Trend continuation for EUR/GBP, CHF/JPY and NZD/CHF

Dow Jones Newswires report:
via Market Talk

👉 Melbourne has been put under a strict six-week lockdown, weighing on the Australian dollar. AUD/USD is retreating from the 0.70 mark. The Reserve Bank of Australia left interest rates unchanged at 0.25% as expected and did not release any hints about future policy.

👉 USD/JPY is steady above 107 as cases in Tokyo continue climbing but the government is not considering new steps.

👉 3:09 pm – The euro edges lower after data showed German industrial production rose by less than expected in May following the relaxation of corona-virus restrictions. Total industrial output increased 7.8% in May from April, versus the 10% gain expected by economists in a WSJ poll. In April, industrial output fell by an upwardly revised 17.5%, a record decline. EUR/USD falls 0.1% on the day to 1.1293, compared to 1.1310 before the data.

👉  Markets have stabilized and the US dollar is attempting recovery after a risk-on Monday, fueled by China’s stock market surge and lower US coronavirus concerns. A mix of figures and COVID-19 statistics are set to rock markets.

👉  Gold has been able to advance despite the risk-on mood and has consolidated above $1,780. It may be well-positioned to continue higher.

👉 Anthony Fauci, America’s leading epidemiologist, warned that the US is still “knee-deep” in the first wave and that the situation is “not good.” New statistics due out from Florida, California, and Texas are eyed.

👉 Sterling is likely to weaken in coming months as time is running out for the U.K. and EU to agree a trade deal before the Brexit transition ends in December, RBC Capital Markets says. “As time ebbs away and the two sides remain far apart, risks of a no deal, or a deal on unfavorable terms for the U.K. are growing,” RBC’s Adam Cole says.

👉 The U.K. economic recovery is likely to lag behind that of continental Europe, says David Riley, chief investment strategist at BlueBay Asset Management. This is as the U.K. began re-opening the economy at a higher point in the infection curve than its European neighbours. “Re-opening [the economy] with higher infection rates” implies a “greater risk of renewed outbreaks that erode business and consumer confidence and weaken the economic recovery,” he says. In Riley’s view, it’s “simply optimistic to believe that the pandemic will not have deep and lingering effects on consumers and businesses even as the virus is brought under control,” casting doubt on expectations of an equally sharp fall and rebound in economic activity.

Here are the High Impact Economic events expected today:

As we have observed earlier in the Currency Monitoring Chart, we discovered that AUD/USD lines are separated with the farthest distance.

The following is EUR/GBP looking at 4 hour chart:

INTRADAY MARKET INSIGHTS

USD/JPY Intraday: 
Under pressure. The pair keeps trading on the downside after retreating from an intraday high of 107.77 seen yesterday. Currently it remains capped by the descending 20-period moving average holding a bearish bias. Unless the key resistance at 107.50 is surpassed, the pair should sink toward 107.20 and 107.05 on the downside.

EUR/USD Intraday:
Upside prevails. The pair is rebounding from a reaction low at 1.1300 (now the key support). Currently it has shot above the upper Bollinger band calling for acceleration to the upside. A further rally should bring the pair toward 1.1345 (around the high of yesterday) and 1.1360 on the upside.

AUD/USD Intraday:
Bullish bias remains. Although the pair posted a pullback, it is still supported by a rising 50-period moving average. Even though a continuation of the consolidation cannot be ruled out, its extent should be limited. To conclude, unless the support level at 0.6950 is violated, the pair should expect a rise with targets at 0.6990 and 0.7010 in extension. Alternatively, a break below 0.6950 would bring a drop with 0.6920 and 0.6900 as targets.

NZD/USD intraday: 
Further upside. The pair is climbing along the rising 50-period moving average. The relative strength index stays above its neutrality level at 50, showing the lack of downward momentum for the prices. To conclude, as long as 0.6520 is not broken, look for a further upside with targets at 0.6597 and 0.6617 in extension. Alternatively, a break below 0.6520 would open a path to 0.6486 on the downside.

GBP/USD Intraday: 
Bullish bias above 1.2475. Despite the recent pullback from 1.2520, a support base at 1.2475 has formed and has allowed for a temporary stabilization. The relative strength index is around its neutrality level at 50, suggesting the lack of downward momentum for the prices. Therefore, as long as 1.2475 is not broken, intraday bullish bias remains with up targets at 1.2520 and 1.2540 in extension. On the other hand, crossing below 1.2475 would bring a return with 1.2455 and 1.2435 as targets.

USD/CHF Intraday: 
Key resistance at 0.9430. Although the pair posted a rebound from 0.9380, it is still capped by a declining 50-period moving average. The relative strength index has struck against its neutrality level at 50 and is turning downward. Hence, as long as the resistance level at 0.9430 is not surpassed, expect a return with targets at 0.9400 and 0.9380 in extension. Alternatively, a break above 0.9430 would bring a bounce with 0.9450 and 0.9470 as targets.

USD/CAD Intraday: 
Downside prevails. The pair is capped by a bearish trend line drawn from July 2. Currently, it is trading at levels below both the 20-period and 50-period moving averages, while the relative strength index stays below the neutrality level of 50, suggesting a bearish bias. Unless the key resistance at 1.3555 is surpassed, the pair should proceed to 1.3515 and 1.3495 on the downside. Alternatively, above 1.3555, expect a rebound to 1.3580.

EUR/JPY Intraday: 
Target 120.54. The pair is potentially forming a head and shoulder pattern. In fact, it has dropped below both the 20-period and 50-period moving averages, while the relative strength index shows a bearish divergence. As long as the key resistance at 121.81 holds, expect a decline to 120.81 and 120.54. Alternatively, a break above 121.81 would open a path to 122.27 on the upside.

EUR/GBP Intraday: 
Further upside. The pair remains on the upside after breaking above its previous trading range. Currently, the 20-period moving average has moved further above the 50-period one, while the relative strength index stays above the neutrality level of 50, signaling a bullish bias. Above the key support at 0.9029, expect an advance to 0.9089 and 0.9106. Alternatively, a break below 0.9029 would trigger a return to 0.9002 on the downside.