell into deep negative territory in March 2022 but has been in positive territory since last October. The latest downward reversal shows how fragile economic growth is in the eurozone.
Germany recorded a second-record foreign trade surplus of 24.9bn in May, second only to January this year. The figures are noticeably better than the previous 22.2bn and the expected 19.9bn. This is moderately positive news for the euro as it reflects stronger net demand for the euro.
However, worryingly, the surplus widened as the 6.6% fall in imports exceeded the 3.6% decline in exports. The dynamics of imports in Germany are closely linked to manufacturing activity, and both are at their peak. In turn, this could have a negative impact on the economy in the coming months, outweighing the initial positivity for the single currency by a margin.
The Sentix Investor Confidence index plummeted to -7.3 after just a month in positive territory (it was 0.3 in June). The index initially fell into deep negative territory in March 2022 but has been in positive territory since last October. The latest downward reversal shows how fragile economic growth is in the eurozone.
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#WaveAnalysis
#Gold reversed from resistance level 2400;
Likely to fall to support level 2325.
Gold today reversed down with the Bearish Engulfing from the key resistance level 2400 (which reversed the price at the start of June).
The resistance level 2400 was strengthened by the upper daily Bollinger Band and by the 61.8% Fibonacci correction of the previous downward correction (4) from the middle of May.
Given the strength of the resistance level 2400 and the overbought daily Stochastic, Gold can be expected to fall to the support level 2325.
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#Gold reversed from resistance level 2400;
Likely to fall to support level 2325.
Gold today reversed down with the Bearish Engulfing from the key resistance level 2400 (which reversed the price at the start of June).
The resistance level 2400 was strengthened by the upper daily Bollinger Band and by the 61.8% Fibonacci correction of the previous downward correction (4) from the middle of May.
Given the strength of the resistance level 2400 and the overbought daily Stochastic, Gold can be expected to fall to the support level 2325.
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#WaveAnalysis
#Nasdaq100 rising inside impulse wave 3;
Likely to test resistance level 20775.
Nasdaq 100 index continues to rise inside the accelerated impulse wave 3, which previously broke the round resistance level 20000 (which stopped the previous waves (i) and i).
The active impulse wave 3 belongs to the higher order upward impulse wave (3) from the end of April.
Given the clear daily uptrend, Nasdaq 100 index can be expected to rise further to the next resistance level 20775 (target price for the completion of the active impulse wave 3 coinciding with the daily up channel from May).
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#Nasdaq100 rising inside impulse wave 3;
Likely to test resistance level 20775.
Nasdaq 100 index continues to rise inside the accelerated impulse wave 3, which previously broke the round resistance level 20000 (which stopped the previous waves (i) and i).
The active impulse wave 3 belongs to the higher order upward impulse wave (3) from the end of April.
Given the clear daily uptrend, Nasdaq 100 index can be expected to rise further to the next resistance level 20775 (target price for the completion of the active impulse wave 3 coinciding with the daily up channel from May).
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#Crypto
Bargain hunters are showing themselves in full force in crypto. Its total market cap rose 3.6% in 24h to $2.11 trillion, climbing back to the top of the range of the past five days.
#Bitcoin rebounded to $57.3K after a couple of dips to $54K, sticking to its descending channel that has been in force since March, but the price is very dangerously stuck at the bottom of this corridor. This situation makes us fear an acceleration of the sell-off with a potential target in the $50-51K area, where the crypto market was stagnant in February.
#Ethereum trades at $3050 and remains below the 200-day moving average but has not given up trying to climb higher. Here, ETH has a strong support line, which also attracted buyers in April and May. More on the bulls' side is that the RSI on daily timeframes rises from oversold territory. These are promising technical signals, but the sustained sell-off from the US and German governments and the overhang of selling from Mt Gox lenders is undermining the confidence.
Bargain hunters are showing themselves in full force in crypto. Its total market cap rose 3.6% in 24h to $2.11 trillion, climbing back to the top of the range of the past five days.
