JPY maintain most of the gains made in the past days as friction are being maintained in the US-Sino relationships. Economists seem to worry that the US-Sino trade war may have entered unchartered waters, causing stronger demand for safe havens. Analysts tend to note that risk aversion may remain with us for a while and that speculation may also be feeding safe havens such as the Yen. It should be noted that Bloomberg reported that the White house is delaying US Companies to do business with China’s Huawei Technologies. A Reuters poll on the other hand showed that a number of economists expect the trade war to bring forward the next US recession and expect the Fed to cut once again in September as well once more until the end of the year. We could see JPY remaining supported should tensions be maintained. USD/JPY remained near the lows of the past few days, yet proved unable to clearly break and distance itself from the 106.00 (S1) support line. Technically speaking we see the case for a descending triangle being formed, between the downward trendline incepted in the past two days and the 106.00 (S1) support line, which some could say that is foreshadowing a break downwards of the pair. Should the pair maintain bearish pressures, we could see the pair breaking clearly the 106.00 (S1) support line and aim for the 105.30 (S2) support level. Should the bulls take over, we could see the pair breaking the 106.60 (R1) resistance line and aim for higher ground.
Cable tests low grounds, as elections are discussed in the UK
The weakened against the USD during yesterday’s European session for a brief period of time, indicating its sensitivity. The main reason cited by analysts, was a media report that Boris Johnson was preparing to hold an election in the days after the 31st of October. It should be noted that Labour leader Jeremy Corbyn had stated that he will be calling for a no confidence vote after the summer recess. On the other hand, the UK Prime Minister stated yesterday that there are “bags of time” left to renegotiate Brexit with the EU, without clearly answering the question. We expect the pound to remain under pressure for the time being as UK politics currently feed uncertainty. Cable maintained a tight sideways motion between the 1.2135 (R1) resistance line and the 1.2075 (S2) support level for the past ten days. We could see the pair maintaining a sideways motion for the time being yet the pound’s sensitivity along with Brexit fundamentals (like today’s financial releases) could increase volatility for the pair. Also bear in mind that the pair’s RSI in the 4-hour chart is at the reading of 30, implying a rather overcrowded short position. Should the pair come under the selling interest of the market, we could see the pair breaking clearly the 1.2135 (S1) support line and aim for the 1.2075 (S2) support level. Should the bulls take over, we could see the pair aiming for the 1.2210 (R1) resistance line.
Other economic highlights, today and early tomorrow
Today during the European session, we get Germany’s trading data for June, with the focal point being the export growth rate along with the trade balance figure, Norway’s CPI rate for July and the star of the day is expected to be UK’s preliminary GDP growth rate for Q2 and UK’s manufacturing growth rate for June. In the American session, we get Canada’s employment data for July and the from the US the Core PPI rate for July along with the Baker Hughes oil rig count, which could affect oil prices. Please bear in mind that oil prices could also be affected by the release of the EIA monthly oil market report. During a rather quiet Asian session on Monday, we get New Zealand’s electronic card sales growth rate for July.
GBP/USD H4
Support: 1.2135 (S1), 1.2075 (S2), 1.2000 (S3)
Resistance: 1.2210 (R1), 1.2290 (R2), 1.2375 (R3)
USD/JPY H4
Support: 106.00 (S1), 105.30 (S2), 104.65 (S3)
Resistance: 106.60 (R1), 107.20 (R2), 107.90 (R3)
