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FOREX: Dollar Dives to New Multi-year Low
The USD index sank to a new multi-year low last seen in mid-2018, with the greenback's losses extending to 9% from the 2020 high. The catalysts for the USD selling are piling up, with worsening Sino-US tensions, an extended build in the EUR net long position, month-end greenback sales and the Fed rate decision Wednesday all adding to the negative dollar bias.
The dollar's drop worked in favour of precious metals, prompting a new intraday high in spot gold at $1,945.72 alongside strength in haven FX as USD/JPY dropped well below Y106. Despite this, CHF failed to benefit, with the EUR's persistent rally largely responsible - EUR/CHF rallied through crowded resistance at 1.0795-97 and looks set to close above 1.08 for the first time since early June.
The data calendar Tuesday is lighter, with just US consumer confidence on the docket. Earnings from Pfizer, Visa, 3M and McDonald's are due. No central bank speakers are currently scheduled, with the Fed in media blackout ahead of Wednesday's policy decision.
EURUSD: Impulsive Rally Accelerates
- RES 4: 1.1864 3.0% 10-dma envelope
- RES 3: 1.1815 High Sep 2018
- RES 2: 1.1800 Round number resistance
- RES 1: 1.1781 Intraday high / 2.000 proj of Apr 23 - 30 rally from Apr 24 low
- PRICE: 1.1760 @ 16:36 BST Jul 27
- SUP 1: 1.1639/1581 Intraday low / Low Jul 24
- SUP 2: 1.1507 Low Jul 22
- SUP 3: 1.1423 Low Jul 21
- SUP 4: 1.1371 Low Jul 16 and key near-term support
The pair enjoyed its best session for months Monday, extending the recent rally through $1.17 handle. Bulls remain (firmly) in control for now. A positive theme follows last week's breach of 1.1495, Mar 9 high registering fresh 2020 highs. This also confirmed a strong resumption of the broader uptrend in place since the reversal on Mar 20. The focus is on 1.1815, Sep 2018 high. Initial support is 1.1639.
GBPUSD: Bullish Focus Intact
- RES 4: 1.3130 High Mar 10
- RES 3: 1.3020 0.764 proj of the Mar 20 - Apr 14 rally from May 18 low
- RES 2: 1.2977 High Mar 11
- RES 1: 1.2902 Intraday high
- PRICE: 1.2881 @ 16:49 BST Jul 27
- SUP 1: 1.2717 Low Jul 24
- SUP 2: 1.2644 Low Jul 22
- SUP 3: 1.2611 20-day EMA
- SUP 4: 1.2535/2480 50-day EMA / Low Jul 14
GBPUSD maintains a bullish tone and has started the week on a firm note. The pair Monday cleared resistance at 1.2813 Jun 10 high, confirming a resumption of the broader uptrend that has been in place since the reversal on Mar 20. Attention turns to 1.2977, Mar 11 high and 1.3020, a Fibonacci projection. On the downside, firm near-term support has been defined at 1.2644, Jul 22 low. Bullish
EURGBP: Looking For A Break Higher
- RES 4: 0.9264 2.0% 10-dma envelope
- RES 3: 0.9184 61.8% Fibonacci retracement of the Mar - Apr decline
- RES 2: 0.9176 High Jun 29 and the bull trigger
- RES 1: 0.9148 Intraday high
- PRICE: 0.9126 @ 10:33 BST Jul 27
- SUP 1: 0.9049 20-Day EMA
- SUP 2: 0.9001 Low Jul 21 and key near-term support
- SUP 3: 0.8991 50-day EMA
- SUP 4: 0.8938 Low Jul 10 and the key near-term support
EURGBP found support Jul 21 and has defined a S/T base at 0.9001. The outlook remains bullish. Recent Japanese candle patterns highlighted a reversal. Activity Jun 13, was a bullish engulfing and followed a doji candle on Jun 10. Together they signalled a reversal off 0.8938, Jun 10 low. The focus is on 0.9145, Jun 30 high and 0.9176, Jun 29 high. A break of 0.9001 would concern bulls.
USDJPY: Confirms Break Of Key Support Zone
- RES 4: 107.79 High Jul 7 and key resistance
- RES 3: 107.53 High Jul 20
- RES 2: 106.90 High Jul 24
- RES 1: 106.16 Intraday high
- PRICE: 105.29 @ 16:54 BST Jul 27
- SUP 1: 105.12 Intraday Low
- SUP 2: 104.86 2.0% 10-dma envelope
- SUP 3: 104.51 Low Mar 13
- SUP 4: 103.67 76.4% retracement of the Mar 9 - 24 rally
USDJPY was under pressure throughout the Monday session. Bearish pressure is likely to continue dominating near-term. Friday's bearish session saw the pair breach key supports at 106.07, Jun 23 low and 105.99, the May 6 and 7 low. Monday's move lower has confirmed a clear break of this support zone. This paves the way for a move towards 105.21 next, a Fibonacci retrace level. Initial resistance is at 106.16.