#Bitcoin rebounded to $57.3K after a couple of dips to $54K, sticking to its descending channel that has been in force since March, but the price is very dangerously stuck at the bottom of this corridor. This situation makes us fear an acceleration of the sell-off with a potential target in the $50-51K area, where the crypto market was stagnant in February.
#Ethereum trades at $3050 and remains below the 200-day moving average but has not given up trying to climb higher. Here, ETH has a strong support line, which also attracted buyers in April and May. More on the bulls' side is that the RSI on daily timeframes rises from oversold territory. These are promising technical signals, but the sustained sell-off from the US and German governments and the overhang of selling from Mt Gox lenders is undermining the confidence.
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#Review
The pound is preparing for a bullish breakout
#GBPUSD is trading near 1.28, which has acted as an area of resistance in the pair since last December. At the same time, the range of fluctuations of the pound is narrowing, as since October, the downside impulses have become less and less deep, with the price increasingly approaching the top of the ascending triangle. Classically, such a pattern ends with a breakout of resistance.
The current resistance's importance is reinforced by the fact that near 1.2850 is the 200-week moving average, an important filter of the long-term trend. A failure under this line in 2022 kicked off a more than 20% collapse in the pound over the next six months.
Almost exactly one year ago, we saw a false breakdown of this line followed by a month and a half of increased pressure. This only reinforces the importance of a resistance breakdown if a new bear attack does not follow it.
The pound is preparing for a bullish breakout
#GBPUSD is trading near 1.28, which has acted as an area of resistance in the pair since last December. At the same time, the range of fluctuations of the pound is narrowing, as since October, the downside impulses have become less and less deep, with the price increasingly approaching the top of the ascending triangle. Classically, such a pattern ends with a breakout of resistance.
The current resistance's importance is reinforced by the fact that near 1.2850 is the 200-week moving average, an important filter of the long-term trend. A failure under this line in 2022 kicked off a more than 20% collapse in the pound over the next six months.
Almost exactly one year ago, we saw a false breakdown of this line followed by a month and a half of increased pressure. This only reinforces the importance of a resistance breakdown if a new bear attack does not follow it.
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GBPUSD recently gained support on the decline towards the 50-week average. More importantly, the bears attempted to drag the pound back into the long-term channel in which the pair has been trading since 2008.
In the impending battle between the bulls and bears, the former has more visual advantages so far.
GBPUSD's ability to rise above 1.29 will be an important signal of a change in market sentiment, confirming the breakdown of horizontal resistance and overcoming the 200-week moving average.
The above bullish scenario opens a fast path to the 1.31 area (last year's peak). However, the upside potential does not end here, and the pair may reach 1.42—the peak of 2021.
An alternative scenario is a new GBPUSD reversal to the downside, reversing all bullish scenarios mentioned above. This has happened many times before, and getting too excited about buying without proper confirmation signals would not be wise.
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In the impending battle between the bulls and bears, the former has more visual advantages so far.
GBPUSD's ability to rise above 1.29 will be an important signal of a change in market sentiment, confirming the breakdown of horizontal resistance and overcoming the 200-week moving average.
The above bullish scenario opens a fast path to the 1.31 area (last year's peak). However, the upside potential does not end here, and the pair may reach 1.42—the peak of 2021.
An alternative scenario is a new GBPUSD reversal to the downside, reversing all bullish scenarios mentioned above. This has happened many times before, and getting too excited about buying without proper confirmation signals would not be wise.
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#WaveAnalysis
#GBPUSD reversed from the long-term resistance level 1.2850;
Likely to fall to support level 1.2725.
GBPUSD currency pair is under bearish pressure after the earlier downward reversal from the long-term resistance level 1.2850, which has been reversing the price from the start of March.
The downward reversal from the resistance level 1.2850 created the daily Japanese candlesticks reversal pattern Shooting Star Doji – which stopped the previous ABC correction 2.
Given the strength of the resistance level 1.2850 and the still overbought daily Stochastic, GBPUSD currency pair can be expected to fall further to the next support level 1.2725.
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#GBPUSD reversed from the long-term resistance level 1.2850;
Likely to fall to support level 1.2725.
GBPUSD currency pair is under bearish pressure after the earlier downward reversal from the long-term resistance level 1.2850, which has been reversing the price from the start of March.
