Major pairs were pretty active this Tuesday

EUR/USD

Major pairs were pretty active this Tuesday, except for the EUR/USD pair that continued struggling around the 1.1000 level and treading water within a tight range. The American dollar came under selling pressure at the beginning of the day, as the Japanese yen appreciated sharply on diminishing hopes for massive stimulus coming from Japan, but European currencies underperformed amid self-weakness. 

US data was generally positive, with Consumer Confidence pretty much unchanged in July, as the index stands at 97.3 from 97.4 in June. New Home sales rose by 3.5% in June, to a seasonally adjusted annual rate of 592,000, the strongest pace since February 2008. Also, house prices continued to rise across the country, although moderating its pace, up by 5.2% in May and compared to a year before. The negative note was given by the Markit flash Services PMI,  with activity rising at the weakest pace in the current five-month sequence of expansion, resulting at 50.9 from previous 51.4. 

The EUR/USD pair closed the day a few pips below the 1.1000 level after trading as high as 1.1029 early Europe, and short term technical readings have nothing to offer with the price stuck within range, although the downward risk persists, considering that the pair has been steadily printing lower highs. Still lacking directional strength, technical indicators in the 4 hours chart hold within neutral territory, while the price is stuck around a modestly bearish 20 SMA, in line with the negative tone of the common currency. The daily low was set a  1.0951, with a break below it required  for a retest of 1.0910, the post-Brexit low, en route to the 1.0800/40 strong static support zone. 

Support levels: 1.0955 1.0910 1.0840

Resistance levels: 1.1000 1.1050 1.1090 

USD/JPY

Yen shorts got squeezed this Tuesday, as investors fear the Bank of Japan will end up providing less stimulus than the one initially estimated. Comments from Finance Minister Taro Aso, saying that the government is yet to decide on the size of the economic stimulus package and that he trusts the BOJ will act as needed, underpinned the JPY, also supported by rumors suggesting the upcoming fiscal stimulus will be less than half the expected 10trillion yen. The Bank of Japan will have its economic policy meeting this week, with most analyst expecting the Central Bank to cut rates further into negative territory from the current -0.10%. The USD/JPY trimmed partially its daily losses, recovering up to the 104.60 region after trading as low as 103.99 during the past Asian session. From a technical point of view, the 1 hour chart shows that the price has met selling interest on an approach to the 105.00 level, while developing well below its moving averages, suggesting the upward potential is now limited. In the same chart, the RSI indicator has turned back south after correcting extreme oversold readings, now around 41, also supporting a bearish extension for the upcoming hours. In the 4 hours chart, the technical indicators maintain modest bearish slopes near oversold territory, while the 100 and 200 SMAs converge in the 104.00/10 region, indicating that renewed selling interest through the level, will end up at fresh lows closer to the 103.00 level. 

Support levels:  104.00 103.60 103.20 

Resistance levels: 104.80 105.30 105.70

GBP/USD

The Pound Sterling weakened at the beginning of the day, falling down to 1.3056 against the greenback, the lowest in two weeks, after MPC member, Martin Weale, shifted it stance, and now favors adding more stimulus to the local economy. The pair bounced from the mentioned low up to 1.3175, ending the day with moderated gains around 1.3150, but maintaining the neutral bias seen on previous updates. Data coming from the UK showed that mortgages approvals in June, fell to 40.1K against previous 41.8K, while business borrowing in the same month dropped for the first time in 2016, down by £526m last month to £262.4m. From a technical perspective, the pair has nothing new to offer, confined to a tight range around the 1.3100 figure, and with the 4 hours chart showing that the price is still below a horizontal 20 SMA, while the technical indicators remain stuck around their mid-lines. The lack of directional strength will likely persists until the upcoming BOE's meeting in August, with 1.3000 and 1.3320 being the extremes of the range and the levels to break to see some follow through afterwards.  

Support levels: 1.3115 1.3080 1.3045 

Resistance levels: 1.3175 1.3230 1.3260

AUD/USD

The AUD/USD pair recovered ground this Tuesday, as buying interest defended the 0.7450 region. The pair traded as high as 0.7539  during the US afternoon, with no macroeconomic catalyst beyond the recovery, beyond the rates' differential between Australia and other major economies. The pair closed the day a handful of pips above the 0.7500 level, its highest in a week, and will face a major challenge during the upcoming Asian session, with the release of Australian Q2 trimmed CPI, expected at 1.5% from previous 1.7%. If inflation comes in below expected, the RBA will be one step closer to cut rates again, meaning that the Aussie may give back its recent gains and even extend its decline beyond the critical Fibonacci support at the mentioned 0.7450 level. Technically, the 1 hour chart favors a continued decline, given that the price is back below its moving averages, while the Momentum indicator heads lower below its 100 level almost vertically. In the 4 hours chart, however, the RSI indicator heads modestly lower around 53, but the Momentum indicator keeps heading higher above its mid-line, while the price stands above its moving averages, providing an immediate support around 0.7480. 