EURJPY: Still Below Last Weeks High
- RES 4: 125.49 0.618 projection of the May 6 - Jun 5 from Jun 22 low
- RES 3: 125.23 High May 1, 2019
- RES 2: 124.96 2.0% 10-dma envelope
- RES 1: 124.29/43 High Jul 22 / Jun 5 and key resistance
- PRICE: 123.70 @ 16:57 BST Jul 27
- SUP 1: 122.84 Low Jul 24
- SUP 2: 122.47 Low Jul 21
- SUP 3: 122.20 20-day EMA
- SUP 4: 121.82 Low Jul 15 and 16
EURJPY last week found resistance at 124.29, Jul 22 high just ahead of the primary resistance at 124.43, Jun 5 high. Friday saw key support at 123.06 probed before the cross found strong support at the day low of 122.84. A close below 123.06 would signal a top and highlight the potential for a deeper correction. For now, the current uptrend remains intact. Clearance of 124.43 would trigger an extension higher.
AUDUSD: Remains In An Uptrend
- RES 4: 0.7246 High Feb 6, 2019
- RES 3: 0.7222 1.764 projection of the Mar 19 - 31 rally from Apr 3 low
- RES 2: 0.7206 High Apr 17, 2019
- RES 1: 0.7182/99 High Jul 22 / High Apr 18, 2019
- PRICE: 0.7133 @ 17:10 BST Jul 27
- SUP 1: 0.7063 High Jun 10 and former breakout level
- SUP 2: 0.7010 Low Jul 21
- SUP 3: 0.6963 Low Jul 16
- SUP 4: 0.6922/21 Low Jul 7 / Low Jul 14
AUDUSD remains in an uptrend. Last week the pair cleared former resistance at 0.7063, Jun 10 high. The breach confirmed a resumption of the uptrend that has been in place since Mar 19. Price also traded above the recent objective of 0.7119, a Fibonacci projection and the focus is on 0.7222. On the downside, the key near-term support remains 0.6922/21, Jul 7 and 14 low. Initial support is at 0.7063.
USDCAD: Remains Vulnerable
- RES 4: 1.3618/46 50-day EMA / High Jul 14 and key S/T resistance
- RES 3: 1.3600 High Jul 20
- RES 2: 1.3537 High Jul 21
- RES 1: 1.3491 Low Jul 9
- PRICE: 1.3387 @ 17:11 BST Jul 27
- SUP 1: 1.3351 Low Jul 23
- SUP 2: 1.3316 Low Jun 10 and bear trigger
- SUP 3: 1.3235 Low Feb 24
- SUP 4: 1.3267 Low Feb 25
USDCAD remains vulnerable. Price action last week cleared key support at 1.3486, Jun 23 low. This confirmed the end of the broad sideways move that had dominated since mid-June. The former support at 1.3398 Jun 11 low has also been cleared, reinforcing the bearish threat. The break lower opens 1.3316, Jun 10 low where clearance would expose 1.3202, Feb 21 low. Resistance is at 1.3491, Jul 9 low.OPTIONS: Expiries for Jul28 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.1500(E577mln), $1.1570-75(E572mln)
- USD/JPY: Y106.00($600mln)
- EUR/USD: Jul30 $1.1500(E1.19bln); Jul31 $1.1495-1.1500(E1.2bln), $1.1550(E1.8bln); Aug04 $1.1490-1.1500(E1.05bln); Aug05 $1.1500(E1.12bln); Aug06 $1.1345-55(E1.27bln),$1.1500-10(E1.9bln), $1.1600(E1.8bln)
- USD/JPY: Jul30 Y106.00($1.8bln); Jul31 Y106.00($1.1bln); Aug03 Y107.35-45($1.5bln); Aug06 Y105.00($1.0bln)
- USD/CHF: Aug05 Chf0.9425-30($1.75bln)
- AUD/USD: Jul31 $0.7050(A$1.0bln); Aug06 $0.6960-65(A$2.0bln)
- AUD/JPY: Aug05 Y76.00(A$1.0bln)
- USD/CAD: Jul31 C$1.3400($2.0bln), C$1.3500($2.0bln), C$1.3570-80($1.0bln)
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