The downward reversal from the resistance level 1.2850 created the daily Japanese candlesticks reversal pattern Shooting Star Doji – which stopped the previous ABC correction 2.
Given the strength of the resistance level 1.2850 and the still overbought daily Stochastic, GBPUSD currency pair can be expected to fall further to the next support level 1.2725.
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#WaveAnalysis
#USDJPY reversed from the key support level 160.00;
Likely to rise to the resistance level 162.00.
USDJPY currency pair recently reversed up from the key support level 160.00 (former resistance from April, which stopped the previous impulse wave (1)).
The upward reversal from the support level 160.00 started the active minor impulse wave v, which belongs to the impulse wave 3 from the start of June.
Given the predominant daily uptrend and the bullish USD sentiment, USDJPY currency pair can be expected to rise further to the next resistance level 162.00 (which stopped the previous impulse wave iii at the start of July).
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#USDJPY reversed from the key support level 160.00;
Likely to rise to the resistance level 162.00.
USDJPY currency pair recently reversed up from the key support level 160.00 (former resistance from April, which stopped the previous impulse wave (1)).
The upward reversal from the support level 160.00 started the active minor impulse wave v, which belongs to the impulse wave 3 from the start of June.
Given the predominant daily uptrend and the bullish USD sentiment, USDJPY currency pair can be expected to rise further to the next resistance level 162.00 (which stopped the previous impulse wave iii at the start of July).
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According to the sentiment index, the #crypto market remains in fear. Still, market capitalisation rose for the second day in a row as lower prices attracted buyers. Cap rose 1.9% to $2.16 trillion, surpassing previous local highs, which is promising.
#Bitcoin gained 3.2% in 24h as it attempted to consolidate above the $59.0K level and the 200-day MA. These levels are above the local highs, and we have seen the sell-off intensify over the past four days. The next milestones on the way up are seen at $60K and then $63K. However, even after rising to $65.5K this month, bitcoin will remain within the descending channel.
#Solana received impressive buyer support at the beginning of the week when it touched the 200-day MA. This was an important signal that the balance of power was still with the bulls. However, it is too early for them to celebrate, as the crossing of the important curve is still small, and the 50-day MA is pointing down and above the price—a bearish signal.
#Bitcoin gained 3.2% in 24h as it attempted to consolidate above the $59.0K level and the 200-day MA. These levels are above the local highs, and we have seen the sell-off intensify over the past four days. The next milestones on the way up are seen at $60K and then $63K. However, even after rising to $65.5K this month, bitcoin will remain within the descending channel.
#Solana received impressive buyer support at the beginning of the week when it touched the 200-day MA. This was an important signal that the balance of power was still with the bulls. However, it is too early for them to celebrate, as the crossing of the important curve is still small, and the 50-day MA is pointing down and above the price—a bearish signal.
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#Review
RBNZ dovishness hits the Kiwi
The Reserve Bank of New Zealand kept its benchmark interest rate at 5.5% for the eighth consecutive meeting, which was in line with analyst expectations. However, the central bank's comments were softer than expected, dragging down NZDUSD by around 1% to 0.6070, a low for the week.
The RBNZ expects inflation to return to the 1-3% target range in the second half of the year and hinted at the possibility of reducing the degree of monetary tightening. At its last meeting in May, the regulator was leaning towards the need for another hike. However, it has now moved into line with the major global central banks, where markets have seen or expect 1-2 rate cuts before the end of the year.
By modern standards, this is a sharp policy reversal that has clipped the Kiwi's vestigial wings.
RBNZ dovishness hits the Kiwi
The Reserve Bank of New Zealand kept its benchmark interest rate at 5.5% for the eighth consecutive meeting, which was in line with analyst expectations. However, the central bank's comments were softer than expected, dragging down NZDUSD by around 1% to 0.6070, a low for the week.
The RBNZ expects inflation to return to the 1-3% target range in the second half of the year and hinted at the possibility of reducing the degree of monetary tightening. At its last meeting in May, the regulator was leaning towards the need for another hike. However, it has now moved into line with the major global central banks, where markets have seen or expect 1-2 rate cuts before the end of the year.
