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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#EconomicComment
Falling US inflation sparks more risk appetite
The US consumer price index fell 0.1% instead of the expected 0.1% increase, slowing annual inflation to 3.0% from 3.3% last month and below the expected 3.1%. The price index excluding food and energy slowed to 3.3%, also weaker than expected.
The faster inflation slowdown prompted a reassessment of policy rate forecasts. According to the FedWatch tool, traders now see a 45% chance of three or more rate cuts by the end of the year, up from 27% a day ago and 14.5% a month ago.
This is negative news for the dollar and positive for global demand for risk assets, including equities and gold. US indices continue to hit all-time highs on a daily basis, and the sentiment index has returned to "greed" territory. The price of gold passed $2410 per ounce.
The price was above this level only between the 17th and 22nd and for a few minutes on the 12th and 19th.
Falling US inflation sparks more risk appetite
The US consumer price index fell 0.1% instead of the expected 0.1% increase, slowing annual inflation to 3.0% from 3.3% last month and below the expected 3.1%. The price index excluding food and energy slowed to 3.3%, also weaker than expected.
The faster inflation slowdown prompted a reassessment of policy rate forecasts. According to the FedWatch tool, traders now see a 45% chance of three or more rate cuts by the end of the year, up from 27% a day ago and 14.5% a month ago.
This is negative news for the dollar and positive for global demand for risk assets, including equities and gold. US indices continue to hit all-time highs on a daily basis, and the sentiment index has returned to "greed" territory. The price of gold passed $2410 per ounce.
The price was above this level only between the 17th and 22nd and for a few minutes on the 12th and 19th.
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#WaveAnalysis
#USDCAD reversed from key support level 1.3600;
Likely to rise to resistance level 1.3700.
USDCAD currency pair recently reversed up from the key support level 1.3600, which has been steadily reversing the price from the start of May.
The support level 1.3600 was strengthened by the lower daily Bollinger Band and by the 50% Fibonacci correction level of the previous upward impulse from January.
Given the predominant daily uptrend, oversold daily Stochastic and the rising bullish USD sentiment, USDCAD currency pair can be expected to rise further to the next resistance level 1.3700.
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#USDCAD reversed from key support level 1.3600;
Likely to rise to resistance level 1.3700.
USDCAD currency pair recently reversed up from the key support level 1.3600, which has been steadily reversing the price from the start of May.
The support level 1.3600 was strengthened by the lower daily Bollinger Band and by the 50% Fibonacci correction level of the previous upward impulse from January.
Given the predominant daily uptrend, oversold daily Stochastic and the rising bullish USD sentiment, USDCAD currency pair can be expected to rise further to the next resistance level 1.3700.
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#WaveAnalysis
#GBPAUD reversed from support level 1.8945;
Likely to rise to resistance level 1.3700.
GBPAUD currency pair recently reversed up from the powerful support level 1.8945, which has been repeatedly reversing the price from the start of May.
The price made numerous Japanese candlesticks reversal patterns near the support level 1.8945 – forming the daily Bullish Engulfing pattern just recently.
Given the predominantly bullish sterling sentiment seen across the FX markets today, GBPAUD currency pair can be expected to rise further to the next resistance level 1.9200.
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#GBPAUD reversed from support level 1.8945;
Likely to rise to resistance level 1.3700.
GBPAUD currency pair recently reversed up from the powerful support level 1.8945, which has been repeatedly reversing the price from the start of May.
The price made numerous Japanese candlesticks reversal patterns near the support level 1.8945 – forming the daily Bullish Engulfing pattern just recently.
Given the predominantly bullish sterling sentiment seen across the FX markets today, GBPAUD currency pair can be expected to rise further to the next resistance level 1.9200.
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The #crypto market cap fell by 0.8% in 24 hours to $2.11 trillion. An attempt to strengthen the market's offensive on news about inflation in the US attracted new sellers, which this time can easily be linked to the similar dynamics of the Nasdaq index, with which crypto has the closest correlation.
At the same time, the dynamics of the last 24 hours were not one-sided: Bitcoin lost 1.4%, Ethereum—0.3%, BNB—0.9%, and Solana—3.5%, but such coins as XRP, Toncoin, and many others added.
#Bitcoin is back at $57K after a failed assault on $60K on Thursday. Technically, the bears are keeping the price above the 200-day moving average. In fact, the sellers could be corporates whose actions are often closely tied to Nasdaq100 performance. German authorities were also actively selling off previously confiscated Bitcoins. This volume is not huge, but some potential buyers prefer to stay on the sidelines, seeing the overhang of sales.
At the same time, the dynamics of the last 24 hours were not one-sided: Bitcoin lost 1.4%, Ethereum—0.3%, BNB—0.9%, and Solana—3.5%, but such coins as XRP, Toncoin, and many others added.
#Bitcoin is back at $57K after a failed assault on $60K on Thursday. Technically, the bears are keeping the price above the 200-day moving average. In fact, the sellers could be corporates whose actions are often closely tied to Nasdaq100 performance. German authorities were also actively selling off previously confiscated Bitcoins. This volume is not huge, but some potential buyers prefer to stay on the sidelines, seeing the overhang of sales.
#Review
Promising divergence of Nasdaq100 and Russell 2000
Indices in the US went in different directions. While the market’s flagship gainer of recent years, the #Nasdaq100, has lost nearly 2.9% from its peak just after the CPI data, the index of small-cap companies, the #Russell2000, has soared 4.7% to date.