Support levels: 0.7490 0.7450 0.7410 

Resistance levels: 0.7540 0.7590 0.7635

Dow Jones

US indexes closed mixed, but not far from their opening levels, with the DJIA down 19 points, to 18,473.75, but the Nasdaq and the S&P up, 0.24% and 0.03% respectively. Apple reported earnings right after the close, surging 5% in after-hours trading as the company reported that profits and sales fell, but beat estimates. IPhone unit sales for the quarter fell 15%  from a year earlier to 40.4 million, exceeding, however, the average estimate of 39.9 million. The DJIA daily chart shows that the index trimmed almost all of its daily losses, having traded as low as 18,387, also supported by another string of positive US data. In the mentioned chart, the index holds above a bullish 20 SMA, while the technical indicators have turned flat well above their mid-lines after correcting overbought conditions, limiting chances of a steeper downward move. In the 4 hours chart, the index is below its 20 SMA, the immediate resistance at 18,514, while the technical indicators head modestly higher within neutral readings, not enough at the moment to confirm further gains. 

Support levels: 18,456 18,369 18,398

Resistance levels: 18,514 18,546 18,592

FTSE 100

The FTSE 100 added 13 points or 0.21% to close at 6,724.03, supported by a shift in MPC's stance, now backing an August rate cut, in the wake of poor macroeconomic data. Oil's prices decline weighed on the energy-related sector, with BP ending down 1.3% after the company posted quarterly underlying earnings of $720 million, falling short of analysts’ consensus of $839 million. The credit issuer Provident Financial on the other hand, soared 5.7% after it raised its dividend, after posting a 49% gain in first-half profits. Steady around the highs, the Footsie daily chart presents a neutral-to-bullish stance, as the benchmark remains well above its mid-line, but the technical indicators lack upward momentum, holding however, within positive territory. In the 4 hours chart, the neutral stance persists, with the index a few points above a flat 20 SMA and indicators heading nowhere around their mid-lines. 

Support levels: 6,703 6,668 6,615 

Resistance levels: 6,760 6,806 6,850

DAX

European equities edged modestly higher this Tuesday, with the German DAX up by 49 points, to 10,247.76, its highest close since the Brexit. Commerzbank was the biggest loser, down by 2.34% after reporting its second quarter operating profit dropped to €342 million , from €419 million a year earlier. Automakers closed generally higher, with Volkswagen up 2.73% and Daimler adding 1.34%. The index is currently trading around the roof of the daily descendant channel coming from late May, and not far from the pre-Brexit high of 10,340, maintaining a positive tone, as in the daily chart, the technical indicators keep heading higher near overbought territory, whilst the benchmark continues to advance above its moving averages. In the 4 hours chart,  the 20 SMA heads sharply higher around 10,166, but the Momentum indicator maintains a neutral stance, stuck around its 100 level, while the RSI indicator is also flat, but around 66. 

Support levels: 10,213 10,165 10,085 

Resistance levels: 10,275 10,340 10,400

Nikkei

The Nikkei 225 tumbled, closing the day at 16,338.04, down by 1.43% or 233 points on renewed yen´s strength. Asian shares closed generally higher, but the Japanese benchmark was undermined by speculation that any upcoming stimulus package will fall short of market's expectations, following comments made by Finance Minister Taro Aso.  Market talks were of 10 to 30 trillion yen on fiscal stimulus, but a leaked document presented a plan for just 6 trillion to be applied during the upcoming years. The index recovered some ground in after-hours trading as Wall Street trimmed most of its intraday losses, but the daily chart shows that it broke below a horizontal 100 DMA, while the RSI indicator keeps heading lower within positive territory, now at 52, suggesting the decline may extend further on a break below 16,327, the immediate support. In the 4 hours chart, the 20 SMA heads sharply lower above the current level, while the technical indicators present a limited downward momentum, but hold below their mid-lines, also supporting a downward extension for the upcoming sessions. 

Support levels: 16,327 16,242 16,130 

Resistance levels: 16,597 16,668 16,720 

Gold

Spot gold edged modestly higher on Tuesday, underpinned by yen's strength at the beginning of the day, which sent the safe-haven asset up to $1,324.50, its highest so far this week. The price however, retreated in the American session to close the day around 1,320.00 ahead of the upcoming FED's decision. Despite the US Central Bank is expected to remain on-hold, investors will be reading in between lines, searching for clues over the date of an upcoming move. A hawkish stance  from the FOMC will likely put the commodity under pressure, at least in the short term, in spite a rate hike seems unlikely until the second half of 2017. Technically, the commodity remains in a consolidative stage, trading within Fibonacci levels, but with the risk towards the downside, as in the daily chart, the price stands below a modestly bearish 20 SMA, whilst the technical indicators maintain bearish slopes within negative territory. In the 4 hours chart, indicators are flat around their mid-lines, while the 20 SMA is a few cents above the current level. 

Support levels: 1,308.00 1,299.45 1,285.80    

Resistance levels: 1,324.50 1,333.50 1,342.50

WTI Crude Oil

Ahead of the US inventories report, West Texas Intermediate crude oil futures fell to a fresh 3-month low of $42.35 a barrel, as oversupply concerns re-surged during the last three weeks, on high derivates stockpiles, particularly gasoline. WTI price bounced modestly by the end of the day, but held below 43.00, with a clearly bearish technical stance in the daily chart, given that technical indicators have extended their declines within negative territory, with the RSI currently at 33. In the same chart, the 20 DMA heads lower well above the current level, having already crossed below the 100 DMA, in line with further declines. In the 4 hours chart, the RSI indicator has barely corrected oversold readings, the Momentum indicator holds flat well below its 100 level, while the 20 SMA accelerated its decline well above the current level,  now providing a strong dynamic resistance around 43.70.

Support levels: 42.35 41.80 41.25

Resistance levels: 43.70 44.40 45.15