By modern standards, this is a sharp policy reversal that has clipped the Kiwi's vestigial wings.
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The #NZDUSD reversed to the downside last Friday from a local high of 0.6150, having broken the upper boundary of the long-term descending channel in place since January 2023. This fits into a broader trend of lower highs since 2014. The recent complete reversal in RBNZ policy is a major fundamental factor keeping the global Kiwi trend in place.
Locally, NZDUSD is testing support in the form of the 200-day moving average after breaking above the 50-day moving average (now at 0.6100) intraday. With fundamentals driving the pair, we expect further declines towards 0.5900 - a key support level over the past 12 months—over the summer months.
The pair's dips have become increasingly shallow over the past two years, which has increased interest in the New Zealand currency's momentum, especially near the local extremes of 0.6150 and 0.5900.
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Locally, NZDUSD is testing support in the form of the 200-day moving average after breaking above the 50-day moving average (now at 0.6100) intraday. With fundamentals driving the pair, we expect further declines towards 0.5900 - a key support level over the past 12 months—over the summer months.
The pair's dips have become increasingly shallow over the past two years, which has increased interest in the New Zealand currency's momentum, especially near the local extremes of 0.6150 and 0.5900.
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#EconomicComment
China's CPI slowed from 0.3% y/y to 0.2% instead of the expected acceleration to 0.4%, bringing investors' attention back to weak demand. Meanwhile, PPI deflation eased from -1.4% y/y to -0.8% y/y, staying in negative territory for the past 20 months.
China is once again spreading deflation, as it did before 2018. However, the global effect is radically reduced by a slew of import duties that are raising domestic prices in developed countries to support alternative producers. Growing de-globalisation is the new pro-inflationary factor after waves of supply problems and energy price hikes in 2022.
When applied to the FX, weak inflation is negative for the currency, suggesting monetary policy easing or acting as a manifestation of a weak economy. Prices in China also have an impact on a global level, so a fresh batch of rather soft figures suggests a further slowdown in price growth in the US and Europe, which is positive for global demand for risk assets.
China's CPI slowed from 0.3% y/y to 0.2% instead of the expected acceleration to 0.4%, bringing investors' attention back to weak demand. Meanwhile, PPI deflation eased from -1.4% y/y to -0.8% y/y, staying in negative territory for the past 20 months.
China is once again spreading deflation, as it did before 2018. However, the global effect is radically reduced by a slew of import duties that are raising domestic prices in developed countries to support alternative producers. Growing de-globalisation is the new pro-inflationary factor after waves of supply problems and energy price hikes in 2022.
When applied to the FX, weak inflation is negative for the currency, suggesting monetary policy easing or acting as a manifestation of a weak economy. Prices in China also have an impact on a global level, so a fresh batch of rather soft figures suggests a further slowdown in price growth in the US and Europe, which is positive for global demand for risk assets.
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#WaveAnalysis #SPX
S&P 500 broke key resistance level 5500;
Likely to rise to resistance level 5700.
S&P 500 Index is under the bullish pressure after the price broke above the key resistance level 5500, which stopped the previous waves i and b at the end of June.
The breakout of the resistance level 5500 continues the active multi-impulse sequence made of the different-dimension nested impulse waves – iii, 3 and (3).
Given the clear daily uptrend, S&P 500 Index can be expected to rise further to the next resistance level 5700 (target price for the completion of the active impulse wave 3).
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S&P 500 broke key resistance level 5500;
Likely to rise to resistance level 5700.
S&P 500 Index is under the bullish pressure after the price broke above the key resistance level 5500, which stopped the previous waves i and b at the end of June.
The breakout of the resistance level 5500 continues the active multi-impulse sequence made of the different-dimension nested impulse waves – iii, 3 and (3).
Given the clear daily uptrend, S&P 500 Index can be expected to rise further to the next resistance level 5700 (target price for the completion of the active impulse wave 3).
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#WaveAnalysis
#EURJPY broke the key resistance level 174.30;
Likely to rise to the resistance level 176.00.