We saw one of the most notable one-day rotations in market history. This is only the second time since 1979 that the Russell 2000 has closed the day up over 3% (it was up 3.6%) against the backdrop of a decline in the S&P500. Considering the magnitude of the S&P500 and Nasdaq100 decline (0.7% and 2.3%, respectively), this was the largest divergence that occurred quite suddenly.
It’s easy to find justifications for a rally in a small-company index. A slowdown in inflation is a historically positive signal for such firms. Typically, during these periods, companies rebuild margins, getting a chance to keep up with the largest corporations.
Promising divergence of Nasdaq100 and Russell 2000
Indices in the US went in different directions. While the market’s flagship gainer of recent years, the #Nasdaq100, has lost nearly 2.9% from its peak just after the CPI data, the index of small-cap companies, the #Russell2000, has soared 4.7% to date.
We saw one of the most notable one-day rotations in market history. This is only the second time since 1979 that the Russell 2000 has closed the day up over 3% (it was up 3.6%) against the backdrop of a decline in the S&P500. Considering the magnitude of the S&P500 and Nasdaq100 decline (0.7% and 2.3%, respectively), this was the largest divergence that occurred quite suddenly.
It’s easy to find justifications for a rally in a small-company index. A slowdown in inflation is a historically positive signal for such firms. Typically, during these periods, companies rebuild margins, getting a chance to keep up with the largest corporations.
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It’s no secret that in previous months, the market has been pulled upward by a narrow AI narrative, while the breadth and strength of the stock market rally have been at “extreme fear” levels. Moreover, the Russell 2000 has been losing ground smoothly since May, pulling back deep into a multi-year range, while the Nasdaq100 has been methodically updating all-time highs since mid-May.
A sign of inflation is behind this big trade. April CPI data released in mid-May confirmed an acceleration in the pace of price increases and spooked markets so much that some speculated the next move would be a rate hike, not a rate cut. From this perspective, the Russell2000 index performed according to classic rules, giving up ground for a month after the strong May CPI release, sideways on neutral data in June, and soaring on the July release.
A sign of inflation is behind this big trade. April CPI data released in mid-May confirmed an acceleration in the pace of price increases and spooked markets so much that some speculated the next move would be a rate hike, not a rate cut. From this perspective, the Russell2000 index performed according to classic rules, giving up ground for a month after the strong May CPI release, sideways on neutral data in June, and soaring on the July release.
Following this logic, the Russell 2000 is poised for a prolonged rally, a strong start to what we saw the day before. Right now, the index has climbed to the March 2024 peak levels, which, if broken, would take it to its highest level since January 2022.
The Russell 2000 needs to rise 13.5% to reach the all-time highs set in November 2021. That’s not a lot, given the average annual performance, but it’s not so much when you look at how fast the index usually rallies.
A small-company index rally can provide the S&P500 and Nasdaq100 with that much-needed “breadth” and “strength,” adding flesh to that ‘Artificial narrative.
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The Russell 2000 needs to rise 13.5% to reach the all-time highs set in November 2021. That’s not a lot, given the average annual performance, but it’s not so much when you look at how fast the index usually rallies.
A small-company index rally can provide the S&P500 and Nasdaq100 with that much-needed “breadth” and “strength,” adding flesh to that ‘Artificial narrative.
📣Trade responsibly with FxPro
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A soft US CPI report pushed #Gold above the $2400 mark. The price only climbed above it for a couple of hours in April and barely spent three days above this level in May. In both cases, these climbs shifted the balance to the sellers, followed by a dip below $2300. These episodes may have created a knee-jerk reflex, as the troy ounce price was down about 1% on Friday due to a relatively elevated risk appetite.
The gold price is approaching the upper end of the range of the last three months, which could be the end of a consolidation after rallying off the lows of October. There is logic to this idea, as this rally started on policy reversal signals. Recent months have been shrouded in uncertainty due to mixed inflation numbers. And now we are registering a rather high degree of willingness of the Fed officials to start easing soon.
From the technical analysis perspective, the potential upside target in gold in case of a resistance breakout is the level of $2850.
The gold price is approaching the upper end of the range of the last three months, which could be the end of a consolidation after rallying off the lows of October. There is logic to this idea, as this rally started on policy reversal signals. Recent months have been shrouded in uncertainty due to mixed inflation numbers. And now we are registering a rather high degree of willingness of the Fed officials to start easing soon.
From the technical analysis perspective, the potential upside target in gold in case of a resistance breakout is the level of $2850.
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#WaveAnalysis
#GBPUSD under bullish pressure;
Likely to rise to resistance level 1.3120.
GBPUSD currency pair is under bullish pressure after the earlier breakout of the resistance level 1.2850, which has been reversing the pair from 2023.
The breakout of the resistance level 1.2850 results from the simultaneously strongly bullish sterling sentiment and the equally weak USD sentiment.
GBPUSD can be expected to rise further to the next round resistance level 1.3120 (former multi-month high from the middle of 2023).
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#GBPUSD under bullish pressure;
Likely to rise to resistance level 1.3120.
GBPUSD currency pair is under bullish pressure after the earlier breakout of the resistance level 1.2850, which has been reversing the pair from 2023.
The breakout of the resistance level 1.2850 results from the simultaneously strongly bullish sterling sentiment and the equally weak USD sentiment.
GBPUSD can be expected to rise further to the next round resistance level 1.3120 (former multi-month high from the middle of 2023).
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