EURJPY currency pair recently broke above the key resistance level 174.30, which stopped the previous impulse wave I at the start of July.
The breakout of the resistance level 174.30 accelerated the active impulse wave iii of the higher upward impulse wave 5 from the middle of June.
Given the clear daily uptrend and widespread yen sales, EURJPY currency pair can be expected to rise further to the next resistance level 176.00.
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#EURJPY broke the key resistance level 174.30;
Likely to rise to the resistance level 176.00.
EURJPY currency pair recently broke above the key resistance level 174.30, which stopped the previous impulse wave I at the start of July.
The breakout of the resistance level 174.30 accelerated the active impulse wave iii of the higher upward impulse wave 5 from the middle of June.
Given the clear daily uptrend and widespread yen sales, EURJPY currency pair can be expected to rise further to the next resistance level 176.00.
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💷GBPUSD at 1.2870, a 12-month resistance level. 👉Will it gain more?
Anonymous Poll
48%
BUY 📈
52%
SELL 📉
#Review
Pound on the offensive
Positive news for the Pound, beyond the fact that England will play in the Euro-24 final. The monthly estimate showed that the economy grew by 0.4% in May (twice as much as expected) and that growth in the last three months accelerated to 1% year-on-year. That's the fastest pace since early 2023, although it's about half of what it was before the pandemic hit.
The services sector continued to drive growth, adding 1.1% over three months. Meanwhile, the construction sector added 1.9% in May (vs 0.5% expected), shifting from -2.1% y/y to +0.8% over the month. Construction and services are non-tradable sectors, and the current situation points to very healthy domestic demand.
Pound on the offensive
Positive news for the Pound, beyond the fact that England will play in the Euro-24 final. The monthly estimate showed that the economy grew by 0.4% in May (twice as much as expected) and that growth in the last three months accelerated to 1% year-on-year. That's the fastest pace since early 2023, although it's about half of what it was before the pandemic hit.
The services sector continued to drive growth, adding 1.1% over three months. Meanwhile, the construction sector added 1.9% in May (vs 0.5% expected), shifting from -2.1% y/y to +0.8% over the month. Construction and services are non-tradable sectors, and the current situation points to very healthy domestic demand.
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It's a different story for industry and trade. Industrial production rose by 0.2% in May, a slight rebound after a 0.9% drop in the previous month. The year-over-year gain is 0.4%, extending the index's stagnation to almost two years after two years of decline.
There is also disappointment in the performance of foreign trade, with the value of exports falling to its lowest level since January 2022 at £29.6 billion, the level the UK saw five to six years ago. Imports fell over the month but remain high by historical standards at 47.5B, which is 10% above the average five to six years ago.
So, the current monetary regime moderately restricts services and construction but suppresses industrial production and exports. Inflation is the Bank of England's priority, so the continued expansion of the services and construction sectors, which together account for around 90% of GDP, may force the central bank to tighten monetary policy in the coming quarters.
There is also disappointment in the performance of foreign trade, with the value of exports falling to its lowest level since January 2022 at £29.6 billion, the level the UK saw five to six years ago. Imports fell over the month but remain high by historical standards at 47.5B, which is 10% above the average five to six years ago.
So, the current monetary regime moderately restricts services and construction but suppresses industrial production and exports. Inflation is the Bank of England's priority, so the continued expansion of the services and construction sectors, which together account for around 90% of GDP, may force the central bank to tighten monetary policy in the coming quarters.
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This news is a driver for the #GBPUSD as it tests 12-month highs and a key long-term trend line, the 200-week moving average. A potential break above this resistance could open the way to the next leg of the 1.35-1.40 range.
Just as much attention is being paid to the #EURGBP, which is making its second plunge to 2-year lows in a month and looks vulnerable to further Euro retreats ahead of the Pound. The pair is now trading near 0.8420 with the potential to test 0.8300, the lower boundary of the important 8-year range.
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Just as much attention is being paid to the #EURGBP, which is making its second plunge to 2-year lows in a month and looks vulnerable to further Euro retreats ahead of the Pound. The pair is now trading near 0.8420 with the potential to test 0.8300, the lower boundary of the important 8-year range.
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